Date of entry into
force:
September 27, 2014
(Abstract)
According to Article 1 of the Law, the "Crimea" free economic
zone (hereinafter referred to as "Crimea" FEZ) is implemented within
the boundaries of two administrative territorial units of Ukraine: the
Autonomous Republic of Crimea and the city of Sevastopol. The administrative
border between the territory of "Crimea" FEZ and the rest of the
territory of Ukraine coincides with the land administrative border between the
Autonomous Republic of Crimea and the Kherson region.
"Crimea" FEZ is implemented for a term of ten full calendar
years, starting from the day of entry of this Law into force. The term of
"Crimea" FEZ can be extended or shortened by a law of Ukraine.
Functioning of "Crimea" FEZ during the regime of temporary occupation
of its territory is carried out with regard to the specifics determined by
Section II "Transitional Provisions" of the Law. Termination of the
temporary occupation regime does not constitute grounds to terminate
"Crimea" FEZ (Article 2 of the Law).
Article 3 of the Law establishes that the territory of "Crimea"
FEZ employs a special legal regime for economic activity of natural persons and
legal entities, including a special procedure for applying the norms of
regulatory, tax, and customs legislation of Ukraine, and a special regime for
internal and external migration of natural persons.
The authority for economic development and management of "Crimea"
FEZ is the Managing Company of "Crimea" FEZ (hereinafter referred to
as "Managing Company"), which is a legal entity held in state
ownership. During the term of "Crimea" FEZ, the Managing Company
cannot be corporatized or privatized. The functions and competence of the
Managing Company, and the procedure for control over its activity are
determined by the Cabinet of Ministers of Ukraine (Article 4 of the Law).
Article 5 of the Law envisages, in particular, the following specifics of
levying taxes on the territory of "Crimea" FEZ:
·
national taxes and
fees determined by Article 9 of the Tax Code of Ukraine, and the contribution
to mandatory state pension insurance provided for by the Law of Ukraine
"On Contribution to Mandatory State Insurance" are not levied on the
territory of "Crimea" FEZ;
·
a natural person
whose tax address (place of residence) is located on the territory of
"Crimea" FEZ or a legal entity (segregated unit) whose tax address
(location) is on the territory of "Crimea" FEZ, is treated as a
non-resident for the purposes of taxation. A natural person whose tax address
(place of residence) is located on other territory of Ukraine, or a legal
entity (segregated unit) whose tax address (location) is on other territory of
Ukraine, is treated as a resident for the purposes of taxation;
·
any income
originating from the territory of "Crimea" FEZ received by a person
treated as a resident under this Law is subject to taxation as foreign income,
according to the general rules established by the Tax Code of Ukraine;
·
incomes of hired
employees whose permanent place of residence is located on the territory of
"Crimea" FEZ in the form of salaries and other similar payments and
compensations paid by an employer located on other territory of Ukraine, are
taxed according to the general rules at the location of such employer;
·
local taxes and
fees determined by Article 10 of the Tax Code of Ukraine can be levied on the
territory of "Crimea" FEZ.
Specifics of supplying goods to (from) the territory of "Crimea"
FEZ are determined by Article 6 of the Law.
Article 7 of the Law establishes the procedure for natural persons crossing
the administrative border of "Crimea" FEZ.
Ukraine guarantees protection of property and non-property rights of
natural persons and legal entities on the territory of "Crimea" FEZ
according to the laws of Ukraine, including relating to protection of foreign
investments. State guarantees are not provided for internal and external local
debts (loans) of the Autonomous Republic of Crimea and the city of Sevastopol,
as well as persons located (residing, temporarily residing) on those
territories. The procedure for payment (write-off, sale) of a debt of the
Autonomous Republic of Crimea and the city of Sevastopol, or of persons located
on those territories, which was previously guaranteed by the state, in the part
remaining unpaid as of the day the Law takes effect, is established by the
Cabinet of Ministers of Ukraine. Natural persons who reside (temporarily
reside) on the territory of "Crimea" FEZ and hold a foreign citizenship,
or are stateless persons, are not eligible for state guarantees (preferences,
assistance) established by Laws of Ukraine "On State Guarantees of
Restoring Savings of People of Ukraine", "On State Support of
Families with Children", and other Laws of Ukraine (Article 8 of the Law).
According to Article 9 of the Law, the territory of "Crimea" FEZ
can use a multi-currency regime, under which hryvnya, as well as foreign
currencies included by the National Bank of Ukraine in groups 1 and 2 of the
Classifier of Foreign Currencies and Banking Metals, can be used to pay the
cost of goods (works, services) sold (provided) within "Crimea" FEZ.
