Today, at the Government’s meeting, the First Deputy Minister of Economic Development and Trade Maksim Nefedov presented a comprehensive draft law on improvement of the investment environment in Ukraine developed jointly with the Better Regulation Delivery Office (BRDO) and in cooperation with EasyBusiness.
If it is adopted, Ukraine has all chances to increase own position by 40 points in the Doing Business rating of 2018 and enter the Top-30 of leading countries in terms of the ease of doing business.
Due to existing legal requirements, this comprehensive draft law was divided into several parts. You can find the text of each part here:
Currently, all these draft laws were presented for public discussion that will take the next three weeks.
Welcome to the discussion!
Send your proposals to [email protected].
Source: the Ministry of Economic Development
A “deregulation day”, which resulted in the abolition of more than 360 obsolete restrictive regulations, was held in the Cabinet of Ministers of Ukraine. Furthermore, the Government significantly simplified the working environment for farmers and the telecom-market.
As the Prime Minister of Ukraine Volodymyr Hroysman said, the decisions discussed during the Cabinet of Ministers’ meeting greatly simplify the life for SMEs, minimize the risks of corruption and will save billions of hryvnas.
“The gross national product creates the entrepreneurship, which is a real sector, which we should not hinder, on the one hand, and on the other hand, should create the regulations that would enable us to be competitive. But not in a way as it sometimes happens, when the state creates artificial barriers and the business begins to found out the ways to get around. Any official can find fault with something whether it is a column, a business or an entrepreneur, because he has hundreds of thousands of regulations, some of them – since the Soviet Union, and then they begin to impose fines and create a pressure. We will destroy such regulations and keep those who don’t agree beyond the work of our Government,” the Prime Minister said.
For his part, the First Deputy Minister of Economic Development and Trade of Ukraine Maksim Nefedov said that a package of deregulatory initiatives that have a significant impact on the business development was prepared with the help of experts of the Better Regulation Delivery Office (BRDO), which was established with the support of the Ministry of Economy and the Group of Strategic Advisors on the Support for Reforms. “Some of the documents will be completely abolished, others – will be revised in such a way to better meet modern requirements. This is a hard and important work, and today we have made a significant contribution in it,” Maksim Nefedov said.
In particular, during the Government’s meeting, they decided to abolish 367 illegal and obsolete regulations. This decision will allow to significantly reduce administrative burdens and corruption risks in the administration of conflicting rules.
The government has also made a significant step towards deregulation in the telecom sector. An approval procedure for construction of mobile-communication base stations was greatly simplified (amendments to the Resolution of the CMU #461 of 13/04/2012). The procedure of putting these facilities into operation will be reduced by one month. In addition, the rules to define a rent rate for communications equipment have been clarified (amendments to the Resolution of the CMU #786 of 04/10/1995).
They has also approved a decision on submitting the initiative to abolish a minimum rate of paying for notary services at 1% to the President (Decree #762 of 10/07/1998). This restriction led to the fact that notaries have received huge payments even if they were ready to get less amounts of money. According to experts, a total volume of real estate transactions amounted to 55 billion hryvnas in 2014. This means that notaries received at least 550 million hryvnas as payments for their services (both private and state ones).
“So this mandatory minimum rate in the amount of 1% has a specific value for the state and investors. Its abolition will significantly reduce the costs when it comes to real estate purchase and sale contracts,” the First Deputy Minister of Economic Development and Trade said.
During the “deregulation day”, the Government has also initiated the abolition of a ban to mix different varieties of grains (amendments to the Order of the Ministry of Agricultural Policy #661 of 13/10/2008). Today, farmers have huge losses because of this unjustified ban. Its abolition will reduce logistical losses, increase the capacity of grain elevators and ports and, consequently, increase foreign exchange revenues to the budget. It is expected that the economic effect of this decision for the business will exceed 10 billion hryvnas by 2020.
Moreover, the Government has also improved a procedure of calculating a normative monetary value of land plots. A period to receive the information on the normative monetary value of land plots by applicants will be reduced to 1 day. A standard land lease agreement is also amended that will allow to reduce a number of lawsuits related to conflicts of laws on land lease (currently, 20 thousand per year).
The Cabinet of Ministers has also approved the rules for the development of oil and gas fields revised and adapted to modern needs that will greatly reduce the pressure from regulatory bodies and minimize corruption risks.
