On March 11, 2020, the Cabinet of Ministers of Ukraine (CMU) adopted Regulation No. 211 introducing a period of national quarantine from March 12, 2020, to April 3, 2020, (National Quarantine).
Following this, on March 17, 2020, the Ukrainian Parliament adopted Law No. 530 (Draft Law No. 3219) and Law No. 533 (Draft Law No. 3220) (Laws).
Law No. 530 came into effect on March 17, 2020, and Law No. 533 on 18 March, 2020. The Laws introduce a number of measures related to spread of coronavirus COVID-19 and National Quarantine. The most important of those measures are highlighted below.
Importation of pharmaceuticals and medical equipment
- Importation of pharmaceuticals, medical products and equipment (the list is to be further approved by the CMU) required for combating coronavirus COVID-19 is exempt from import VAT and customs duties for three consecutive months.
- Customs clearance of such items is prioritized.
Payment for land and property tax
- In the period from March 1, 2020, to April 30, 2020, payment for land (including land tax and land lease payment) is not to be accrued and paid, but only for land plots used for business activity.
- Similarly, in the same period, non-residential real estate owned by individuals and/or legal persons is not subject to property tax.
Unified Social Security Contribution (USSC)
- Payment of USSC is optional for March and April of 2020 in relation to certain categories of USSC payers, such as private entrepreneurs, people engaged in independent professional activity and farm members. This option is not available to employers paying USSC on behalf of their employees.
Fines for tax violations and USSC violations
- No fines will apply for tax violations committed in the period from March 1, 2020, to May 31, 2020, except for certain categories of violations.
- Similarly, fines for some USSC violations committed in the period from March 1, 2020, to April 30, 2020, will not apply (in particular for failure to pay USSC and submit USSC reporting timely and for some others).
- No late payment interest will apply to: (i) taxpayers for the period from March 1, 2020, to May 31, 2020, and (ii) USSC payers for the period from March 1, 2020, to April 30, 2020.
Annual personal income tax returns
- The deadline for submission of annual personal income tax return for 2019 is extended until July 1, 2020, except in certain cases provided by the Tax Code.
- The deadline for payment of tax obligations under annual personal income tax return for 2019 is extended until October 1, 2020.
- The Laws provide for the possibility to agree unlimited unpaid leave of absence with personnel until National quarantine ends.
- During the period of National Quarantine or the period of the restrictive measures (that might be established by the Commissions on Technogenic-Environmental Safety and Emergency Situations):
- Employers may send employees to work from home; and annual or other social vacation (as may be relevant to specific employees) can be provided beyond the schedule.
- Employers may change employees' work schedules due to the change in way of working.
- Release from administrative liability of foreign individuals who failed to leave Ukraine or prolong a term of stay in Ukraine and/or failed to change a temporary / permanent residency permit due to National Quarantine.
Ban on foreclosure of mortgaged property
- The CMU will develop and submit to the Ukrainian Parliament a draft law on suspension of performance of the obligations secured by mortgage and on prohibition of foreclosure of mortgaged property.
- Debtors, for the period of National Quarantine (up to April 3, 2020), will be released from performance of secured obligations.
- It will be prohibited for creditors to foreclose mortgage property during the period of National Quarantine.
Force majeure and impact on real estate market
- National Quarantine is recognized as a force majeure event.
- Tenants that were obliged to close their business due to the ban on working in public spaces (shopping malls, restaurants, cinemas, etc.) introduced by the CMU as of March 17, 2020, will most likely request to suspend rent payments until the end of National Quarantine.
- There will be delays in delivery under contractor agreements, as contractors may provide vacation for construction workers due to safety reasons and restrictions on transportation.
- Putting the completed objects into operation may be postponed until the end of National Quarantine since providing administrative services is suspended.
- Completion of real estate transactions (e.g. sale and purchase agreements, long-term lease agreements) can be delayed until the end of National Quarantine.
Restriction of remedies for utilities providers during the National Quarantine
- There is a ban on applying fines for non-payment or late payment for provided utilities services.
- Suspension of providing utilities services in case of non-payments or late payments is prohibited.
- There is a ban on eviction of citizens from their housing (including state and municipal social housing) and foreclosure of such housing to cover debts for provided utilities.
Administrative liability introduced for violation of health regulations for control of infectious diseases
- Law No. 530 introduces administrative liability for violation of quarantine, sanitary, hygiene, and epidemiological rules and regulations. It also covers cases of violating decisions enacted by local self-government authorities to control the spread of infectious diseases.
