Kyiv Ex-Mayor Omelchenko - Kyiv City Council Decisions On Allocation Of Plots Without Auctions Illegitimate

From Ukrainian News

Former Kyiv city mayor and Verkhovna Rada deputy of the Our Ukraine People's Self-Defense Bloc faction Oleksandr Omelchenko considers that decisions of Kyiv city council on allocation of land plots for construction without holding of auctions are illegitimate.

Omelchenko disclosed this in an interview to the Contracts magazine.

He reminded that when he was the mayor, in September 2005, he signed the order on auctioning-off plots to later refuse from allocation of land by the city council.

It was planned that allocation of land without holding auctions would be undertaken only in the case potential investors had managed to submit bids before September 1, 2005.

However, Omelchenko said that current Kyiv city mayor Leonid Chernovetskyi did not cancel the decision of his predecessor and resumed old scheme of land allocation.

«In fact, all recent decisions of Kyiv city council are illegitimate, as my order on holding of land auctions is still in force,» Omelchenko said.

Besides, he is sure that to terminate unlawful land sales by Kyiv city council it is necessary to have political stability.

As Ukrainian News earlier reported, in September 2006, Kyiv city council amended temporary order of plot purchase via competition, excluding the item foreseen allocation of lands only to those investors, who had submitted their bids before September 2005 and bids, which had not been considered by the city council before 1, 2006.

I guess this post is slightly wrong spelled, but that's just a source copy. Hope you will clear with it.

Morarorium Comes Back

Lytvyn group in parliament is initiating prolongation the moratorium on sale of agricultural land until 2010.

The relevant draft law, which Parliamentary Deputy Kateryna Vaschuk of the Lytvyn Bloc prepared, has already been registered in the parliament. Lytvyn Bloc favored a land inventory with the aim of determining who actually own the land and the legal basis on which it is owned.

Early, parliamentary deputies Petro Symonenko, Oleksandr Tkachenko, and Volodymyr Matveev from Communist Party recently proposed that the parliament extend the moratorium on sale of agricultural land from 2008 until 2011.

President Viktor Yuschenko is confident that the moratorium is the cause of corruption on the land market.

The Rough Guide to Taxation in Ukraine 2007

I'd like to present you a "The Rough Guide to Taxation in Ukraine 2007" from Deloitte Ukraine. I see that Ukraine RE market newbies pay much attention to legal issues, as well as blog audience. For sure, for more mature players it could be quite well known, but additional information from respected source does make sense to know.

I appreciate to Brian Mulholland, Director of Tax and Legal - friend of mine and blog' reader, too. There is no advertising from my part. Just well done job.

Table of content

• Investment in Ukraine
• Types of Business Entities
• Taxation in Ukraine
• Taxation of Businesses in Ukraine
• Transfer Pricing
• Taxation of Cross-Border Transactions
• Taxation of Individuals
• Customs Duties
• Currency Control
• Contacts at Deloitte CIS

New Procedure of Notaries' Certification of Mortgage, Property Disposal and Pledge Agreements

The Ministry of Justice, with its Order # 703/5 "On Amendments to Regulations on Notarial Acts Accomplishment in Ukraine" dated August 29^th 2007, has approved new procedures of notaries' certification of mortgage contracts, property disposal and pledge agreements.

In particular, among others, the new Regulations ratify the following amendments:

• notaries' certification of property disposal and pledge agreements in case the right of ownership for the property is taken to be, but has not been acquired for the date of the agreement's conclusion;
• the procedure of certification of mortgage contracts for unfinished real estate;
• notaries' certification of property disposal and pledge agreements in case the property secures a debt.

According to a notice of Mr. Lavrynovych, Ministry of Justice, the amendments enlarge the scope of conclusion of mortgage, property disposal and pledge agreements, including as for the real estate.

The changes are directed to the state registration and will become in force 10 days after they are made public.

Cabinet Approves Procedure For Architectural And Technical Supervision Of Construction

From Ukrainian News

The Cabinet of Ministers has approved the procedure for architectural and technical supervision of construction projects. Ukrainian News learned this from government resolution No.903 of July 11.

Specifically, the field supervision is exercised by an architect of the project or an authorized person, who can involve in the effort the subcontracting planning organizations that participated in some parts of the project.

The architect supervises the preparation of necessary documentation if it is developed by another entity of architectural activity. He is also to appoint a field supervision group to visit the construction site on a regular basis and record the work results.

By the resolution, the technical supervision procedure is exercised by the customer or the builder during the entire construction period and all design solutions and government standard requirements must be observed.

The technical supervision includes the check of documents that verify the parameters of structures and production items, the record keeping of the amount of construction and assembly works, and the evaluation of the results of the works performed.

Supervisors have the right to demand from the subcontractor to fulfill the amount of work stated in the design and estimates, to interrupt the project if materials are found to be of poor quality, to conduct a laboratory research on the materials, and to remove project deviations. They can also demand suspension of the project.

