A number of permit (licensing) documents required for doing business in various sectors of the economy in Ukraine have been abolished by the Ukrainian government to reduce the burden of excessive or unnecessary regulation. These changes are set to completely overhaul the concept of the permit system in Ukraine.
On 26 April 2014 the Law of Ukraine “On Amending Certain Legislative Acts of Ukraine with Respect to Reduction of the Number of Permitting Documents” (the “Deregulation Law”) came into force. The Deregulation Law was adopted to amend a group of laws and regulations (37 in total) covering permitting (licensing) matters in Ukraine.
These changes not only facilitate doing business in Ukraine, but are also intended to eliminate fraudulent and corrupt practices in conducting activities that require permit (licensing) documents. In particular, recent changes provided by the Deregulation Law mean that:
- if any permit is required by any law or regulation, but is not included in the Law of Ukraine “On List of Permitting Documents”, then it is not required to be obtained;
- if a state/municipal body fails to issue a permit within established deadline, then such permit is deemed to have been issued;
- if for the purposes of obtaining a permit there is a requirement to receive any intermediate approvals, consents, authorisations, etc., it is within the scope of obligations of a relevant state/municipal body (which issues a “final” permit) to obtain all required intermediate approvals. Previously, it was the responsibility of the applicant to collect all intermediate approvals and submit them to a body which issues a “final” permit; and
- permits can only be revoked by the court and not by state bodies (such as inspections), which used to be the case.
The Deregulation Law abolishes 113 permits, consents and authorisations. These changes mainly concern businesses related to energy and natural resources; health, safety and environment; food, grain and agrochemicals; land, tourism and transportation, and subsoil and waste management. Please click here to view a separate publication on liberalisation of the grain market in Ukraine. The most noteworthy changes introduced to these industries are outlined below.
1. ENERGY AND NATURAL RESOURCES
A number of positive changes were made in the area of energy and natural resources. In particular, the Deregulation Law has simplified a number of permitting and similar procedures that require consents from certain state authorities as a prerequisite for issuing a permit or carrying out certain activities. As a result, the following applications will no longer be required:
- to local self-governance authorities – (i) to obtain a permit for use of subsoil resources; and (ii) to select the location of facilities that use and may have a negative effect on water resources;
- to the State Service for Geology and Subsoil – to obtain permits for: (i) the extraction of underground waters (a type of a special water use permit); and (ii) designing and construction of facilities for the extraction of underground waters;
- to the State Agency of Water Resources – to obtain a permit for the use of surface waters (a type of special water use permit);
- to the bodies of the Ministry of Health – to obtain a permit for the use of water resources for medical treatment (a type of special water use permit);
- to local state executive authorities – to obtain a permit for carrying out dredging works, laying cables, pipelines and other communications at the lands of water fund (save for works at protected shoreline belts; internal waters and territorial sea);
- to the state agencies on forestry and fishery – to obtain a permit for reclamation works in habitats of swimming birds, fur animals and commercial fishing in habitats of beavers and desmans;
- to self-government authorities, state administrations and central executive authorities in the respective sectors – (i)to select the location of mining facilities and underground facilities that are not used for the production of mineral resources (e.g., storage of oil and gas, disposal of waste, storage of goods, etc.); (ii) to select the location of facilities or carrying out of operations that may have a negative effect on forestry; and (iii) to use forest land plots for the production of mineral resources (drilling, mining, demolition works, etc.).
In certain cases (for instance, for the purpose of issuing a special water use permit) the state authorities will be providing their conclusions to the permitting authorities with reasoning as to why a particular permit will or won’t be issued.
In the renewable energy sector, permits have been cancelled for: (i) production, transmission and supply of energy from renewable energy sources; (ii) installation of renewable energy generation equipment; (iii) construction or renovation of hydropower facilities at small rivers; (iv)construction of power networks to supply renewable energy to consumers; and (v) connection of renewable energy plants to power networks.
2. HEALTH, SAFETY AND ENVIRONMENT
- Waste management
A significant effort has been made to revise and simplify the permitting system in the waste management area. The Deregulation Law replaces a number of permits with a single permit for waste management activities, which will be effective for three years and must be obtained by entities generating more than 1000 units of waste (calculated under a special formula) per year. Entities that generate from 50 to 1000 units per year must annually submit a declaration on waste.
In particular, the Deregulation Law abolishes permits for: (i) construction or renovation of a waste management facility; (ii) disposal of waste; (iii) waste generation and disposal limits; (iv) mixing or disposal of waste, if a disposal technology exists in Ukraine; (v) operation of a hazardous waste management facility; (vi) storage and disposal of waste; and (vii) preparing and approving of rates for discharge of polluting substances into water objects.
