EBA addresses president, prime minister to revise bill on creation of free economic zone in Crimea

The proposed taxation regime and movement of goods in the draft law on the creation of a free economic zone in Crimea is not efficient and it actually excludes the economic relations of Ukraine with its occupied territory, according to experts from companies-members of the European Business Association (EBA).

"The EBA .sent an open letter to Ukrainian President Petro Poroshenko, Prime Minister Arseniy Yatseniuk and Speaker Oleksandr Turchynov to draw their attention to the bill and take the relevant measures to improve it," reads a press release of the EBA issued on Tuesday.

The association said that Ukrainian businessmen want to see the quick establishment of partnership relations with their Crimean colleagues, and hope that the efficient economic operation will be restored on the territory of Crimea and Sevastopol city in the near term, while the help of the state is required for this.

The association's experts said that the bill is to be revised so that it defines a procedure for protecting and guaranteeing property and non-property rights of Crimean business under Ukrainian jurisdiction in line with the requirements of Ukrainian and international law, and a procedure for the state registration of businessmen on the temporarily occupied territory and carrying out other registration actions in line with Ukrainian law.

The lawmakers also should foresee a mechanism for protecting property and non-property rights of Ukrainian business registered on the temporarily occupied territory, including via addressing foreign courts and collecting debts and executing court rulings. The procedure for the use of foreign currency for settling payments with contractors and employees on the temporarily occupied territory should be revised.

In addition, the rules for crossing the customs border and the relevant regime of taxation of transactions on the movement of goods between the temporarily occupied territory and the rest of the territory of Ukraine should be elaborated.

The EBA insists that a status of goods of Ukrainian-origin for their duty-free imports to the territory of Ukraine should be given to goods made by Ukrainian companies on the temporarily occupied territory. A procedure for certifying goods made in Crimea and Sevastopol city should be defined so that they can enter the foreign markets as goods of Ukrainian origin.

The lawmakers also should settle the issue of applying the Tax Code of Ukraine and define a procedure its application for taxation of Ukrainian business doing on the temporarily occupied territory and the issue of double taxation of companies and individuals-businessmen.

"Representatives of the companies-members of the association believe that it is better to remove the requirements which do not have practical application from the draft law (for example, the requirements on the managing company) and the clauses which do not directly concern settling of the specifics of carrying out the economic operation on the temporarily occupied territory (for example, the requirements on the structure of foreign currency services, lotteries or gambling)," reads the press release.

As reported, the Ukrainian parliament on June 19, 2014 passed at first reading draft law No. 4032-A on the tax and customs control in the free economic zone of Crimea and the specifics of carrying out the economic operation on the temporarily occupied territory of Ukraine.