Also, revised license conditions for fire-fighting (reducing a number of works and services subject to licensing from 17 to 7) as well as license conditions on industrial catch of biological resources have been approved.
In addition, they decided that each ministry together with the Ministry of Justice and the State Regulatory Service (SRS) would conduct an inventory of obsolete laws and regulations and report on their abolition in a month.
It is expected that deregulation days, when packages of initiatives important for the business are considered, will be held in the Government on a regular basis.
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Source: “NV.Biznes”
How can Ukraine return the business of interregional bus services?
In recent years, our country started to reform the railway and air transportation enthusiastically. This aim is necessary and good. However, as a rule, the priorities were not so good. Hard statistics clearly show: almost a half of the market in the passenger traffic structure is the bus services. But there are problems with this sector. Therefore, they should be reformed first and foremost.
Based on the results of 2015, the railway traffic amounted to 390 million passengers a year, the aviation – just over 6 million passengers, and the bus transportation – 2.3 million. Based on the results of 2013, more than 3 billion passengers were transported by buses and in 2008 – almost 4.5 billion. It is possible that this difference “migrated” to illegal bus carriers. According to unofficial estimates, now about 5 billion passengers use bus services. Less than a half of them are legal.
The market volume exceeds 100 billion hryvnas a year.
What is wrong with a “shadow carrier”? Actually, he provides people with what they need – satisfy the demands. However, it turns out that such “satisfaction” can be dangerous.
First, some, but practically the most of shadow carriers don’t even have a license. When something happens, a carrier is not responsible to the passengers. Paying for services is carried out in cash and there are no records. It doesn’t provide any insurance fees, not to mention paying taxes.
Further, prices of our carriers reached a current European level, but the quality still remains at the African level in most cases. To my mind, most readers here will remember tattered chairs, a bus that jumps, rattles and even breaks down on the road from own experience.
However, the worst thing is that the “shadow” transportation services don’t provide any safety guarantees. There is the depressing statistics: about 60 people die in the intercity bus transportation and 700-800 – are injured every year. The reasons: busses don’t meet safety standards, drivers violate not only traffic rules, but also working hours and break time.
According to the law, the mode of work and rest is quite strict: after every 4 hours of driving, a driver should have a rest, there should be two drivers on the route, which is of more than 9 hours’ length, and the company should pay two salaries respectively. But our “shadow” carriers try to save: after more than a 4-hour trip, the driver immediately takes hold of the wheel to start his trip back, one driver is assigned to a 9-hour trip. Moreover, the drivers, who have not such a high salary, also seek additional earnings instead of trying to comply with safety requirements concerning their own health.
In order to ensure the safety, EU countries have been applying a requirement that buses should be equipped with tachographs – devices for permanent registering of the vehicle’s speed- for almost 30 years. Thus, employees of the Ukrainian Transport Inspection could check a speed mode of a bus throughout the trip. In reality, illegal drivers are riding with a speed of 130 and 150 km/h. And this creates a huge risk to the life and health of passengers.
You may ask: “Who is to blame?” The existing rules for regulation of the bus transportation market. The state artificially restricts an offer of services in the competitive segment of transportation and established low requirements on the safety of buses. But there is no price regulation. So, it turns out that the offer of services is restricted for customers, unlike their price. Thus, we have the European prices for the African quality.
There would be no problem, if the state approved itself as a smart manager. The shadow segment appears, as officials decided that there should be roughly just 10 bus trips per day on the Kyiv-Kharkiv route. In fact, they determine this number of trips based on a conditional assessment, details of which are not disclosed. And even if a carrier comes and offers to add another two trips, because the carrier sees the demand, he gets the answer: well, go at 4 o’clock in the morning. It is clear that these factors encourage the corruption – “go hat in hand to us and arrange a matter”.
In this situation, the carriers, knowing that the demand for transportation services is high and the control is minimal, offer their services bypassing the government “cashier’s office”. At the same time, this situation have had a strong lobby in the circles of officials until recently. Therefore, the attempts to introduce the European rules on the bus services market have failed.