- Individuals found in violation of these disease control and prevention rules and regulations are subject to an administrative fine of UAH17,000 to UAH34,000 (USD630 to USD1,250).
- If a violation in this area is committed by an official (holding office in a private or government entity), they face an increased fine of UAH34,000 to UAH170,000 (USD1,250 to USD6,300).
- The fine is applied irrespective of whether actions of the person at fault led to any adverse effects for others.
Administrative liability introduced for failure to release public information on coronavirus COVID-19 control and prevention procurements
- If where public procurements are undertaken with the aim of coronavirus COVID-19 control and prevention, administrative liability is introduced for failure to release information on these procurements to the public. Failure to follow the proper procedure for disclosure of such information is also now punishable.
- The administrative fine for these types of offenses is UAH11,900 to UAH25,500 (USD440 to USD950).
Increased criminal liability
- Violation of rules and regulations on prevention of infectious diseases that led, or could have led, to further spread of the disease was already a criminal offense under the laws of Ukraine. Now, however, a person convicted of this crime faces a more severe punishment.
- Where a fine is applied against the perpetrator, the penalty is increased from UAH1,700 (USD64) to a between UAH17,000 and UAH51,000 (USD640 to USD1,920).
- The conviction may also include imprisonment of up to three years. In severe cases, where actions of the convicted person caused loss of life or other serious consequences, the punishment is imprisonment of a minimum five and up to eight years.
- Note that the criminal law does not stipulate the applicable rules and regulations on prevention of infectious diseases that should be adhered to. These rules are established by other primary and secondary legislation, including acts of the CMU and local authorities. As an example, the CMU established National Quarantine. It further ordered that starting on March 17, 2020, restaurants, cafes, shopping and entertainment centers, other entertainment facilities, fitness centers and cultural establishments, should temporarily suspend their work. If a specific business continues operations, and it is further established that this failure to follow the government-imposed quarantine regime led (or could have led) to the spread of coronavirus COVID-19, then officials of this company could face charges under this article.
Extension of terms
- From the date of announcement of National Quarantine (March 12, 2020) and until it ends (expected on April 3, 2020) the terms set by the legislation for applying for administrative and other services are suspended; the terms for providing such services by state authorities are also suspended. Administrative services include state registration of entities, property rights and incumbrances, state expertise, and issuance of special permits.
Planned inspections of business by state authorities
- During National Quarantine, the planned control and supervision of business activities by the state authorities (including the State Labour Service of Ukraine) are prohibited.
- There is a ban on documentary and actual tax audits for the period from March 1, 2020 to May 31, 2020, except for certain unscheduled documentary tax audits regarding VAT matters.
- Documentary tax audits scheduled for the period from March 18, 2020, and May 31, 2020, but which have not commenced as of the date of publication of Law No. 533, will be rescheduled.
- Documentary and actual tax audits which were commenced before March 18, 2020, but that have not been finished are suspended until May 31, 2020.
- Running of the limitation period under Article 102 of the Tax Code (i.e. during which tax authorities can assess tax obligations to taxpayers) is suspended until May 31, 2020.
- There is a ban on documentary USSC audits for the period from March 18, 2020, to May 18, 2020.
- Documentary USSC audits which were commenced before March 18, 2020, but that have not been finished are suspended until May 18, 2020.
Introduction of simplified procedures
- The Law of Ukraine On Public Procurement regulating public procurement in almost all spheres will not apply to the procurement of goods, works or services necessary for the implementation of measures against coronavirus COVID-19.
- The CMU will approve the list of such goods, works and services and the relevant procurement procedures.
- Procuring entities may exercise full pre-payment for such goods, works or services.
- Procuring entities must publish reports on procurement, procurement agreements and reports on execution of such agreements.
- The CMU will ensure control over the price of medicines, medical supplies and socially significant goods (e.g. bread, grains, meat, dairy products, etc.).
- The mandatory requirement to introduce cash registers for taxpayers applying the simplified system of taxation is postponed from October 1, 2020, to January 1, 2021.
- The deadline for filling an anti-corruption declaration by persons who have this obligation has been moved from April 1, 2020, to June 1, 2020.
- Declarants who were unable to file a declaration due to the restrictive quarantine measures until June 1, 2020, are released from liability for failing to meet the deadline.