Changes in distribution of sugar imports quotas to make importers dependent on Derzhkomreserv or Agrarian Fund
Kyiv. November 23, 2010
The changes offered by the Ministry of Economy to the Procedure of the
Establishing Tariff Rate Quota to Import Raw Cane Sugar to Ukraine make
imports directly dependent on the State Committee on the State Material
Reserve and Agrarian Fund, said Associate of Volkov and Partners
Law Firm Iryna Polovets to the Interfax-Ukraine Agency,
commenting on the draft order of the Cabinet of Ministers of Ukraine
prescribing changes to the specified Procedure.
"Currently, import of raw cane sugar to Ukraine is allowed under the
contractual relations between Ukrainian entities involved in foreign
economic activity and their foreign contractors producing sugar.
However, virtually the total volume of imported sugar is supervised by
the Ministry of Agrarian Policy and UkrTsukor Association. Thus, today
import of sugar depends on the following three counterparties – the
Ministry of Agrarian Policy, UkrTsukor, and entities involved in foreign
economic activity,” said Ms. Polovets.
She explained that in case the changes to the Procedure of the
Establishing Tariff Rate Quota to Import Raw Cane Sugar to Ukraine are
adopted, the entities of foreign economic activity, though being the
main link, will be excluded from the chain, and the import of sugar will
depend on contractual relations between producers and the
Derzhkomreserv and Agrarian Fund...
Ban on import of non-exotic fruit and vegetables contradicts WTO regulations
Kyiv. November 9, 2010
The Cabinet of Ministers of Ukraine’s intentions to ban the import of
non-exotic fruit and vegetables are out of line with a number of
commitments a country undertakes when accedes the World Trade
Organization, believes Associate of Volkov and Partners Tatiana Kheruvimova.
Such opinion was expressed in the interview to UNTERFAX-Ukraine by the
Associate that commented on the recent announcement by Minister of
Agriculture Mykola Prysiazhniuk as regards the government’s intentions.
“A possible ban is to shore up domestic prices, which may mean
protectionist moves by Ukraine for importers”, said Ms. Kheruvimova.
The Associate explained that in case where the government chooses to
impose a ban without any required notifications and consultations with
the WTO, such moves may result in alike restrictions for Ukraine from
the side of importing countries.
In her opinion, considering that the application of measures might
entail consequences both for importers and for national producers and
consumers, it would be a good thing to conduct early consultations with
the said participants of trade-economic relations.
At the same time, Ms. Kheruvimova explained that the national
legislation and WTO regulations envisage a set of other mechanisms of
trade protection of the national producer, “for example, anti-dumping,
safeguard or anti-subsidy investigations”.
Thus, according to the Associate, in case of import surge, injurious to
the national producer, the latter enjoys the right to apply with the
Ministry of Economy to initiate a safeguard investigation that may
trigger the imposition of safeguard measures.
Reportedly, in the course of the meeting that was held in Vinnitsa
region and concerned the situation in the food market and autumn-field
works completion Minister of Agriculture Mykola Prysiazhniuk reported
that the government intends to ban the import of non-exotic fruit and
Auction sale of grain quotas contradicts WTO rules
Kyiv. October 25, 2010
“The auction sale of grain export quotas in Ukraine is at variance with
World Trade Organization (WTO) rules, and will throw the grain market
into uncertainty and question fulfillment of contractual obligations by
exporters,” says Associate of Volkov and Partners Law Firm Andrii
The aforementioned has been his commentary to the Interfax-Ukraine
Agency on a governmental intention to introduce the sale of grain export
quotas at auction with the purpose to prevent corruption, which has
been recently announced by First Vice-Prime Minister Andriy Klyuyev.
“Should the Cabinet of Ministers of Ukraine adopt the procedure of quota
sale at auctions, it risks breaching WTO rules. Moreover, taking into
consideration that the Ministry of Economy has been accepting export
license applications from October 20, the decision on introduction of
sale of quotas at auctions, if adopted, will throw grain market into
uncertainty and question fulfillment of contractual obligations by
exporters," told Mr. Zablotskyi.
According to him, Article VIII of GATT 1994 reads that all fees and
charges of whatever character imposed by contracting parties in
connection with importation or exportation shall not represent a
taxation of imports or exports for fiscal purposes.
Mr. Zablotkyi also said that the same objectives pointed out in the
explanatory note to the bill on changes into the Law “On Foreign
Economic Activity” (regarding auction sale of quotas) No.7230. Thus, if
the bill is not adopted, the Cabinet of Ministers won’t be able to hold
This document extends Cabinet of Ministers’ competences, authorizing the
state higher executive body to decide "…on application of exports
(imports) licensing, including, but not limited to, quotas establishment
(quantitative and other restrictions), as well as an auction sale of
quotas…” explained Mr. Zablotskyi.
Draft government decree on grain quotas introduction contravenes WTO commitments
Kyiv. October 13, 2010
“The Cabinet of Ministers of Ukraine’s draft decree on grain export
quotas, under which the quotas have to be introduced totaling 2.7million
tons before December 31, 2010, does not comply with commitment Ukraine
has undertaken while accessing to the World Trade Organization (WTO),”
considers an Associate of Volkov and Partners Irina Polovets.