In order to fully understand the positive effect of these changes it is necessary to analyse the procedures and other secondary legislation, which has yet to be developed or revised by the Ukrainian government and its responsible bodies.
- Air pollution
The validity term of the air pollution permit required for owners of stationary pollution sources will now depend on the level of air pollution. Thus, the air pollution permit for the first group of sources will be issued for seven years, for the second group – ten years, and have an unlimited validity term for pollution sources belonging to the third group.
- Hazardous substances
The Deregulation Law cancels: (i) the need to approvelocations of entities that process, dispose or destroy defective hazardous products; and (ii) permit forproduction, storage, transportation, use, dumping, destruction and disposal of toxic substances, including the products of biotechnology and other biological agents.
- Objects of high hazard
The Deregulation Law cancels the permits for construction (renovation) and operation of high-risk facilities. The construction (renovation) of such facilities shall now be carried out in accordance with construction laws.
The Deregulation Law provides a number of long-awaited changes to land regulation. The change of designated purpose of forest land plots shall now be governed solely by the Land Code. This particular amendment has finally resolved the issue of “double” regulation of the procedure for changing the designated purpose of forest land plots. In particular, initially both the Land Code and the Forest Code provided for two slightly different procedures with respect to the change of designated purpose of forest land plots which, in turn, used to cause numerous disputes and misinterpretations.
The Deregulation Law abolishes the following approvals: (i) approval of the Cabinet of Ministers of Ukraine of the alienation of the municipal lands to foreign states and/or companies; and (ii) approval of Verkhovna Rada of Ukraine of the materials on withdrawal (redemption) of especially valuable land plots owned by natural persons and companies.
The Deregulation Law also excludes from the list of permits the conclusion on approval of land allocation project, issued by the Commission on consideration of issues related to approval of land management documentation. This particular change is a technical one, as this type of conclusion has not been required since December 2012.
The Deregulation Law requires the cancelation of permissions for Ukrainian business entities importing water bio resources (e.g. fish and other similar products) and producing dry vines with an alcohol volume of up to 9.5 %.
The Deregulation Law has reduced the list of documents required for customs clearance to import fish products to Ukraine. The following documents are not required for customs clearance of fish products to Ukraine: (i)quarantine permission to packaging made of organic products (e.g. wood); (ii) certificate on recognising of the foreign certificate; and (iii) veterinary certificate.
The Deregulation Law abolishes the requirement to obtain special permits for the import and trade of radio electronic and radiation emitting devices (the “Devices”) in Ukraine. That requirement will only be valid for import and trade of the special purpose Devices for use by Ukrainian military organisations (e.g. army, police, security service, intelligence etc.).
Instead, the National Commission for Communications Regulations of Ukraine (the “NCCR”), the Ukrainian special governing body in the sphere of telecommunications will create the registry of the Devices that are prohibited for use and import to Ukraine (the “Registry”).
The Registry will contain the list of all the Devices that are prohibited for import and use in Ukraine. The import of the Devices will be available if the particular device is not available in the Registry. The Deregulation Law entails that Ukrainian customs authorities will have free access to the Registry for the purposes of customs clearance. The Registry of the general use Devices will be maintained by the NCCR.
The Deregulation Law has cancelled the requirement to obtain a compliance certificate for use of the Devices in Ukraine. Instead, an importer will need to submit a declaration on compliance, an official statement that the Devices comply with technical requirements prescribed by Ukrainian law. The declaration on compliance should be confirmed by one of the entities that are accredited by the NCCR.
In the area of transportation, permits/approvals have been cancelled for: (i) international passenger and cargo transportation; (ii) cargo transportation by road between member states of the European Conference of Ministers of Transport; (iii) the procedure for protection and escort by senders (consignees) of goods subject to spoilage; and (iv) the transportation route for dangerous, super-size and heavy cargo.
7. TOURISM AND ENTERTAINMENT
In the area of tourism and entertainment, permits have been cancelled for: (i) the establishment of zoological parks (zoos); (ii) the establishment and development of zoological collections (e.g. living collections, zoological gardens, oceanariums, collections of stuffed animals or birds, collections of animals’ parts or remains, etc.); (iii)the use of animals in entertainment, sport or other leisure activities; (iv) the tourist guiding services (provided by tourist guiding professionals, including guides, guide-interpreters, sports instructors, etc.); and (v) the use of natural curative resources of local significance.
Law: Law of Ukraine “On Introduction of Amendments to Certain Legislative Acts of Ukraine regarding the Reduction of the Number of Permit Documents” N1193-VII dated 9 April 2014