Any non-cash transactions (transfer) from the territory of "Crimea"
FEZ to other territory of Ukraine, or from other territory of Ukraine to the
territory of "Crimea" FEZ, are done exclusively in hryvnya or a hard
currency. The specifics of such payments (transfers) are established by the
National Bank of Ukraine. The norms of the Law of Ukraine "On Payment
Systems and Transfer of Funds in Ukraine" apply to the territory of
"Crimea" FEZ, with regard to the following:
·
electronic payment
methods issued on the territory of "Crimea" FEZ, including as a
mobile payment instrument, cannot be used on other territory of Ukraine to
initiate any monetary transfer;
·
electronic payment
methods issued by a national payment system or international payment systems
can be used on the territory of "Crimea" FEZ.
Business entities located (residing) on the territory of "Crimea"
FEZ can acquire the status of participants, preliminary qualification
participants, or performers, and goods (works, services) originating from the
territory of "Crimea" FEZ can be the object of government procurement
on general terms, according to the Law of Ukraine "On Government
Procurement", carried out at the expense of the state or local budgets.
Laws of Ukraine "On Protection Against Unfair Competition" and
"On Protection of Economic Competition" apply to relations arising
between business entities located on the territory of "Crimea" FEZ
and business entities located on other territory of Ukraine. Licenses issued to
business entities before this Law took effect, according to the Law of Ukraine
"On Licensing of Certain Types of Economic Activity", the Law of
Ukraine "On the Radio Frequency Resource of Ukraine", and/or
certificates issued according to the Decree of the Cabinet of Ministers of
Ukraine "On Standardization and Certification", and/or permits
granted according to the Law of Ukraine "On the Permit System in the
Sphere of Economic Activity" remain valid on the territory of
"Crimea" FEZ until the term of validity of such licenses,
certificates and permits expires (Article 10 of the Law).
Specifics of labor
relations on the territory of the "Crimea" free economic zone are
provided for by Article 11 of the Law.
Article 12 of the Law
establishes specifics of functioning of the "Crimea" free economic
zone during its temporary occupation.
According to Article 13
of the Law, objects of law in private, state, and municipal property located
(positioned) on the temporarily occupied territory of Ukraine remain in the
ownership of persons who held such objects in ownership (use) at the beginning
of temporary occupation. During the term of temporary occupation:
·
transfer of the private property right to objects located (positioned) on
the temporarily occupied territory of Ukraine is subject to registration on
other territory of Ukraine, according to the rules established by the
legislation of Ukraine;
·
privatization of state and municipal property objects is carried out
according to the Law of Ukraine "On State Property Privatization" and
the legislation of Ukraine on municipal property privatization;
·
any legal relations in respect of lands located (positioned) on the
temporarily occupied territory of Ukraine are carried out according to the
rules established by the Land Code of Ukraine and other legislation of Ukraine
on alienation (sale, lease) of land on the territory of Ukraine.
An internally displaced
person is a person who meets the definition of the Charter of the Office of the
United Nations Higher Commissioner for Refugees and who, at the beginning of
temporary occupation, was residing or temporarily residing on the territory of
the Autonomous Republic of Crimea or the city of Sevastopol (Article 14 of the
Law). An internally displaced person who is deported (forcibly moved, sent)
outside of the temporarily occupied territory of Ukraine or cannot return to
the place of its residence or temporary residence by decision of appropriate
authorities of the occupant state:
·
shall receive a one-time subsidy consisting of compensation of factually
incurred expenses on evacuation from the temporarily occupied territory of
Ukraine, and funds for initial settlement. The procedure for calculation of
such subsidy, its composition and terms of provision are determined by the
Cabinet of Ministers of Ukraine;
·
shall be entitled to free enrolment (education) in preschool and secondary
educational institutions on other territory of Ukraine. The procedure for such
enrolment (education) is determined by the central executive authority that
provides for creation of state policy in the sphere of education;
·
shall be exempt from payment for dormitory in case of entering a higher
educational institution, a postgraduate training program or a doctoral program
on other territory of Ukraine;
·
shall be registered with appropriate health care institutions and receive
free medical aid and medical service;
·
shall be affected by the norms of the legislation of Ukraine on the legal
status of persons who were forced to leave their residence due to temporary
occupation of the Autonomous Republic of Crimea and the city of Sevastopol.