The next point of this logical chain: how to solve the problem? Our proposal: it is necessary to radically revise the rules for the operation of bus carriers on long-distance routes first and foremost and introduce European approaches. This category includes all bus routes with a distance of over 50 km. To do this, first it is needed to refuse regulating a number of trips and introduce strict requirements to the service quality and safety standards. We should abandon the limitation of a number of trips within intercity bus services. The number of trips on the route from Kyiv to Odessa or Poltava should be determined not by an official from the Ukrainian Transport Inspection, but by the market. If 5 entrepreneurs at the same time want to carry people from Kyiv to Odesa, Poltava or Kharkiv – they are welcome. And then passengers will decide whose services they want to take advantage of, taking into account a comfortable schedule, the price-quality ratio, the availability of WiFi or some other entertainment.
It is necessary to amend the law on road transport that provides for the introduction of the European Application principle to assign to an intercity route. If a carrier, who has a license to carry passengers, wants to offer transportation services on the Kyiv-Odessa route, he shall form his schedule, decide what vehicles from his fleet he can use, send a notification to the Ukrainian Transport Inspection on what vehicles and on what schedule he will work. The Inspection should include this information to a common database. And when the carrier concluded the agreements with bus stations, he should have the right to start offering his services.
This process is not as complicated and time-consuming as it may seem. In many European countries, the bus transportation market has been overregulated until recently. For example, in Germany, the bus services market has been seriously restricted by 2012: the intercity bus transportation was not allowed if there were Deutsche Bahn trains on the route. In other words, the buses played a minor role only on routes where there was no railway communication. Starting from 2013, the German government decided to liberalize this market. This was the “daybreak” for bus services: there were a few large companies that have started not only to work in the domestic market, but also carry out international transportation operations within the EU. The passengers enjoyed the benefits of the new system very soon: the price of transportation services became lower than in the same Deutsche Bahn trains. Moreover, there is a flexible pricing system for tickets that allows to buy the tickets at different prices: if you buy in advance, you can buy them for1-2 euros, if later – the price will be higher.
Briefly instead of the summary: we should address the question of intercity bus transportation in Ukraine. And the sooner, the better. This is a matter of life and health of our citizens, the development of adequate market relations in the large field of bus transportation services. And, of course, it is a matter of stable revenues for state and local budgets.
On November 17, the Ministry of Economy and Trade together with the FORBIZ project presented the Strategy for development of small and medium-sized enterprises till 2020.
Key objectives of the Strategy are:
The Head of the Better Regulation Delivery Office Oleksiy Honcharuk moderated the panel discussion “Entrepreneurship support institutions and regulatory policy” that was held as part of the discussion “Strategy for SME development “2020”.
“There is much work to be done. It is great that we have such discussions, because the regulation created without businesses can not be effective. However, a strategy should be a strategy: in other words, it shouldn’t be limited to the general admission of problems but contain real decisions based on an existing policy,” Oleksiy Honcharuk said.
You can join the discussion of the draft Strategy by reading it on our website – e-mail us to [email protected] with “SME Strategy” in the subject line or leave your comments directly below this post on our website.
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Regulatory bodies no longer have the right to inspect the business whenever they wish. The Ministry of Economic Development and Trade has approved the Plan of Comprehensive Inspections for 2017, according to which several bodies may carry out scheduled inspections of one company within certain time limits only once a year. This information will help businesses save time and money to conduct inspections without prejudice to the normal working process.
The Better Regulation Delivery Office (BRDO) created a convenient function to search for a plan of comprehensive state supervision (control) activities that contains the information on all major inspection bodies, with the exception of the State Fiscal Service of Ukraine.
To search – click on this link:
Click on “Find information on comprehensive scheduled inspections in 2016” to view the information on comprehensive scheduled inspections in 2016.
The Ministry of Justice registered the relevant NKREKP’s resolution that amended a method for calculating costs for connecting to electric grids (160 kW – 5 MW).
From now on, there are clear criteria for specifications established for companies ordering this service and a technical specifications element to renovate networks of energy supplying organizations is excluded. The resolution will contain a simple and clear formula instead of this – the capacity specified by a customer multiplied by the connection cost rate.
The Energy Sector Head Oleksiy Orzhel said that the BRDO Office together with the MEDT and the NKREKP had promoted this initiative nearly a year, but it met with significant opposition. Therefore, the today’s registration is a significant step in reforming and simplifying the business environment.
