Businesspeople in Ukraine have long dreamt of a stable environment with low bureaucracy, reasonable taxes and no harassment from government agencies. This year was an attempt to bring reality closer to the dream. But not every law helped Ukraine’s economy, and some hurt it. Here are five big changes:
- Protection from illegal raids
President Petro Poroshenko on Dec. 1 signed a law known as the “Stop mask show law,” meant to protect businesses from illegal raids by law enforcement agencies. The law will require investigators to video record their actions and allows those being searched to also record.
Lawyers must be present at the scene, and law enforcers are not allowed to seize original documents or hardware.
- Land moratorium
One of Ukraine’s big failures is the continuing extension of the ban on agricultural land sales for another year. The ban limits farmers and agricultural businesses to access foreign investment and financing from banks since land cannot be used as collateral. Ukraine has 42 million hectares of agricultural land, more than anywhere in Europe, but its rent prices on plots and land productivity are the lowest. Reluctance to open the land market is costing Ukraine up to $50 billion in lost investment by some estimates.
The failure to lift the ban and fulfill other commitments such as the creation of an anti-corruption court left Ukraine without another $1 billion tranche from the International Monetary Fund’s $17.5 billion loan program.
So far Ukraine has received $8.4 billion.
- Oilseed VAT refund
A controversial law with a large number of amendments to the tax code was passed on Dec. 7.
One of the changes cancelled the value-added tax refund for soybean, rapeseed and sunflower exports starting in March. Domestic agricultural producers oppose the law.
- No stamps
On July 19, a law came into force that abolishes obligatory stamps for businesses and individual entrepreneurs. This was greeted by the business community as a step towards deregulation.
Now documents are considered legally valid simply with the signature of an authorized person.
- Employment of foreigners
A law came into force on Sept. 27 that simplifies the rules for employment of foreigners. Those who invest at least 100,000 euros into Ukrainian businesses have the right to get a temporary residency permit without the need to be employed.
It also offers a perk to company owners and shareholders offering a work permit for three years instead of one. Paperwork for hiring foreigners was reduced, but the financial burden increased. The new law introduced a minimum salary requirement for foreigners, 5–10 times higher than that for Ukrainians, a measure designed to reduce tax evasion.
