CONDUCTING BUSINESS IN UKRAINE 2018 All of the information included in this document is for informational purposes only, and may not reflect the most current legal developments, judgments, or settlements. This information is not offered as legal or any other advice on any particular matter. The Firm and the contributing authors expressly disclaim all liability to any person in respect of anything, and in respect of the consequences of anything, done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of Baker McKenzie’s Conducting Business in Ukraine brochure. No client or other reader should act or refrain from acting on the basis of any matter contained in this document without first seeking the appropriate legal or other professional advice on the particular facts and circumstances. CONDUCTING BUSINESS IN UKRAINE 2018 Baker McKenzie Renaissance Business Center 24 Bulvarno-Kudriavska St. Kyiv 01601, Ukraine Tel.: +380 44 590 0101 Fax: +380 44 590 0110 [email protected] www.bakermckenzie.com\ukraine CONDUCTING BUSINESS IN UKRAINE Table of Content 1. Ukraine — An Overview ...................................................... 11 1.1 Geography, Topography and Population ........................................ 11 1.2 Government and Political and Legal Systems .............................. 12 1.3 Regional Structure ............................................................................... 15 1.4 Economy ................................................................................................ 16 1.5 Foreign Relations ................................................................................. 17 2. Foreign Investment in Ukraine ........................................ 18 2.1. Laws on Foreign Investment ............................................................ 18 2.2. Making an Investment ..................................................................... 20 2.3. Divestiture ............................................................................................ 21 2.4. Investment Incentives ....................................................................... 21 2.5. Dispute Resolution ............................................................................. 21 2.6. Investment Treaties .......................................................................... 22 3. Establishing a Legal Presence.......................................... 23 3.1 Companies ............................................................................................. 23 3.2 Joint Venture/Cooperation Agreements ...................................... 34 3.3. Investment Funds/Mutual Funds .................................................. 35 4. Compliance with Anti-Corruption Legislation of Ukraine ................................................................................... 39 4.1 General ................................................................................................... 39 4.2 Ukrainian Anti-Corruption Legislation ......................................... 40 4.3 Elements to Ensure Compliance .................................................... 42 5. Taxation ............................................................................................ 44 5.1 General ................................................................................................... 44 5.2 Corporate Income Tax........................................................................ 44 Baker McKenzie | 3 5.3 Taxation of Foreign Entities ............................................................. 45 5.4 Double Taxation Treaties .................................................................. 47 5.5 Taxation of Permanent Establishments ....................................... 49 5.6 Value Added Tax ................................................................................. 50 5.7 Personal Income Tax ............................................................................ 51 5.8 Payroll Taxes ........................................................................................ 54 5.9 Land Tax ................................................................................................ 55 5.10 Excise Duty ......................................................................................... 56 5.11 Tax Controversies ............................................................................... 57 6. Currency Regulations ............................................................. 59 6.1 General ................................................................................................... 59 6.2 Status of the National Currency .................................................... 59 6.3 Use of Foreign Currency in Ukraine .............................................. 60 6.4 Transfer of Foreign Currency from Ukraine ............................... 60 6.5 Other Licensable Transactions ....................................................... 60 6.6 Settlements under Export and Import Contracts ...................... 61 6.7 Purchase of Foreign Currency .......................................................... 61 6.8 Trade in Foreign Currency ................................................................ 62 6.9 Borrowing from Non-Residents ..................................................... 62 6.10 Temporary Restrictions on Currency Transactions .................. 62 7. Customs Regulations............................................................... 63 7.1 Introduction ........................................................................................... 63 7.2 Declarant (Importer of Record) ....................................................... 65 7.3 Customs Broker .................................................................................... 66 7.4 Registration Procedure ...................................................................... 66 7.5 Customs Clearance .............................................................................. 66 7.6 Customs Regimes ................................................................................ 68 7.7 Certification and Control ................................................................... 75 7.8 Customs Valuation Rules .................................................................. 76 7.9 In-Kind Contribution .......................................................................... 79 7.10 Customs Control ................................................................................ 79 4 | Baker McKenzie CONDUCTING BUSINESS IN UKRAINE 8. Property Rights to Real Estate....................................... 82 8.1 General ................................................................................................... 82 8.2 Lease of Non-Land Real Estate ...................................................... 84 8.3 Land Ownership .................................................................................. 84 8.4 Land Leases .......................................................................................... 87 8.5 Third-Party Rights ............................................................................. 89 9. Privatization ................................................................................ 90 New page in history of Ukrainian privatization: Law 2269 .......................................................................... 90 10. Competition Law ..................................................................... 94 10.1 Overview of Applicable Legislation .............................................. 94 10.2 Merger Control .................................................................................. 95 10.3 Anticompetitive Concerted Actions ............................................. 98 10.4 Abuse of a Monopoly (Dominant) Position ............................. 100 10.5 Unfair Competition and Advertisement .................................... 101 10.6 Public Procurement ........................................................................ 102 10.7 State Aid ............................................................................................ 102 10.8 Liability for Infringements of Competition Law, Immunity/Leniency ....................................................................... 103 10.9 Competition Law Reforms: Achievements and Expectations ........................................................................... 107 11. Dispute Resolution ................................................................ 110 11.1 Introduction ........................................................................................ 110 11.2 Commercial Litigation in Ukraine ................................................. 112 11.3 Commercial Arbitration ................................................................... 116 11.4 Enforcement of Foreign Court Decisions ................................... 116 11.5 Enforcement of Foreign Arbitral Awards ................................... 117 Baker McKenzie | 5 12. Financial Services ................................................................... 119 12.1 Ukrainian Financial Services Sector .............................................. 119 12.2 Role of the Financial Services Commission ............................... 119 12.3 Financial Institutions ...................................................................... 120 12.4 Types of Financial Services ............................................................ 121 12.5 Licensing ............................................................................................