“Energy supplying organizations have been using a concept of non-standard connection, where the cost to connect the customer’s electrical equipment was determined for each case, to connect the equipment with capacity more than 50 kW for a long time. At the same time, technical specifications to renovate networks of energy supplying organizations carried significant corruption risks. As a result, customers received unreasonable and very high connection costs in reality,” Oleksiy Orzhel commented and added that it would be very important to control establishing the rate per power unit connection when new rules to connect to electricity supply networks were adopted. Its adequate establishment is a key to the reform success.
Thus, the business can accurately estimate costs and plan future projects, in particular in case of connecting to the electrical grids.
The Kyiv City Council’s Standing Committee for budget issues and the socio-economic development approved the project of reducing a size and a new procedure for paying share contributions in Kyiv. The project provides for reducing the “investment tax” from maximum 10% to 4% for both residential and non-residential buildings. A formula to calculate the share contribution size is also changed.
The adoption of the new procedure completely defeated arguments of the same Kyiv City Council regarding the impossibility to reform an issue of paying share contributions in cities’ infrastructure. On November 15, the bastion of corruption and ineffective “manual” regulation began to show signs of serious strain. It became easier for honest and non-corrupt real estate developers to obtain the “access to the market”.
However, the compromise decision on reducing share contributions is only the first step towards the complete abolition of one of the most corrupted and uncontrolled charges for the business. It demonstrates – THE COMPLETE ABOLITION OF “INVESTMENT TAX” is not only possible, but also beneficial to the state. For this purpose, the government just needs to start thinking strategically and lay aside personal desires to “manually” regulate business charges.
Kyiv joined many cities of Ukraine, which have long started to implement reforms in this area. Local authorities become business-oriented little by little. The state should make the next step.
Lawmakers in the Verkhovna Rada of Ukraine should make their final choice – either to preserve corruption and pressure on investors or support the reforms and open the door for investments. Approving the draft law #3610 regarding the complete abolition of share contributions is an ultimate goal of the first step, which was made in the bastion preventing investments and development of the construction market!
We thank Olga Balytska for her perseverance in defending the community’s rights for reforms and hope that soon we can completely get rid of uncontrolled “investment exactions” by adopting the draft law #3610 regarding the complete abolition of share contributions.
Ukraine should adopt a state concept of sector development to develop the timber market. The head of the Agriculture Sector of the Better Regulation Delivery Office Andriy Zablotsky stated that at the round table on “Timber export: in the search of compromise”.
According to him, applying any restrictive measures towards timber exports is not reasonable without introducing the effective regulation of timber registration and trade, procedures for issuing certificates of origin and increasing the liability for violations of law.
He also noted that according to WTO rules, Ukraine could introduce other restrictive measures toward timber exports, but these measures should comply with WTO standards.
The expert stressed that a lack of effective regulation has a more distorting impact on the internal market than it would have in the case of clear game rules for the market. For example, according to the State Statistics Service, we export more timber to the European Union and less timber according to the Eurostat in terms of certain positions, and vice versa. This shows a negative impact of prohibiting timber exports without the effective regulation on the internal market.
“Ukraine should first focus on developing the internal regulation that would help to support domestic producers, and only then think about how to limit exports and for what purposes. After all, the instruments that we can apply under WTO rules have a different impact on internal market participants. And we should take it into account and calculate the consequences,” Andriy Zablotsky said.
This decision was approved at a meeting of the Ministry’s working group that was chaired by the First Deputy Minister of Agrarian Policy and Food Maksym Martynyuk.
According to the head of the Agriculture Sector of the Better Regulation Delivery Office Andriy Zablotsky, who is a member of the working group, this is evidence that we are moving step by step towards the effective regulation. For the first time in the history of country’s independence, the decisions in the context of specific markets but not papers will be analyzed during the review process. The process will be open and public, anyone who wish can join and submit own proposals.
A pilot market selected to start the process with is a wood market.
The relevant information will be published on the Ministry’s website in the nearest time.
General information:
The working group in the Ministry of Agrarian Policy and Food of Ukraine is one of five groups established at relevant ministries to implement the order of the First Vice Prime Minister of Ukraine Stepan Kubiv to conduct an objective assessment of the regulatory field, the inventory and cleaning it out in the future.