According to Article 15
of the Law, any legal entity – resident of Ukraine that changes (has changed)
its location from the temporarily occupied territory to other territory of
Ukraine:
·
shall be written off the tax debt and amounts of spread (deferred) monetary
liabilities for any taxes (fees, mandatory payments) that arose starting from
the time of temporary occupation;
·
shall be exempt from any taxation (including under Article 271 of the
Customs Code of Ukraine) of fixed assets and low value assets that are owned by
legal entities who move their place of business from the temporarily occupied
territory to other territory of Ukraine and transported for further use in
economic activity, provided that such fixed assets were listed on the company's
balance as of January 1, 2014, in free circulation on the territory of Ukraine;
·
shall be allowed to include the following in corporate income tax
deductible expenses: 1) duly confirmed expenses incurred in relation to
evacuation of fixed assets and stocks from the temporarily occupied territory
to other territory of Ukraine; 2) 100% of depreciation of fixed assets that are
being evacuated from the temporarily occupied territory of Ukraine and
commissioned on other territory of Ukraine.
On the temporarily
occupied territory of Ukraine, rights to securities and rights under securities
of issuers are protected and recorded according to the legislation of Ukraine,
with regard to the following:
·
acquisition and termination of rights to securities and rights under
securities on the temporarily occupied territory of Ukraine, as well as their
encumbrance with liabilities or restriction of circulation are subject to
registration on other territory of Ukraine, according to the procedure
established by the National Securities and Stock Market Commission;
·
depositary institutions registered on the temporarily occupied territory of
Ukraine are obligated to undergo the simplified re-registration procedure on
other territory of Ukraine, according to the procedure and terms established by
the National Securities and Stock Market Commission. The license of a
depositary institution that did not undergo such simplified re-registration
procedure in the specified term is considered withdrawn;
·
transfer of securities and/or rights to securities or rights under
securities, if the beneficiary is a person located or registered on the
temporarily occupied territory of Ukraine, shall be carried out after full
payment of such securities;
·
specifics of circulation of securities, depositary activity and activity of
security issuers located on the temporarily occupied territory of Ukraine are
determined by the National Securities and Stock Market Commission.
During temporary
occupation:
·
the National Securities and Stock Market Commission shall have the right to
suspend amendment of the depositary accounting system in respect of securities
of issuers registered on the temporarily occupied territory of Ukraine, or in
respect of owners of securities subject to depositary accounting by depositary
institutions on the temporarily occupied territory of Ukraine, in particular,
in case of violations of the norms of this Law;
·
holding general meetings of shareholders and owners of corporate interest,
or other meetings of management bodies of joint stock companies and other
business associations, shall be forbidden on the temporarily occupied territory
of Ukraine;
·
payments under legal documents related to securities (transfer of
securities and/or rights to securities, or rights under securities), if the
beneficiary is a person located (positioned) on the temporarily occupied
territory of Ukraine, shall be carried out on the delivery versus payment
principle, as provided in Article 1, paragraph 18 of the Law of Ukraine "On
the Depositary System of Ukraine".
Any activity of state
lottery operators is forbidden on the temporarily occupied territory of
Ukraine. If a person is affected by the law on sanctions, such person shall be
deprived of their license to issue and hold lotteries.
The Law provides that
the Law of Ukraine "On the Special Investment Activity Regime on Priority
Development Territories, and "Port Crimea" Special Economic Zone in
the Autonomous Republic of Crimea" shall be declared null and void.
The Law also introduces
appropriate amendments to:
·
Section VI "Final and Transitional Provisions" of the Budget Code
of Ukraine;
·
Section XX, subsection 10 "Final and Transitional Provisions" of
the Tax Code of Ukraine;
·
Section XXI "Final and Transitional Provisions" of the Customs
Code of Ukraine;
·
Paragraph 1, Section II "Final and Transitional Provisions" of
the Law of Ukraine "On Ensuring Civil Rights and Freedoms, and the Legal
Regime on the Temporarily Occupied Territory of Ukraine";
·
Article 5, paragraph 4, sub-paragraph "d" of the Decree of the
Cabinet of Ministers of Ukraine "On the Currency Regulation and Currency
Control System";
·
Article 11, part 1 of the Law of Ukraine "On Chambers of Commerce in
Ukraine";
·
Article 8, part 1, and Article 13, part 5 of the Law of Ukraine "On
State Lotteries in Ukraine";
·
Section VIII "Final and Transitional Provisions" of the Law of
Ukraine "On Collection and Registration of the Single Contribution for
Mandatory State Social Insurance".
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