As Ukrainian News earlier reported, the parliament created a single vertical executive authority for regulating architecture and construction.

The Ministry of Construction, Architecture, Housing, and Utilities initiated state expert examination of investment programs and construction projects by a single state organization.

Land Resourse Agency On The Road

The State Land Resources Agency intends to compete land inventory by 2008, said First deputy chairman of the state agency Yurii Alekseenko. "We plan to settle the issue in at least half a year and a year maximum," he said.

Head of the state agency Ihor Yatsuk considers it the agency's priority to simplify allocation of land plots.

In late March, the Cabinet of Ministers appointed Yatsuk as the head of the State Land Resources Agency. With its decree of January 31, the Cabinet of Ministers reorganized State committee of land resources in State agency of land resources.

At the beginning of March, the chairman of commission for reorganization of State committee for land resources, first deputy chairman of state committee for land resources Mykola Kaliuzhnyi forecast end of reorganization of the committee and the beginning of work of State agency of land resources on April 12-13.

Yushchenko Believes In Land Moratorium' Cancelling Within This Year

The process of land privatization in Ukraine will be completed within seven or eight months, President Viktor Yushchenko said.
"Within the next seven or eight months, land privatization in Ukraine, which started in 2000, will be completed through farmers' acts," Yushchenko said at a meeting with foreign investors and diplomats in Kiev .
Ukrainian legislation now faces the task of creating a register and various mortgage mechanisms. " I am sure that parliamentary debates on the main issue - canceling the moratorium on land sale - will be successfully completed in the third and fourth quarters 2007," the president said. The position on this moratorium issue is simple, he said: "as we agreed with key political forces, the land market in Ukraine must start to fully operate as of January 2008."
"Ukrainian landowners must be allowed to use their title to the land," the president said.

Minister Rybak Announces Completion Of Drafting Of Housing Code

(Ukrainian News)

Deputy Prime Minister Volodymyr Rybak has announced the completion of the drafting of the Housing Code.

Rybak's service made the announcement, a text of which Ukrainian News obtained.

According to the announcement, Rybak has held a meeting dedicated to the present state and the problems connected with the drafting of the Housing Code.

The meeting was attended by the heads of the Economics Ministry, the Finance Ministry, the Regional Development and Construction Ministry, and the Labor and Social Policy Ministry as well as by the relevant representatives of the Cabinet of Ministers' secretariat.

On the outcome of the meeting, Rybak said that the process of drafting of the Housing Code had generally been completed.

Rybak directed central organs of the executive branch of government to complete agreement of this document with the relevant agencies within two weeks so that it can be submitted to the government Committee on Regional Policy, Construction, Housing, and Utilities for consideration and submitted to the Cabinet of Ministers for approval before the end of May.

Rybak said that the Housing Code should be considered by the parliament in June.

As of today, most of the comments and proposals on the draft Housing Code have been addressed in the text section of the draft code.

The issues that require reconsideration include the need to specify certain definitions in the draft code (for example, official premises and hostels) and bringing individual provisions of the draft code in line with the active legislative acts.

As Ukrainian News earlier reported, President Viktor Yuschenko has directed the Cabinet of Ministers to submit the draft Housing Code to the parliament for consideration by July 2007.

Rybak forecast that the parliament would adopt the Housing Code by April.

The Housing Code regulates legal relations of individuals and legal entities, executive authorities and local self-governments in the housing sector.

In October 2005, the parliament rejected a Housing Code with recommendations of the President.

The parliament adopted the code in July 2005, but President Viktor Yuschenko vetoed it.

The Housing Code of the Ukrainian Soviet Republic, which was adopted in June 1983, is presently in force.

Illegal Corporate Raiders

I decide to post it because there are a lot request and opinion on Ukrainian legislative system and corporate relations. This is extremely important for investors in RE, and other ones at all.

Now, Illegal Corporate Raiders are broadly presented in corporate conflicts. So, I thought you have to read and know this. I'm appreciate to American Chambers of Commerce in Ukraine and its President Jorge Zukoski personally.


Recently, under the auspices of the Chamber, a Working Group has been active in analyzing the issues surrounding the activities of illegal corporate raiders and proposing recommendations to addresses these impediments to current and future investment. The Working Group is comprised of representatives of Ukrainian and foreign companies specializing in legal and consulting services as well as specialists in the sphere of corporate governance.

The current deliverable developed by the Chamber Working Group is a White Paper entitled "Illegal Corporate Raiders". The document contains information that highlights issues and remedies which require the joint efforts of Ukrainian executive and legislative authorities, both the foreign and domestic investment community, representatives of the judiciary, as well as experts and scientist who are engaged in the sphere of economic and corporate governance reform. The recommendations put forth are directed to the prompt and effective implementation of a transparent system of property rights protection governed by the rule of law in Ukraine.