The Source: Hromadske Radio
Tetyana Troschynska: What the adoption of the draft Law on Liberalization of state supervision will change for business in Ukraine?
Oleksiy Honcharuk: The inspections will be conducted more rarely. The amount and duration of inspections will be reduced. But it is not a main achievement, as the planned inspections are not the things that the business was concerned about the most. The business was concerned about unscheduled inspections, when regulatory authorities come suddenly and try to find something.
This legislative package reduces the amount of reasons for inspections. And now it makes a main reason for regulatory authorities – at the request of an individual – more complicated. Previously, if tax service representatives wanted to inspect the enterprise urgently, it had organized that the anonymous complainant wrote some cavil and as if by this reason it had come and inspected. Now this mechanism got a filter. There is the State Regulatory Service that is independent and isolated from the ministries. To get the right to inspect the business, now it is needed to prove for an independent body that it is necessary.
The mechanism of implementation should be made as much transparent as possible. We will attract the public, the organizations of business associations, so everyone can understand that fake applications should go into the past.
The third point is the information transparency. We will create a common system to make it possible to see who will inspect, who will be inspected, observe the statistics and dynamics. We still have the Soviet system where the efficiency of inspector’s work measures by how many business entities he punished and how many penalties he imposed.
And, by the way, as this system has not been still reformed, the Verkhovna Rada decided to put a moratorium on inspections. This means that till the end of 2017 the pressure on businesses from regulatory authorities will be reduced.
Vasyl Shandro: So, regulatory authorities will not have right to come to the business unscheduled at all, will they?
Oleksiy Honcharuk: There will be four reasons. The first one is an accident, some terrible event, when it is clear for everyone that something is wrong. The second one is on the initiative of the subject. Sometimes the business needs to show his investors and counterparties that everything is okay. The third reason is at the request of an individual. As I explained, there are significant changes, and the State Regulatory Service will be the filter. Moratorium is an ambiguous decision. However, it can exist as a temporary measure, as a kind of anesthesia.
Tetyana Troschynska: Let’s say, there are many small food industry enterprises that produce sausages or creamy cakes – something that can stand too long and become stale. Won’t this moratorium lead to the situation when companies, which are not afraid of reputational losses, will feed the customers anything during the moratorium?
Oleksiy Honcharuk: The Law on Control and Supervision will cover all inspecting bodies. But the moratorium will not cover the food industry enterprises where the absence of control and supervision can lead to serious consequences. However, the activity of inspecting bodies still comes within the provisions of the law.
Tetyana Troschynska: Does the integrated inspection datebase unify the criterions upon which inspections are conducted?
Oleksiy Honcharuk: Every inspection has to determine why it exists and for which risks it is monitoring. But the integrated inspection system is a source information for citizens about who, where, how much and whom inspects. There is a quite big amount of parameters. The availability of this information allows us to analyze.
Of course, nothing will change tomorrow. We will need a few months to launch this system. The Tax Service will try to avoid the implementation of the law. But every day the dozens of young motivated people are working for its realization. If you have ideas, experience, observation – join us. Your help will be needed.
Vasyl Shandro: How will you fight against the resistance of regulatory authorities?
Oleksiy Honcharuk: It is impossible to change quickly something that has been built for years. Many things begin with the self-consciousness of the business and the decision not to give the bribes. Be strong to fight! While you’re cooperating with corrupt officials, they will always be there.
Vasyl Shandro: Is the business ready to work by fair rules?
Oleksiy Honcharuk: I must state that the business does not always trust the state. If the business understood that rules were stable, but not they work in this way now, and in another way tomorrow, it would be ready to play by them. The rules must be stable, simple and clear and executable.
The main problem in Ukraine is that Ukraine does not record its measures. Sometimes you take a resolution and don’t understand why it was adopted at all. All rules, which are being adopted, must be explained in details to the public. That is why this habit “When I want your opinion, I will rattle your cage” leads to the fact that the rules are not fulfilled.
Source: Delo.ua
The “road money” will be spent directly on roads for the first time in the history of independent Ukraine. The Parliament voted at the first reading for the draft law on making amendments to the Law “On Sources of Road Industry Financing in Ukraine” to improve the mechanism of the road sector financing. Simply said, this legislative initiative implies establishing a special State Road Fund.
