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On 17 March 2020, the Verkhovna Rada of Ukraine adopted a number of laws aimed at preventing the onset and spread of coronavirus disease (COVID-19) in Ukraine.

Among them, Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding Taxpayers Support During the Period of Measures Aimed at Preventing the Onset and Spread of Coronavirus Disease (COVID-19)” No. 533-IX and Law of Ukraine “On Amendments to the Laws of Ukraine Aimed at Preventing the Onset and Spread of Coronavirus Disease (COVID-19)” No. 530-IX (the “COVID-19 Prevention Laws”).

Labour legislation

Employees may work remotely to the extent possible. Subject to their consent, they may use an unpaid leave for a period exceeding 15 working days per year.

Employers may change the working schedule (particularly, in relation to consumer services) subject to prior notification via websites or other communication means.

The COVID-19 Prevention Laws do not establish rules on the forced suspension of work (idle time). Thus, same as before, if the idle time occurred through no fault of an employee, the employer is obliged to pay the employee at least two-thirds of his/her salary.

Commercial issues

The imposition of the quarantine by the Cabinet of Ministers of Ukraine constitutes a force majeure event. In addition, the imposition of the quarantine may serve as a ground for suspension of the statute of limitations (if the plaintiff proves the impossibility to file a lawsuit for that reason).

Starting from the day of the quarantine announcement, the time limits for administrative services provision are suspended (in particular, the time limits for consideration of applications on the relevant permits or licenses).

Tax and customs

  • Medicines and medical products purchased to combat COVID-19 (according to the list defined by the Cabinet of Ministers of Ukraine) are exempt from import duties and VAT.
  • Fines for violation of tax legislation committed from 1 March 2020 to 31 May 2020 will not be imposed. However, the following actions will be subject to a fine:

– breach of the requirements on certain types of insurance agreements;
– alienation of property under the tax lien without the consent of controlling authorities;
– breach of accounting rules, rules of production and circulation of fuel and ethyl alcohol within excise warehouses, which are applied on a common basis; and
– breach of assessment, declaring and payment of VAT, excise tax, and rental payment.

  • Taxpayers are not subject to late payment interest for the period from 1 March 2020 to 31 May 2020. The accrued but unpaid late payment interest will be written-off.
  • Documentary and factual tax audits are under a moratorium (i) with respect to taxation for the period from 18 March 2020 to 31 May 2020, and (ii) with respect to payment of the unified social contribution for the period from 18 March 2020 to 18 May 2020. However, the moratorium does not cover unscheduled documentary audits with respect to the claimed VAT refund.
  • The period for filling of tax returns on personal income tax is extended until 1 July 2020 (instead of 1 May 2020). An individual must pay the declared amount until 1 October 2020 (instead of 1 August 2020).
  • The land tax is not accrued and is not paid for the period from 1 March to 30 April 2020 for the land plots used in the commercial activity.
  • Non-residential property is not subject to real estate tax for the period from 1 March to 30 April 2020.
  • The mandatory use of cash registers for the unified tax payers of II-IV groups is postponed for three months (i.e. until 1 January 2021).

Liability for violation of the quarantine measures

The following types of liability may be imposed for violation of the quarantine measures:

  • administrative liability in the form of a fine; and
  • criminal liability in the form of a fine, arrest, personal restraint or imprisonment depending on the offence gravity and its consequences.

The COVID-19 Prevention Laws have already been signed by the President of Ukraine and entered into force.

We will be happy to provide you with a more detailed analysis on the business organisation strategy during the quarantine period and measures aimed to mitigate negative effects. If necessary, we are ready to arrange a call in the near future to discuss further steps.

Posted on March 18, 2020

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