It was her comment to the Interfax-Ukraine Agency on the draft decree,
developed by the Ministry of Economy of Ukraine and recently published
at the department’s web-site.
“The only possible reason to introduce quotas may be for critical want
of foodstuff in the exporting country, but the draft decree does not
identify such critical deficiency prevention as the purpose for its
adoption,” said Ms. Polovets.
The Associate explained that Article XI:1 of the General Agreement on
Tariffs and Trade prohibit WTO members from export restrictions by
quotas imposition, export certificates or any other measures, save for
duties, taxes and other charges.
Besides, the lawyer says “considering that Ukraine’s export quotation
poses a threat to price inflation in the countries importing grain
originated in Ukraine, we do not rule out complaints to be filed against
Ukraine with the WTO”.
“Moreover, Ukraine’s trade partners could turn to similar measures in
response to Ukraine’s actions,” summed up Ms. Iryna Polovets.
Reportedly, the government’s draft Decree on grain export quotation
released at the Ministry of Economy’s web-site contemplates the wheat
quota of 0.5 mln tons, barley quota of 0.2 mln tons and corn quota of 2
The draft Decree determines the procedure of quotas’ allocation and
imposes a de facto prohibitive quota in the amount of 1 000 tons for rye
and buckwheat exports.
The allocation of quotas will be based on the conclusions by the
Ministry of Agriculture with due consideration of the quantities
declared by a company for export...
Expert opinion: just single legislative initiative suffices to dissolve tax militia
Kyiv. October 13, 2010
The dissolution or re-subordination of the tax militia (police) do not
obligatory require specific amendment to be introduced into the draft
Tax Code, believes Attorney at Law from Volkov and Partners Taras
In the interview to Interfax-Ukraine he commented on the initiative as
regards the dissolution of the tax militia, which the Parliamentary
Committee for Industrial and Regulatory Policy and Entrepreneurship
proposes to promote by amending the respective provisions of the draft
"This structure could be liquidated by introducing the respective draft
law with the Verkhovna Rada of Ukraine addressing amendments into the
Law of Ukraine "On the State Tax Service of Ukraine", said Mr.
At the same time, he pointed out that the dissolution within the meaning
of “liquidation” is unlikely to occur.
According to the Attorney at Law, in case of full liquidation of the tax
militia the relevant structural division should be established from the
ground up and, accordingly, the relevant regulatory framework for such
division should be established too. “In practice such structural shifts
are rare”, admitted Mr. Rosputenko. “The tax militia division with its
existing scope of rights is most likely to be transferred to the
Ministry of Internal Affairs’ subordination. In such case the
legislation would see little changes”, supposed the Attorney at Law.
Mr. Rosputenko noted that considering a numerous announcements by the
government officials and assessment of some of their actions (including
the draft law initiative), it may be concluded that the state is
gradually proceeding to reformation of the system of law enforcement
agencies. This move evokes obvious positive responses in Ukraine and
from the world community.
Lawyers are divided as to whether owners of 95% of JSC’s shares may force minority shareholders to sell their stakes
Kyiv. September 30, 2010
The draft Tax Code of Ukraine contemplates that an income gained by an
individual from a deposit placed with a bank in 2010 be subject to a 5%
tax, starting from 2011 and till the expiration of a contract.
This opinion was expressed to Interfax-Ukraine by Associate of Volkov
Koziakov and Partners Ruslan Malinovskyi, commenting on the
provisions of the draft Tax Code developed by the government and
registered with the Parliament.
"The absence in the draft Tax Code of the provisions stipulating its
application to legal relations occurred before its adoption and
persisted could likely lead to various conflicts with tax authorities",
believes Mr. Malinovskyi.
He explained that the draft Tax Code provisions involving taxation of
individuals’ incomes arising out from deposits placed with commercial
and state banks determine the application of established rates and
taxation procedure for such incomes solely in compliance with the code.
According to the Associate, exclusively the provisions of the Code and
general rules envisaging that the legislation has no ex post facto
within the time, except for cases prescribed by the law, must be applied
to the deposit contracts executed in 2010 and remained effective after
the Tax Code's coming into force.
Moreover, Mr. Malinovskyi pointed out that while defining an amount of
income derived by an individual from a deposit one must count for a
minimum wage established for that period of time when an income will be
paid to an individual.
Reportedly, before the draft Tax Code adoption the government of Ukraine
voiced an idea to impose tax on incomes arising from every deposit
exceeding the amount of UAH 200 000, which was supposed to insert into
the said draft Code.
Lawyer: fees for verification of individuals ID-numbers unlawful
Kyiv. September 29, 2010
Fee-based verification by the Tax Service bodies of an individual’s
ID-number issued by the State Tax Administration of Ukraine (the STAU)
contravenes the law, believes Associate from Volkov Koziakov and
Partners Ruslan Malinovskyi.
