18.02.2015

Legislative Changes Regarding Business Deregulation

Provisions of the Resolution of the Cabinet of Ministers of Ukraine "On Some Issues of Business Deregulation" No.42 dated 28.01.2015, which came into effect on February 11, 2015 (hereinafter, the Resolution), are aimed at simplifying the environment for doing business and decreasing corruption in the agricultural, food, oil & gas and IT industries.

The Resolution is focused, inter alia, on simplifying the state registration procedure for foodstuffs, controlling the circulation of pesticides and agrochemicals, abolishing the compulsory monitoring of compliance with the special conditions for subsoil use as well as simplifying the employment procedure for foreigners and stateless persons.

Below we will consider the relevant key changes.   

FOOD INDUSTRY

The Resolution envisages the abolition of quality examination for specialty foods to reduce the costs of business entities for licensing procedures that are not applied in the EU.

AGRIBUSINESS

1. The Resolution introduces a clear procedure for obtaining marketing authorizations for plant protection products and permits for importing plant protection products to be used in state trials. Precise terms are set for some constituents of the process (import permits for experimental batches shall be issued within 10 days after the documents are filed, payment for expert examinations shall be made within 10 days, and marketing authorizations shall be issued within 10 days). These novelties make the registration procedure for plant protection products more transparent.

2. The Resolution abolishes compulsory quarantine certificates for grains and oilseeds and their derived products, food waste and residues and thus would reduce the relevant costs of enterprises, in particular, the downtime costs.

3. Also, the Resolution reduces the issuance term for phytosanitary certificates from 5 days to 24 hours after the relevant vehicle load time. This will allow reducing the costs associated with vehicle downtime. It should be noted that such certificates are issued within two hours in the EU.

OIL & GAS INDUSTRY

The Resolution abolishes the compulsory monitoring of compliance with special subsoil use conditions, which is too costly and unclear. Instead, the geological monitoring process will be fleshed out, which would reduce the room for corruption and fraud and would help reinvest in the improvement of equipment and processes.

EMPLOYMENT ISSUES

The Resolution has also introduced some substantial changes to the Procedure for Issuing Employment Permits for Foreigners and Stateless Persons approved by the CMU Resolution No.437 dated 27.05.2013.

The most important novelties are as follows:

1. A shortened procedure for obtaining permits is introduced for IT professionals and graduates of prestigious universities.

If a foreigner seeks:

  • A position of a company manager in the software industry, or a position of a systems or software developer, or that of a program technician;
  • Any position in a company, and has graduated from a TOP-100 university according to the world rankings (as per the list of rankings referred to in the Resolution).

The above provisions are included in the list of cases, where the employment of foreigners is deemed reasonable and well-founded. As we know, in such cases employers are not required to submit information on labour demand (in the Form No.3-ПНх) to the employment center 15 days before the permit application date. Thus, the permit issuance duration for the above candidates will be shortened by at least 15 days.

2. The period to consider applications for the issuance/prolongation of permits has been reduced.

Instead of the former 15 calendar days, employment centers have only 7 days for decision-making.

3. The application period for permit prolongation has been extended

Now one may apply for permit prolongation no later than 20 calendar days in advance. Previously – 30 calendar days in advance.

4. The wordings on the validity period and the number of prolongations have been refined

The validity period of permits (other than permits for an internal corporate assignee) should be the same as the labour contract validity period. However, they should not exceed one year. There was an omission in the previous wording of the Procedure, as there was no linkage to the employment contract validity. If an employment contract is concluded for an indefinite period, the permit shall be issued for a period not exceeding one year.

There remains a possibility to prolong permits: by one year for a regular permit and by two years for a corporate assignee permit. However, a clarification has been added that the number of prolongations is unlimited.

 5. The mechanism for informing employers about the results of applications for the issuance/prolongation of permits has been improved

It has been specified that the relevant notices shall be sent to employers by mail with return receipt requested, and, additionally, by e-mail. Apart from that, the e-mails shall contain, among other things, the relevant bank details for the payment of issuance fees.

 6. The payment period for the issuance of permits has been reduced

Previously, that period began on the date of the relevant employment center’s decision to issue a permit and constituted 30 calendar days. According to the newly worded Procedure, it shall begin on the date of the employer’s receipt of the relevant notice and shall constitute 10 business days.

 7. Some groups of foreigners are exempt from payment for permits

It has been established that no payment shall be charged from foreigners pending a refugee status or requiring additional protection.

 8. Other novelties:

  • The period for filing copies of employment contracts concluded with foreigners with employment centers has been extended: the previous term of 3 business days after the contract date has been extended to 7 business days.
  • Employment centers are obliged to return the sets of documents previously filed by applicants, if the latter are denied permits.

Employment centers are obliged to return the sets of documents previously filed by applicants, if the latter are denied permits.

In general, this Resolution is aimed at harmonizing the laws of Ukraine with the EU legislation as well as at reducing the corruption component in doing business. The above changes will have a positive impact on the business environment in Ukraine and thus create additional conditions for the influx of foreign and domestic investment as well as improve Ukraine’s position in the Doing Business ranking.

 

Kind regards and best wishes,

Anna Zorya

Partner

Anna.Zorya@arzinger.ua

Pavlo Khodakovsky

Partner

Pavlo.Khodakovsky@arzinger.ua

 

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