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Taxes, Regulatory Affairs, Health Care, Customs, Dairy

24/ 12/ 2012
  On 12 December 2012 the following Draft Laws were withdrawn from the Verkhovna Rada of Ukraine in line with the Parliament’s Regalement: The Draft Law of Ukraine On Amendments to the Tax Code of Ukraine on Implementation of an Additional Levy from Producers and Importers of Packages and Goods in Packages for the Recycle of Hard Domestic Waste Development No 11402 dated 6 November 2012 concerning the introduction of the levy on producers and importers of packages and goods in packages. The suggested amendments might lead to the double taxation, because, on the one hand, producers and importers of packaging are the payers of such levy, and on the other hand - producers and importers of packed goods also are the payers; leave away a significant rise of production costs of relevant goods that would become a burden on the shoulders of the end consumers. The Association emphasized that instead of the introduction of such a levy, it is necessary to develop an effective system of waste management, foster the waste reduction as well as recycle thereof. Draft Law “On Internal Trade” No 9443  dated 10 November 2011, which contained the number of controversial provisions that virtually would prevent the well-balanced and competitive environment for internal trade in Ukraine and would create difficulties for the functioning of the range of economic sectors. Having analysed Draft’s provisions the EBA drew attention of its authors to the fact that if adopted in its proposed version, the Draft Law will stifle the rules of fair play on the market. Importantly, some provisions of the Draft Law go in sharp controversy with the statutory documents, which regulate contractual relations between the suppliers and retail chains, alcohol and tobacco trading etc. Moreover, the rules for new trading units’ management are heavily regulated. With this in mind, the EBA called for the consideration of business community’s proposals which have been developed jointly by key retail sector companies and industrial unions. If duly taken into account, the proposals could help sustain equal competitiveness on the retail market and promote transparent and predictable regulatory environment. EBA’s position was voiced many times during the meetings, round tables, working groups, in position papers and letters. The Draft Law “On Amending Certain Laws of Ukraine To Abolish Advertisement of Medicinal Products” No 10653 dated 5 June 2012, enacted the amendments to the Article 21 of the Ukraine’s Law “On the Advertisement” that would completely abolish any advertisement/promotion of medicinal products for the public in Ukraine.  The EBA appealed to the state authorities to pay their attention on the international experience which shows that no prohibition is being applied to the advertisement of the over-the-counter (OTC) products with any constraints applicable in the majority of EU countries. Draft Law On Amendments to the Law of Ukraine On Customs Tariff of Ukraine (regarding import duties on tires)” No 10624 dated 15 June 2012, which aimed to increase tariff protection for domestic producers by increasing import duties on various categories of tires 7% to 10% and from 10% to 15% respectively. However, these suggested rates exceed the maximum level of import duties defined by Ukraines commitments to the WTO. According to Article II of the General Agreement on Tariffs and Trade 1994, the WTO country-members actually agree not to impose import duty rate that would exceed the specified levels. In addition, the measures proposed by legislator did not meet the long-term interests of Ukraine and could have rather negative effect: increasing the price of foreign tires, worsening the competition environment, increasing gray import into the country, which would flood the market with uncontrolled commodities that threatens the safety of final consumer, etc. Draft Law “On Amendments to the Law of Ukraine “On Milk and Dairy Goods” and Other Legislative Acts regarding Strengthening Measures against Falsifications of Dairy Goods” No 11177 as of 5 September 2012. One of the provisions of the draft envisaged that with the aim of providing the social guarantees to the population and in order to prevent monopoly abuses in the area of milk price formation, the Cabinet of Ministers of Ukraine has the right to establish minimal level of purchasing prices for raw milk for certain periods of the calendar year, following the appeal of the central state body on the issues of agrarian policy. This contradicts with the principles of market price formation, WTO norms, and provisions of the Law “On Prices and Price Formation” and the Programme of economic reforms of the President of Ukraine for 2010-2014 which, in particular, says about refusal from the administrative involvement into the process of prices formation for agricultural products. We express our sincere gratitude to EBA member-companies that were involved in the process of the aforesaid Draft Laws withdrawal, as well as to the state officials who supported our position. The Association will continue to addvocate the interests of its members as well as to facilitate the introduction and implementation of relevant reforms to assure business growth in Ukraine.

