Editor's Note: Especially for our customers and readers, we invited an experts to clarify the legal issues related to quarantine, forced downtime, taxes and payments to employees.
Bankruptcy amid the coronavirus. Are there any peculiarities?
Maria Brusnitsyna: "On October 21, 2019, the Code of Ukraine on Bankruptcy Procedures (KZoT) was put into effect, which determines the procedure for considering bankruptcy cases. Yes, of course, the coronavirus has affected all processes, including bankruptcy. Courts have started to hold hearings on online platforms, but generally postpone the consideration of cases from the beginning of the quarantine to September or do not set a date at all. Appeals and cassation authorities extended the deadline for filing complaints until the end of the quarantine. Therefore, bankruptcy cases will be delayed. Practice, including bankruptcy of individuals, will be developed for a long time, and there are a lot of problematic issues of applying the Code of Ukraine on bankruptcy procedures.
In addition, the Verkhovna Rada Committee on Economic Development at its meeting on April 13, 2020 considered the draft Law of Ukraine “Ön Amendments to the Code of Ukraine on Bankruptcy Procedures” (regarding the prevention of abuses in the field of bankruptcy for the period of implementation of measures aimed at preventing the emergence and spread of coronavirus disease (COVID-19) (Register No. 3322 of 10.04.2020), filed by People's Deputies of Ukraine Taruta S. A., Natalukhoi D. A., Movchan A. V. and Ruschishin Y. I.
The purpose of this bill is to create an effective mechanism for the period of quarantine established by the Cabinet of Ministers of Ukraine to prevent the spread of coronavirus disease (COVID-19), in order to avoid problems arising from the implementation of the provisions of the Code of Ukraine of Bankruptcy Procedures, in particular regarding the possibility of holding a meeting and a committee of creditors remotely (via videoconference and by questioning) and extending the terms of the preliminary meeting bankruptcy court.
To date, this law has not been adopted."
Ekaterina Voronyuk: "Reducing production and reducing workers is a new reality, and whether the pandemic will lead to the bankruptcy of entrepreneurs and companies depends on the state.
If the state, represented by ministries and departments, introduces measures to introduce tax holidays, debt restructuring, preferential lending, then in aggregate such a package can save business.
However, now most European countries have introduced a moratorium on the opening of bankruptcy cases. The question of survival in such conditions is a question of flexibility and management of the company, how it copes with financial difficulties. However, if your efforts and a set of measures to save the business did not work, then the enterprise (LLC) can go to court in accordance with the Code of Bankruptcy Procedures. As of early May, no legislative changes have been made to the procedures."
Are there legal ways to optimize employee salary costs? Dismissal, leave at own expense during quarantine
Maria Brusnitsyna: "During the quarantine period, the topic of dismissal is constantly raised. Both on the part of employers and on the part of employees. In addition, on March 19, 2020, information appeared on the Unified Portal of the Ministry of Internal Affairs of Ukraine that managers who illegally dismiss employees during quarantine face a fine of up to 51 thousand UAH or punitive deduction of earnings. Indeed, Art. 172 of the Criminal Code of Ukraine provides for such liability, which is imposed on the head of a legal entity or on an individual entrepreneur. However, no changes on this issue were made to the legislation during the quarantine period. The official had responsibility even before covid-19 measures began to be applied in Ukraine. Pressure on an employee to dismiss him is unlawful, as is the retention of an employee who wishes to resign.
Unfortunately, there is no one-size-fits-all solution for all employers. Some of the employers issued a downtime, which reduced their salary costs. And someone managed to come to a consensus with employees and send them on vacation at their own expense. If the employee wishes, which is drawn up by the relevant application, the latter may be granted leave without pay for the entire period of quarantine.
Thus, article 26 of the Law "On Holidays" provides an opportunity for an employee to take leave without pay by agreement of the parties.
For family reasons and other reasons, an employee may be granted leave without pay for a period stipulated by agreement between the employee and the owner or a body authorized by him, but not more than 15 calendar days a year.
If the Cabinet of Ministers of Ukraine establishes a quarantine in accordance with the Law of Ukraine "On Protection of the Population from Infectious Diseases", the period of stay on leave without pay for the period of quarantine is not included in the above period.
In addition, according to the Law of Ukraine "On Employment of the Population", assistance for partial unemployment is provided by employment centers to insured persons in case of loss of part of their wages due to a forced reduction in working hours due to the suspension (reduction) of activities due to measures to prevent the occurrence and spread of coronavirus disease, provided for by the quarantine established by the Cabinet of Ministers of Ukraine (CMU), for appeal of the employer for its payment to employees.
That is, small and medium-sized businesses within 30 calendar days from the date of suspension (reduction) of production, and in the absence of arrears in the payment of wages and payment of a single contribution to compulsory state social insurance, have the opportunity to issue such assistance at the employment center, for employees with whom an employment contract has been drawn up, with the exception of pensioners.
In addition, the state provides unemployment assistance to an employee who has lost his job, which today can be registered online on the Diya portal. "
Ekaterina Voronyuk: "In order to preserve jobs, the right of employees to leave and reduce the tax burden for the period of quarantine measures, employers can send their colleagues on leave without pay for the period of quarantine (part 2 of article 26 of the Law of Ukraine “On Vacations”). The only condition is the consent of your employee. This law gives an employee the opportunity to take advantage of such leave for a second time during the year. In this case, I recommend indicating in the order on leave, as the basis of the Law of Ukraine "On Vacations" and the above-mentioned laws No. 530 and No. 533-i: for the period of quarantine.