There are many jokes about the deplorable state of Ukrainian roads throughout the country (actually, we make them up ourselves, but nevertheless). However, the fact remains: 97% of our roads – with overdue minor and major repairs. You can easily ride only on 3% of roads and this is just about 5,000 of 170,000 kilometers.
Nevertheless, our country has developed a destructive and wrong tactics. On the one hand, the state imposed fees on motorists in the form of the same excise duty on gasoline, cars and component parts, and on the other hand – these funds are not used for roads. Only 15-20% of them have been allocated for road financing. The rest – to the total budget revenues and they are allocated by the Ministry of Finance as it considers. This situation is strange, unfair and abusive. Most car drivers believe that they paid to the state for roads and expect that at least they should be repaired with these funds. However, the truth is that the money from the total budget are spent on anything but roads. Who and how allocates the money is another question.
Therefore, a positive point number one: when the specialized Road Fund is established, it will keep records and control existing revenue items. And the government will not be able to redirect the money of car drivers for other purposes manually.
A positive point number two: according to preliminary estimates, the establishment of the Road Fund will increase the funding of Ukrainian roads approximately by 4 times. Accordingly, the repair rates of our road network will be improved significantly. And it will be possible to really say that every citizen of Ukraine will see the better quality roads already in 4-5 years.
Today, repair works are carried out, but they are occasional. For example, it is all the same for people living in Sumy or Chernivtsi regions when the Kyiv – Poltava – Kharkiv road is renovated. However, when this Fund is established – everyone will know that there will be good roads in his region. After all, the money from it will be allocated between state and local roads.
A positive point number three: a large part of Fund’s money will be used to finance the road safety. But this is not only the quality of roadway surfacing. Our road infrastructure requires a lot of facilities it is only dreaming of now. For example, we need to build safe pedestrian crossings. The existing ones are often equipped improperly.
The quality and placement of road signs is a separate case. Even if a driver doesn’t want to break traffic rules, he can cause a car accident. After all, road signs are placed improperly, they can be seen just very close, they are “hidden” in the bushes and trees and sometimes even contradict each other.
Thus, we have a very one-sided attitude of the state toward car drivers – it just requires them to observe the safety while guaranteeing nothing in return. The Road Fund will change this situation.
However, this necessary and useful draft law was just took as a basis. MPs will consider it again and make a final decision. The Better Regulation Delivery Office was directly involved in drafting this document, so we along with all car and pedestrian community will “keep our fingers crossed”. May the roads of Ukraine will become a source of pride but not jokes.
The Verkhovna Rada adopted as a whole the draft law #3153 that provides for extending a moratorium on business inspections to December 31, 2017.
The moratorium doesn’t apply to scheduled activities of the State Veterinary and Phytosanitary Service of Ukraine regarding verifying the food quality and safety.
“The temporary moratorium on business inspections is the most controversial decision, which, however, will reduce an administrative burden on businesses for some time. In general, such moratoriums have nothing in common with the “effective regulation”. However, currently, it is an anesthesia, which is necessary to allow the business to operate normally while the inspection system is changing,” the head of the Better Regulation Delivery Office (BRDO) Oleksiy Honcharuk commented on the draft law.
According to this document, regulatory bodies carry out unplanned activities only in consultation and coordination with the State Regulatory Service, upon an enterprise’s own request on inspection, on the basis of a court decision or in case of an industrial accident until December 31, 2017.
Unscheduled inspections can be also carried out upon an individual’s request on violating his legitimate rights by a business entity. The State Regulatory Service should consider and approve such a request.
Under the law, only such bodies as the NKREKP, the State Commission for Securities and Stock Market, UKRINFORM, the State Financial Inspection and its territorial bodies, the State Service of Export Control of Ukraine, the State Nuclear Regulatory Inspectorate of Ukraine and its territorial bodies, the state air service, the NBU and the Anti-Monopoly Committee of Ukraine can be exceptions for the regulation by law.
Source: delo.ua
On November 3, the Verkhovna Rada adopted the Draft Law “On Amendments to the Law of Ukraine “On Principles of state supervision (control) in the sphere of economic activity” that had liberalized the system of state supervision (#2418a).
According to the Market Surveillance Sector Head of the Better Regulation Delivery Office (BRDO) Volodymyr Holovatenko who had participated in its development, the adoption of this draft law will improve the domestic business environment and help business entities to organize their activity with more predictable and clear regulation.
