Export matters are now among priorities of legal support that we provide to our customers.
Olha DRACHEVSKA: “Export matters are now among priorities of legal support that we provide to our customers”
“Incolanse” law firm is well-known in business circles not only in Ukraine, but also far from boarders thereof. By their persevering work since year 2013, the lawyers of this company become reliable support for both Ukrainian and foreign companies.
We managed to catch the founder and managing partner of the company, Ms. Olha DRACHEVSKA in her tight business schedule to discuss the “hottest” matters of the businessmen’s requests. To take advantage of the opportunity, we also received her comment on the Order No. 85 by the Cabinet of Ministers of Ukraine regards the procedure of value-added tax (VAT) payment, in force since February 21 of the current year.
– Olha Oleksandrivna, your staff comprises of professional lawyers, attorneys and auditors, experts in international economic activities and accounting. What business persons’ hardships are most frequently asked to be resolved nowadays?
– As we are working day by day with business, we deeply understand its needs. A lot of our customers are industrial companies of Ukraine, involved into international trade.
The matters of export are now among the priorities of legal support provided to our customers.
During the recent years, export from Ukraine is steadily growing. At the moment there are around 40 thousand of manufacturing plants in Ukraine, and they provide 70 per cent of commodity export from Ukraine. At that, the industry ensures almost 64 per cent of employment for small and medium business. Gross value added is mostly created by mining, food, metallurgical, mechanical engineering, wood processing, consumer goods and chemical branches.
Surplus of export in the year 2017 has been observed in Donetsk Region (ferrous metals and products thereof), in Vinnytsia, Cherkasy and Odesa Regions (fats and oils, prepared foods), in Lviv, Zhytomyr and Ivano-Frankivsk Regions (mechanical engineering, polymers and plastics). Ivano-Frankivsk region is successful in the spheres of mechanical engineering, polymer and plastics industry; Mykolayiv Region trades in its products of chemistry, etc.
Values of export tend to increase. Ukraine has a range of advantages. Among them – geographically convenient location, access to the Black Sea. We have quite enough manufacturing sites; our production costs are low, and the potential of mineral and raw material resources is high. Infrastructure here is developed very well (airports, sea and river ports, and highly efficient network of railway and automobile roads). Potential of population of Ukraine is also difficult to overestimate, given that many of them have university education.
– On your opinion, what is required for further development of industrial production?
– It is required not just for development, but mostly for modernization of our industry. We need targeted state support, involvement of foreign investments, efficient regulation of economy, competitive business environment, full-fledged legislative framework, access to financing, simplification of taxes, suspension or complete cancellation of VAT on manufacturing equipment, if it is imported.
– In February of this year the Procedure for VAT payment by installments and enforced fulfillment of liabilities while delivery of equipment to the customs territory of Ukraine for own production needs come in force (approved by Order of the Cabinet of Ministers of Ukraine No. 85 of February 07, 2018 for implementation of requirement of subpar. 65 of the par. 2 chapter XX of the Tax code of Ukraine. – editor’s note).
How does it help our businessmen?
– The referred paragraph 65 of the Tax code of Ukraine stipulates the temporal (till year 2020) right of a taxpayer, who imports equipment for personal use in industry production to the customs territory of Ukraine, to pay VAT by installments.
Order of the Cabinet of Ministers of Ukraine No. 85 of February 07, 2018 establishes, that to obtain the right to pay VAT by installments, the taxpayer shall provide customs office with business-project, business plan or any other document, containing technological process, financial calculations and expected results of activities. There also could be conclusions by state authorities, expert institutions or agencies, state and company standards, technical conditions, technical documentary, documents, confirming
It takes 10 working days for customs office to resolve the matter of providing such right to pay VAT in installments while importing such equipment for importer’s own industrial production into the customs territory of Ukraine; the conclusion is provided free of charge.
If the amount of VAT, declared by the taxpayer for installment, as of the date of declaration exceeds 1 mln. UAH, consideration period extends to 25 days from the day of submission, and resolution thereon shall be made by Chairperson of the State Tax Service of Ukraine.
Taxpayer, who received the Resolution, while customs clearance shall pay only the first installment, and the rest of amount shall be ensured by a performance bond (Chapter X of the Customs code of Ukraine) or bank guarantee. At that, the par. 65 of the Tax code of Ukraine establishes also, that the equipment being imported could also be provided as a security of tax obligations fulfillment.
The remained amount of tax shall be paid on monthly basis, jointly with submission of a supplement tax declaration, or VAT could be paid pre-term.
Amounts of VAT, paid considering the requirements of par. 65 of the Tax code of Ukraine, are to be included by the importer to the tax credit in that reporting (tax) period, in which the tax has been paid to budget.
In addition thereto, a taxpayer who pays VAT by installments must monthly (not later than the next working day after payment of each installment) submit a report on proper use of the equipment being imported to the authorities of the State Fiscal Service in form according to Enclosure 4 to the Procedure No. 85.
According to the State Fiscal Service of Ukraine, currently there are 5 positive decisions made on such installment plans. Although, as we can see, and also on the businessmen’s opinion, the application process is rather complicated and requires many backup documentation; at that a share of positive decisions is still pitiful.
If state support while purchase of industrial equipment and system of tax installments were really made efficient, it would be a new impulse for modernization of production plants, resulting in increased quality of Ukrainian commodity and its competitiveness on international markets. There is no need to say about interconnection of the processes: if a manufacturer increases its products’ quality to meet world standards, its own internal market shall receive the products of the same high quality. This definitely is important for all final consumers.
Thus, irrespective of the side, from which we are considering support of manufacturers, it always shall be of crucial importance for general welfare of the country.
founder, managing partner, lawyer of the law firm “Incolanse” (www.incolanse.com), advisor of a commercial bank’s Chairman of the Management board.
– Language skills or language skills of staff.
DRACHEVSKA Olha Oleksandrivna speaks Ukrainian, Russian, English and French.
Staff members of the company speak Ukrainian, Russian, English, Spain and French.
– Motto: “… I do not need a lawyer to tell me what I cannot do. I hire him to tell how to do what I want to do.” John Pierpont Morgan