Ukraine's poorly tailored legislation is not serving the needs of the business community, lawyers believe, and they expect the new Verkhovna Rada to change how legal norms work in the nation.
Many laws are nothing but carbon copies of the Russian legislature, while some were prepared by inexperienced experts.
When the Kyiv Post asked Leonid Antonenko, an expert on corporate law at Sayenko Kharenko firm in Kyiv, how much he would charge for preparing a national law on the securities market, he said it would cost as much as $500,000.
Meanwhile, Ukrainian lawmakers receive a monthly salary of $410.
Andriy Stelmashchuk, a legal expert with Vasil Kisil & Partners, says the key problem is impunity – that violation of a law does not necessarily lead to punishment, from throwing cigarette butts on the ground to bribing judges.
Another lawyer, Mykola Stetsenko from Avellum Partners, names electronic administration of value added tax (VAT), overregulation of limited liabilities companies and the urgency of introducing a land market among the issues that need to be resolved as soon as possible.
As of Dec. 26, five days before the new law on value-added tax comes into effect, neither the government nor the legal community knows how to work under such a document, Stetsenko explains. It freezes the cash at companies’ VAT accounts on prepayment basis, so the business actors are being put under serious risk of facing a lack of liquidity.
However, Andriy Zhurzhy, a member of parliament with Samopomich party, said the Rada is considering cancellation of a requirement for the companies to have VAT accounts. Rada’s tax committee protests against VAT accounts too.
Sergiy Shkyar, founding partner at Arzinger, points out to the antimonopoly legislation that needs further development. Violators pay fines only in 5-7 percent of the cases, mostly finding the ways to bypass this.
Moreover, current law “on the protection of economic competition” sets the maximum rate of a fine that could be applied to a violator, which is 10 percent of a turnover in a prior year. However, since high market volatility may bring the revenues down very substantially, fine could exceed the 10 percent rate for the current year turnover.
It’s commercial, not administrative courts that should make decisions on antimonopoly cases, Shklyar adds, while the opposite happens.
Oleksandr Burtovy of Antika law firm says monitoring of the energy consumption should also be high on the parliament’s agenda since the deficit of Naftogaz, state-run oil and gas monopoly, is critically high.
“Ukraine is a unique country,” he said. “There is probably nobody who knows how our energy balance is actually formed and how the consumption of energy is tracked.”