The expert also noted that an important innovation was the fact that the spheres, which the legislation had never put a focus on, fall within the scope of this regulatory act for the first time. For example, it is the state supervision in the sphere of civil aviation, compliance with nuclear security and labour legislation requirements. Volodymyr Holovatenko believes that from now on, this approach will allow creating the common rules for almost all regulatory bodies.
According to the adopted law, the periodicity of planned inspections of business entities with high risk will be decreased – such entities will be inspected biyearly.
In addition, certain public responsibility of a regulatory body will be introduced – if it doesn’t post a unified form of the act with a list of questions to inspect a business entity on its website, so it is not allowed to conduct the inspection.
An Integrated automated system of state supervision (control) will be created to systematize the inspections information.
“This is a real reformatory step in building the civilized state supervision system,” the expert stated.
The Source: “24”
Source: Delo.ua
On November, 3, the Verkhovna Rada adopted as a whole the Draft law #2418a on the liberalization of the state supervision that changes the approach to business inspections in Ukraine during its session. Law provisions look pretty friendly towards the business, significantly limiting controllers.
The draft law adopted today in the Parliament had lied too long, if we can say so. It was introduced more than a year ago, in June, 2015, and the first reading was held in November. However, the deputies could not come for a common position according the final reading of the draft law, and in April of 2016, it was passed to the second reading, although only five votes were lacking for the positive decision.
What will be changed in the inspections?
According to experts, the Law on the liberalization of state supervision is aimed primarily at reducing a business burden, offences prevention and supporting the predictability of inspections.
“To my mind, one of the most important innovations is a fact that the law covers the spheres it has never been focused on. We speak about such important spheres like compliance with the requirements of nuclear safety, compliance with labor law and employment, state supervision in civil aviation, architectural and engineering and fiscal control. So, the common rules for practically every regulatory body affecting the business will be created,” the Head of the Market Surveillance Sector of the Better Regulation Delivery Office (BRDO) Volodymyr Holovatenko stated.
However, the law will not cover the foreign currency control, customs control on the border, the state export control, the control of the budget legislation compliance, bank supervision, the control of compliance with the legislation protecting the economic competition.
Also, during the discussion of the draft law, the people’s deputy Yuriy Levchenko insisted on excluding the architectural and engineering control from the law. The Law requires inspecting the entities with high risks biennially. According to the deputy, the Law will not allow preventing the illegal constructions.
Predictability of inspections
The adopted document clearly prescribes the terms of formation of an inspection plan and the duration of every control activity, its beginning and end.
Thus, the companies and self-employed individuals that should be verified by state controllers during next year must be defined before October 15, every year. The inspection plan must be published on the Regulatory Service’s website before November 15, and the full plan of control measures for each entity must be approved and published before December 1.
As for the inspection duration, there is a step forward to the business. According to Volodymyr Holovatenko, the amount and duration of inspections are reduced twice. For example, the law did not limit earlier how many working days all control measures for one entity could summarily last during the year. After the enactment of the law, the whole amount of inspections per year must be limited by 30 working days, and 15 working days for micro and small enterprises. In addition, every measure can last till 10 work days in the future, and 5 days for micro and small enterprises.
Another innovation of the law is an obligation of a regulatory authority to publish the unified forms of acts before the inspection. And the entrepreneurs, in turn, found the possibility to refuse the controllers in the inspection if they did not perform this.
“A unified form of act is a kind of check-list, with which the controller comes to the enterprise. Earlier the regulatory authorities were not obliged to publish them, and that is why the questions, on which the business generally had the right not to answer, might appear in these check-lists. Previously, the controllers could abuse during the state supervision. Now the business will be able to refuse the inspection if the controller asks something that is not in the check-list,” the Better Regulation Delivery Office (BRDO) expert said.
As before, the control body will be obliged to inform business entities about future inspections at least 10 days prior. However, earlier, it was necessary to deliver a registered letter or a telephone message personally to a manager or an authorized person. From now on, it will be possible to inform about the inspection via email. In this case the entrepreneur reserves the possibility not to allow the controller to inspect if his visit was not preceded by a warning.