“The question on fees charged for the services provided undermines legal
grounds for establishment of the bodies of the Tax Service of Ukraine
and the watchdog authority – the STAU", said Mr. Malinovskyi, commenting
to Interfax-Ukraine on the draft law recently passed by the Parliament
in the first reading. The said draft law contemplates that the credit
history bureau be empowered to obtain fee-based information on
authenticity of an individual-taxpayer’s ID-number from the state tax
According to the Associate’s explanation, the Law “On the State Tax
Service” does not lay down any legal grounds for the state tax
inspections and administrations, structurally subordinated to the STAU,
to inspect superior watchdog authority, as well as registration of
individuals – taxpayers.
Reportedly, the Verkhovna Rada supported the draft law in the first
reading, whereby it is offered to prescribe that the State Tax Service
has to verify at the credit history bureau's request identification
number issued to an individual, taxpayer, and payer of other obligatory
In addition, the draft law sets forth that the procedure and amount of
fee charged for the verification have to be determined by the Cabinet of
Ministers of Ukraine.
Responsibility to declare taxable deposits conferred on depositors
Kyiv. September 24, 2010
In case of the draft Tax Code adoption the banks having a tax agent
status in relation to taxable deposit interests will not bear
responsibility for completeness of information disclosed by a depositor
with regard to total amount placed on deposits with different financial
institutions, as reported by lawyers interviewed by Interfax-Ukraine.
According to Associate of Volkov Koziakov and Partners Taras Rozputenko,
disclosure, if requested by regulating authorities, by banks of certain
information relating to legal entities is governed by the applicable
legislation, but disclosure of like information relating to individuals
in case where a bank serves a tax agent is not specified.
Thus, under the law and the draft Tax Code, if funds deposited with two
or more non-related banks, the responsibility to determine the amount of
taxable income is rested on an individual who entered into a respective
bank deposit agreement.
Mr. Rozputenko pointed out that individuals may optimize the taxation of
deposit interests exceeding the limit envisaged by the draft Code
through opening deposit accounts in the name of relatives.
”A legal instrument to optimize taxation of incomes arising from
deposits could be distribution of the deposited funds amidst related
individuals, for example family members", said Mr. Rozputenko...
Ukraine takes tobacco and alcohol dispute with Armenia to WTO
Kyiv. September 20, 2010
Fοr t?å first time since Ukraine became a World Trade Organization (the
WTO) member, ³t ?à¾ requested t?àt WTO Dispute Settlement Body establish
a Panel tο settle a dispute w³t? Armenia concerning less favourable
conditions fοr the import οf Ukrainian tobacco and alcohol t?àn for like
products οf national origin.
The respective request was posted on WTO's web site.
According to Ukraine’s statement, Armenia gave no response to Ukraine’s
request for consultations. As such, there was no way to settle the
dispute through negotiations.
"In case where a country refuses from consultations or does not go on
them, a WTO member having placed a request for the consultations enjoys
the right, under Article 4.3 of the WTO Understanding on Rules and
Procedures Governing the Settlement of Disputes, to immediately request
the establishment of a panel to settle a dispute," Andrii Zablotskyi, an Associate from Volkov Koziakov & Partners, reported to Interfax-Ukraine.
He also highlighted that having reviewed the case, the Panel issues
recommendations for the county, which has violated the WTO agreements,
to bring its legislation in line with the respective WTO standards...
Opinion: creation of single market mechanism for trading in pollution credits to allow increase in foreign investments inflow
Kyiv. September 20, 2010
Creation of single carbon market between Ukraine, Belarus, Kazakhstan
and Russia, initiated by Ukraine, will allow for faster development of
necessary legislative framework to regulate man-made emissions of
greenhouse gases into the atmosphere, an associate from Volkov Koziakov & Partners Olena Hladyuk believes.
This was her comment to Interfax-Ukraine Agency on stated initiative
that has been promulgated by the National Environment Investment Agency
of Ukraine the other day.
“A single market mechanism of trading in pollution credits will create
prerequisites to raise material funds for modernization of economic
sectors, possibility to reduce development pressure on the Ukrainian
territory,” Ms. Hladyuk said.
According to her, should such trade mechanism be available, this will
give rise to significant interest of business entities in reduction of
greenhouse gas emissions and discover some alternative funding sources
for these projects based on international cooperation mechanisms.
Moreover, it might lead to the material social, economic and
Thus, Ms. Hladyuk supposes that implementation of the idea will provide
Ukraine with the possibility for proactive use of mechanisms, provided
under the Kyoto Protocol as a part of the UN Framework Convention on
At the same time, the Associate pointed out that all preliminary
arrangements geared for Ukraine to implement the provisions of the
United Nations Framework Convention on Climate Change and Kyoto Protocol
thereto did not create proper prerequisites for effective application
of the aforementioned provisions by Ukraine. The national system of
estimation of anthropogenic emissions and absorption of greenhouse gases
was brought into line with the international requirements at a snail’s
Reportedly, the National Agency of Ecologic Investments of Ukraine is
initiating the creation of carbon market jointly with the Russian
Federation, Kazakhstan and Belarus as these countries use the same
technologies inherited from Soviet times...