Your business in Ukraine: new perspectives for the private sector or the time to think about the future
It’s not a secret that Ukraine is still one of the market dark horses in context of entrepreneurship. Not many of large companies venture to base their businesses here despite of the wide range of potentially profitable areas for investment. The events of winter and spring of 2014 scared even those who worked steadily for our economy for years. However, now due to the current European course, there are good prospects for the climate improvement in this area. And especially it refers to private sector.
Optimistic forecasts for private business
As we remember, spring 2014 became indicative for companies with foreign funds. A lot of investors have been forced to close their businesses, even those who worked in such sectors which do not require public funding. And, for example, were funded by Western countries and the US taxpayers’ money and were only investment projects and non-commercial organizations. The reason was not even the worsening economic situation in Ukraine. But the difficulty of government contracts roll over because of the uncertainty in the government structures, bureaucracy and corruption. And the renewed Tax Code of 2010 actually denied the right to exist for small and medium-sized businesses.
Today, thanks to the European course, the government is forced to reconsider its relationships with these subjects of business – at least in the framework of the Association Agreement with the EU. Establishment of effective cooperation between the authorities and small and medium businesses, as well as adaptation of the private sector to the rules and regulations of the European market – the first and main tasks under the Agreement. Therefore it is not surprising that 2015 started with rather optimistic promises from VRU for this segment of the market.
MPs supported the bill named “The development and maintenance of small and medium-sized businesses in Ukraine” (#1256). Main recommendations of the European Union’s policy of partnership with the countries of Eastern Europe should be implemented according to this bill:
1) creating of conductive legal environment for the development and implementation of state policy in the sphere of private sector development;
2) increase the efficiency of consultations between the authorities and small and medium-sized businesses through the interests` representation strengthening of the second.
What legal simplifications should be expected?
Considering this fact, as well as vacated due to the crisis market niches, it seems to be sufficiently favorable environment for starting a business. Especially in respect of the upcoming single tax payers groups` number revision and their possible reduction from 6 to 4. As a result, a new version of the bill “The development and support of small and medium-sized businesses in Ukraine” should contain positive innovations:
1) deregulation of business, periodic assessment and regulatory costs` planned reduction of small and medium-sized enterprises in pursuance of the provisions of regulations;
2) facilitating of the establishment, implementation and termination of business activity;
3) ensuring and improving of the simplified taxation system functioning, small businesses` accounting and reporting, established by the Tax Code of Ukraine.
It’s time to prepare the background for future business
However, there are two additional months allocated for the bill rework. In the meantime, while the legislation has not entered into force, and its final edition and reflection on the private sector are not obvious, it is logical to pave the way for future business. This is especially true for foreign investors, who have been unable to start businesses in Ukraine for a long time because of the loads of bureaucratic and ethical reasons specific to this market.
The first and the main step in this direction is the correct registration of your business. The registered company, which does not make commercial activities, does not require tax payment, and only needs a one-time report delivery a year. However, you should apply to a professional lawyer in order to avoid difficulties in the interpretation of the current legislation and its new editions, and take into account all of important legal points.
Competent specialist’s participation would help to avoid confusion in the multilevel bureaucracy, considerably simplify and speed up the whole process or even eliminate the need of personal presence in the country at this stage. In addition, this procedure is not expensive, and fairly simple due to specialist’s engagement. Additionally, law firms would save time and simplify the work. And they even would provide surrender of the relevant reporting for reasonable money compensation. If necessary, the law firm can act as a figurehead or keep accounts in outsourcing. So when the new legislation will come into force and the new market conditions will be clear, you’ll be fully prepared: you will only have to run your already existing business and won’t have to spend time on its registration.
Author: Kateryna Bovan
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Actual information! Without knowledge of important legal points of course can be difficult. I think the law firm is the right decision! I really hope that the legal simplifications will benefit!