A Single Inspection Database
During the year after the enactment of the draft law, it will be necessary to create an integrated automatized inspection system. The information about legal entities and self-employed individuals, types of economic activities subjecting to state supervision, annual plans for control activities, completion reports etc. will be stored in this system. In this case, the access to the information of this system is public and free via the Internet. Ant the system will be integrated with the regulatory authorities’ databases.
The State Regulatory Service has to ensure the creating and functioning of this system and will be its owner in the future. A government enterprise under the Ministry of Justice will be a technical administrator and will be responsible for the data storage, protecting the system from unauthorized access.
Another “Goodies” for the Business
The law provides the introduction of the presumption of legitimacy of the entity. That is, if the provisions of laws or legislative acts allow the ambiguous interpretation of rights and duties of entities or the competences of the state supervision bodies, in this case the business will be right by default
In addition, the draft law prohibits establishing planned figures to bring the entities to the responsibility and applying sanctions to them. According to the people’s deputy Viktor Halasyuk, it will reduce the pressure on businesses and prevent the abuses of supervisory authorities.
According to the document, the entities with high risk level will be inspected biennially in the future. Today according to the Better Regulation Delivery Office (BRDO) expert, the most of businesses are related to the category of high risk.
The experts place emphasize on the fact that today there is the detection and confirmation of false information in the reporting documents and it is a basis for the unscheduled inspection. After the law will come into force, the entities will have a possibility to clarify the data. At the same time, the control authority will be obliged to report about noticed drawbacks. It the entity doesn’t have any time to improve the drawback, it will be inspected.
The First Vice Prime Minister, Minister of Economic Development and Trade of Ukraine Stepan Kubiv said that at the briefing devoted to the regular ease of doing business ranking “Doing Business 2017” on October 26.
“Ukraine took the 80th position in the ranking compared to the 83rd position of last year. This means plus 3 positions. We hoped for a better result,” Stepan Kubiv said and added that some implemented reforms haven’t been reflected in the ranking of that year because of peculiarities of the calculation method, however, the current Government had a settled plan to significantly improve the Ukraine’s position the following year.
Stepan Kubiv described the key changes in the ranking that have influenced the Ukraine’s position, including:
protecting minority shareholders rights (plus 18 positions);
enforcing contracts (plus 17 positions);
taxation (plus 23 positions);
registering a business (plus 10 positions);
getting electricity (plus 7 positions);
international trade (minus 6 positions).
While commenting on other issues regarding the peculiarities of this year’s Doing Business calculation for Ukraine, Stepan Kubiv said that making changes in the tax code (including the reduced Unified social tax), providing the open access to data on real estate properties, introducing a “single window” at Ukrainian customs that began to operate after the reference point for this year’s Doing Business report haven’t been considered for Ukraine because of technical peculiarities of the calculation method. Finally, the World Bank also didn’t considered for the ranking the access of notaries to real estate registers as registrars that speeds up the property registration procedures.
“However, this will be reflected in the ranking of next year,” Stepan Kubiv said. He added that despite the significant work of the Government and non-governmental organizations, most of changes should be adopted by the Parliament.
“For example, simplifying the connection to electricity supply networks should be legally regulated and can be included in the Law on Electricity Market,” Kubiv said. The First Vice Prime Minister emphasized that a number of draft laws designed to improve Ukraine’s positions in the ranking have been registered in the Verkhovna Rada, and the Ukraine’s progress in the Doing Business of 2018 largely depends on people’s deputies.
“Having analyzed these reasons, the BRDO offered to change a strategy of point changes introduced by certain draft laws,” the head of the Better Regulation Delivery Office (BRDO) Oleksiy Honcharuk explained. Instead of this, the Better Regulation Delivery Office has developed a unified draft law aimed at improving Ukraine’s positions and its implementation will provide about 35 positions in the ranking.
“This draft law covers more than 7 areas of business – starting from registration to enforcing contracts and resolving bankruptcy issues. 14 key initiatives of the unified draft law will change rules of the game significantly,” Honcharuk said.
According to him, in case if this draft law is approved, we will get simplified procedures, enhanced possibilities to communicate with the government without the participation of officials via online services and the improved access to information. Finally, this will have a significant impact on restoring the trust between businesses and the government. Oleksiy Honcharuk said that this document was currently in the process of discussion and evaluation by stakeholders.