On 12 December 2012 the following Draft Laws were withdrawn from the Verkhovna Rada of Ukraine in line with the Parliament’s Regalement:

The Draft Law of Ukraine “On Amendments to the Tax Code of Ukraine on Implementation of an Additional Levy from Producers and Importers of Packages and Goods in Packages for the Recycle of Hard Domestic Waste Development” No 11402 dated 6 November 2012 concerning the introduction of the levy on producers and importers of packages and goods in packages.

The suggested amendments might lead to the double taxation, because, on the one hand, producers and importers of packaging are the payers of such levy, and on the other hand – producers and importers of packed goods also are the payers; leave away a significant rise of production costs of relevant goods that would become a burden on the shoulders of the end consumers. The Association emphasized that instead of the introduction of such a levy, it is necessary to develop an effective system of waste management, foster the waste reduction as well as recycle thereof.

Draft Law “On Internal Trade” No 9443  dated 10 November 2011, which contained the number of controversial provisions that virtually would prevent the well-balanced and competitive environment for internal trade in Ukraine and would create difficulties for the functioning of the range of economic sectors.

Having analysed Draft’s provisions the EBA drew attention of its authors to the fact that if adopted in its proposed version, the Draft Law will stifle the rules of fair play on the market. Importantly, some provisions of the Draft Law go in sharp controversy with the statutory documents, which regulate contractual relations between the suppliers and retail chains, alcohol and tobacco trading etc. Moreover, the rules for new trading units’ management are heavily regulated. With this in mind, the EBA called for the consideration of business community’s proposals which have been developed jointly by key retail sector companies and industrial unions. If duly taken into account, the proposals could help sustain equal competitiveness on the retail market and promote transparent and predictable regulatory environment. EBA’s position was voiced many times during the meetings, round tables, working groups, in position papers and letters.

The Draft Law “On Amending Certain Laws of Ukraine To Abolish Advertisement of Medicinal Products” No 10653 dated 5 June 2012, enacted the amendments to the Article 21 of the Ukraine’s Law “On the Advertisement” that would completely abolish any advertisement/promotion of medicinal products for the public in Ukraine.  The EBA appealed to the state authorities to pay their attention on the international experience which shows that no prohibition is being applied to the advertisement of the over-the-counter (OTC) products with any constraints applicable in the majority of EU countries.

Draft Law “On Amendments to the Law of Ukraine” On Customs Tariff of Ukraine “(regarding import duties on tires)” No 10624 dated 15 June 2012, which aimed to increase tariff protection for domestic producers by increasing import duties on various categories of tires 7% to 10% and from 10% to 15% respectively. However, these suggested rates exceed the maximum level of import duties defined by Ukraine’s commitments to the WTO. According to Article II of the General Agreement on Tariffs and Trade 1994, the WTO country-members actually agree not to impose import duty rate that would exceed the specified levels. In addition, the measures proposed by legislator did not meet the long-term interests of Ukraine and could have rather negative effect: increasing the price of foreign tires, worsening the competition environment, increasing “gray” import into the country, which would flood the market with uncontrolled commodities that threatens the safety of final consumer, etc.

Draft Law “On Amendments to the Law of Ukraine “On Milk and Dairy Goods” and Other Legislative Acts regarding Strengthening Measures against Falsifications of Dairy Goods” No 11177 as of 5 September 2012. One of the provisions of the draft envisaged that with the aim of providing the social guarantees to the population and in order to prevent monopoly abuses in the area of milk price formation, the Cabinet of Ministers of Ukraine has the right to establish minimal level of purchasing prices for raw milk for certain periods of the calendar year, following the appeal of the central state body on the issues of agrarian policy. This contradicts with the principles of market price formation, WTO norms, and provisions of the Law “On Prices and Price Formation” and the Programme of economic reforms of the President of Ukraine for 2010-2014 which, in particular, says about refusal from the administrative involvement into the process of prices formation for agricultural products.

We express our sincere gratitude to EBA member-companies that were involved in the process of the aforesaid Draft Laws withdrawal, as well as to the state officials who supported our position. The Association will continue to addvocate the interests of its members as well as to facilitate the introduction and implementation of relevant reforms to assure business growth in Ukraine.

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