Mothers with children under the age of 14 have the right to leave without pay on the basis of clauses 3 part 2 of Article 25 of the Law of Ukraine “On leave to care for a child under the age of 14 for the period of the announcement of quarantine in the relevant territory”. According to the Resolution of the Cabinet of Ministers of Ukraine "On Preventing the Spread of the Covid-19 Coronavirus In Ukraine" No. 211 of 11.03. 2020, as well as the above-mentioned laws, mothers whose children attend kindergartens or other preschool institutions can be installed from 16.03, schools - from 13.03. "
What is important for an entrepreneur to read:
For Ukrainian business, closed for quarantine, canceled rent payment - how it works
How companies affected by quarantine can apply for unemployment assistance for employees
What pitfalls should business owners be aware of in the regulations governing work during quarantine?
Maria Brusnitsyna: "Relief in taxes was given, but not to everyone. Since a significant part of the business is a VAT payer, they did not wait for the abolition of penalties for non-payment or late payment of VAT.
Already in March 2020, due to the actual shutdown of the business, a large number of payers could not pay value added tax (VAT). Not a single regulatory document on this topic was adopted, on the contrary, the State Border Service of Ukraine in the city of Kyiv on 21.04.2020 on its official website posted information that on 02.04.2020 the Law of Ukraine dated 30.03.2020 "On Amendments to Certain Legislative Acts Aimed at Providing Additional Social and Economic Guarantees in Connection with the Spread of Coronavirus Disease (COVID-2019)" came into force. according to which the procedure for the application of penalties has not changed.
Thus, the established moratorium on the application of penalties for violations of tax legislation committed in the period from March 1 to May 31, 2020, does not apply to sanctions for violation of the calculation, declaration and payment of value added tax, excise tax, rent.
However, during this period, the single social contribution (SSC) for individual entrepreneurs, farms and self-employed persons is not calculated and paid. But the paid SSC before the entry into force of the relevant tax benefits is counted in the period of the next payments, in the absence of arrears or penalties.
Also, from March 1 to May 31, 2020, real estate tax and tax for land owned or used by individuals and legal entities are not paid.
I cannot but note that the deadline for submitting a declaration of property status and income has been extended until July 1, 2020, and the deadline for payment of personal income tax (PIT) is until October 1, 2020.
Also, after coming out of quarantine, all business will face a new law that came into force on April 28, 2020, namely, the Law of Ukraine "On Preventing and counteracting the legalization (laundering) of proceeds from crime, financing of terrorism and financing the proliferation of weapons of mass destruction", hereinafter referred to as the "Law". This document has made changes in almost all areas of business. All business representatives and notaries, insurers, accountants, auditors, lawyers and others will work under the new rules.
Thus, the subjects of primary financial monitoring in accordance with the Law include business entities that provide advice on taxation issues; business entities that provide legal services; business entities that provide intermediary services in the implementation of operations for the purchase and sale of real estate, as well as business entities that provide consulting services related to the purchase and sale of real estate for a fee.
In addition, the Law freed the hands of the investigating and prosecutorial authorities, since it gave them the opportunity to open criminal cases on their own identification of information from any source and circumstances that may indicate the commission of a criminal offense.
The Law expanded the list of responsibilities of legal entities and individuals by adding new articles to the Criminal Code of Ukraine (CC) or posting familiar ones in a new edition.
So article 205, approx. 1, the Criminal Code provides for increased liability for forgery of documents submitted during the registration of legal entities and individual entrepreneurs (entering false information into the documents for the Unified State Register (EDRPOU)), in particular about the ownership structure. Article 209 of the Criminal Code "Legalization (laundering) of proceeds from crime" is set out in a new edition.
In case of violation of the Law, the total amount of fines that can be applied to the subjects of primary financial monitoring (if you are not a financial institution) in the amount of twice the amount of benefit received by the subject of primary financial monitoring as a result of the violation, and if the amount of such a benefit cannot be determined - 1,590,000 untaxed minimum incomes of citizens.
I want to draw attention to the fact that the Law provides for new rules for the disclosure of the ultimate beneficiaries of legal entities. Innovations apply to all legal entities without exception, including those created before the entry into force of the above Law.
Legislators obliged all legal entities to submit documents for disclosure of the ownership structure when registering or making changes to the information about a legal entity. An innovation of this Law is the ownership structure itself, which has not yet been approved.
In addition, the Law obliges to update annually information on the beneficiaries of a legal entity, even if it has not changed, and the founder is an individual. So within 14 calendar days from the date of registration of a legal entity, it is necessary to submit documents on the ultimate beneficiary and ownership structure.
All legal entities registered before 28.04.2020, within three months from the date of approval of the ownership structure, are obliged to update information about the ultimate beneficiary.
Liability for failure to submit or late submission of such information provides for a fine of 17,000 to 51,000 hryvnias.
Therefore, we keep our finger on the pulse and are waiting for the ownership structure approved by the State Financial Monitoring Service of Ukraine."
Ekaterina Voronyuk: "Special norms of labor legislation were not adopted during the quarantine, and therefore the entire sphere of labor relations is regulated by the Code of Labor Laws. The procedure for the dismissal of employees occurs only under the conditions defined by law and no more.
Employers must adhere to the entire procedure and registration of the relevant personnel documents (dismissal order, filling out the labor book, full calculation). Otherwise, if the procedure is not followed, the employee can apply to the court with a claim for reinstatement at work and recovery of monetary compensation for the entire time of forced absenteeism. We recommend negotiating with employees, not to press in any way, because pressure, coercion on the part of the employer is also a violation of the legislation. "
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