The digest of reforms from June 29 to July 3, 2015

The digest of reforms from June 29 to July 3, 2015
July 03, 2015.

 

  1. Decentralization reform: Ukrainian President Petro Poroshenko presented and submitted draft constitutional amendments on decentralization (No. 2217a) to Parliament.
  2. Since July 1, Ukraine has introduced a permanent electronic system of value added tax (VAT), in Law No. 71-VIII, “On Amendments to the Tax Code of Ukraine and Some Laws of Ukraine (On Tax Reform).”
  3. Parliament abolished mandatory application of payment transactions (PPO, cash registers) for businesses with annual profit below 1 million hryvnya. Taras Kachka, head of Ukraine Reforms Communications Taskforce, ​​noted, “these reforms are examples of complex transformations that were difficult to perceive by business in most EU Member States, including the introduction of the PPO. In this sense we are in a European trend. But on the other hand, the positive effect of strengthening tax compliance for the same business in the medium term is palpable. Ukraine has to make the move to reduce the level of tax fraud not only for the state but also for society”.
  4. Police reform: The Verkhovna Rada approved Bill No. 2561, “On the internal affairs bodies” during its second reading and passed Bill No. 2822, “On the National Police.” The Verkhovna Rada also adopted Bill No. 2667, “On Amendments to the Law of Ukraine ‘On Prosecution’ (for Improvement and Application of Certain Conditions)” during its second reading. On July 2, the first patrol duty police graduated from the police academy of Kyiv.
  5. Government procurement reform: Parliament approved draft law “On amendments to Some Laws of Ukraine on Government Procurement to Bring them in Line with International Standards and Take Steps to Fight Corruption” during its first reading. This will serve as the basis for law No. 2087a. During a press briefing at Ukraine Crisis Media Center (UCMC), Maxim Nefyodov, Deputy Minister of Economic Development and Trade of Ukraine, said that the bill would promote Ukrainian exports to western markets. Deputy Minister Nefyodov expressed hope for the document’s quick adoption. He predicted the bill would pass by July 16, on time for Ukraine to join the WTO’s Agreement on Government Procurement. “We have already submitted a final proposal on the accession of Ukraine to the WTO Agreement on Government Procurement and hope that in December, Ukraine will be able to join the Agreement. This step will allow Ukrainian suppliers to enter government procurement markets of the 42 member countries of the agreement, the size of which is estimated at 1.7 trillion dollars,” said Nefyodov.
  6. Derzhprodspozhyvsluzhby (State Service on the Issues of Food Safety and Customer Protection) Personnel Changes: On July 1, Serhiy Glushchenko was appointed head of Derzhprodspozhyvsluzhby, with Volodymyr Melnychuk as his deputy. According to Taras Kachka, this decision will spur food safety reform.
  7. Parliament approved all of Law No. 2072 “On Accounting Chamber” during its second reading.
  8. Parliament approved amendments to the Law “On Citizens’ Appeals,” concerning electronic addresses and e-petitions (law No. 2299), thereby expanding the order and form of citizen appeals to authorities.
  9. The Parliament approved Bill No. 1558-1 during its final and third reading. The bill addresses restructuring obligations on foreign currency loans according to the rate at the time the loans were obtained. According to banking sector representatives, this decision is solely for popularity’s sake and will destroy Ukraine’s economy. “We estimate the losses of the economy incurred by passing this law, at least in the amount of 95 billion hryvnya and this is without taking into account the costs that we’ll carry due to the withdrawal of insolvent banks—which will appear as a result of the law when it comes into force—from the market as well as their transference to the Deposit Guarantee Fund. This means reducing social payments from the budget, as funds will have to be directed for payment of the amounts of deposits guaranteed by law,” said Viktor Novikov, a member of the National Bank of Ukraine, during a press briefing at Ukraine Crisis Media Center. The briefing was part of a project by UCMC’s Ukraine Reforms Communications Taskforce.

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