The Chamber anticipates that the White Paper will provide another tool to stimulate a discussion and provide a catalyst to positively influence much needed change. The Chamber's Policy Team and the Chamber Working Group on Illegal Corporate Raiders stands committed to working with our partners among the Membership, in the Ukrainian government as well as the diplomatic and donor community to advocate for much needed changes in this sphere.
As we continue forward with the advocacy plan on this issue we are pleased to offer an opportunity to our Members to submit to our offices all relevant data, figures and explanations relating to your company's experience on the issue of Illegal Corporate Raiders.

The Chamber would like to thank our professional colleagues who provided invaluable assistance in developing this White Paper and who are genuinely concerned about the negative impact of illegal corporate raiders on the business community and international reputation of Ukraine. The Chamber Member companies actively involved include but are not limited to (in alphabetical order): Baker & McKenzie, Bunge Ukraine, Grischenko & Partners, Magister & Partners, USAID - Commercial Law Center. The Chamber thanks them for their proactive involvement and invaluable contribution to the document.

We would also like to express our appreciation to all Members of the Chamber's Legal Committee (Mr. Oleksandr Martynenko, Baker & McKenzie, Co-Chair), the Chamber Board of Directors Policy Committee (Mr. James Hitch, Baker & McKenzie; Mr. Jacques Mounier, Calyon Bank Ukraine; Mr. Myron Wasylyk, The PBN Company; Mr. Sergiy Yanchyshyn, Motorola) as well as to all Members of the Chamber's Illegal Raider Attacks Working Group for their contribution, involvement and support.


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Recent Developments in Ukrainian Legislation, Feb-Mar 2007

There is a good tradition to spot on legislative issues and trends in Ukraine. Please read Chronicle of Recent Developments in Ukrainian Legislation from Russian-Ukrainian Legal Group.

New State Agency for land regulation

Cabinet of Ministers signed a regulation on the State Agency of Land Resources.

According to the regulation, the agency ensures implementation of the state policy and management in the regulation land relations, usage, security and monitoring lands, keeping land cadastre. They're involved in demarking regions, districts, cities, districts in city, villages and settlements as well.

The Agency must provide the documents and submit them for adoption to the Environmental Ministry. The Agency has own local branches in all regional cities.

Short news - restrictions for State companies to lease their property.

Verkhovna Rada intends to exclude state-owned company to lease a property exceed 200 sqm. per company.

Parliament intends to make changes in the Commercial Code put such rules in the law.

In 2006, government revenue from the lease of state property amounted to UAH 326.5 mln UAH. The 2007 budget revenues from the lease of state property set at UAG 310 mln.

Monthly Economic Monitor Ukraine, February 2007

There is a new macro review #76 for economy from Institute for Economic Research and Policy Consulting.

• The Law on the Cabinet of Ministers became the focal point of political conflict in January.
• Real GDP grew by 7.0% yoy in 2006 thanks to strong domestic demand growth.
• The Parliament passed the law allowing privatisation of several large enterprises.
• New steel trade agreement with the EU was initialled in January.
• In 2006 the central fiscal deficit was 0.9% of GDP.
• Real wages grew by 18.4% yoy in 2006 maintaining the previous year trend.
• Consumer prices moved down to 10.9% in January.

Antimonopoly Committee will check the real estate prices

The Antimonopoly Committee of Ukraine (AMCU) intends to check grounds for prices of Kyiv construction companies they set on the new housing market. AMCU chairman Oleksii Kostusev disclosed this in a statement in the Business weekly. He said that currently, regional constructors are being checked.

«Housing construction markets are regional markets. In this, we have started checks at regions,» Kostusev said.

He also said that currently, construction market has no competitiveness between the companies, as the situation can be influenced only by large construction companies.

«We have facts to say that large construction companies have real market power. As the result, there is no full competitiveness on the market,» Kostusev said.

New automated land valuation system presented

State Committee for Land Resources presented the Single automated land cadastre (land valuation) system in Ukraine. As described by Andrei Kotov, the Chairman of "Center of State land cadastre", the system is nationwide and single database, which contains information on all land in Ukraine, as well as the landowners.

Today, the system works only in the Kiev region. Planned that during three months it will cover the all Ukraine. Such system would greatly simplifying the procedure of acquiring land. This system will help to identify the real cost of the Ukrainian lands, and establish transparent mechanisms to calculate fair payment for the land and minimizes cover of land tax. The Goskomzem Chairman, Nikolai Sidorenko said that the system' implementing is useful only after the approving the State Land Cadastre by Verkhovna Rada.

Chronicle of Ukrainian legislative developments – January 2007

Another useful documents - Chronicle of Recent Developments in Ukrainian Legislation, a monthly summary of the most important legislative developments in Ukraine in the areas of business and corporate law from Russian-Ukrainian Legal Group
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50% of total land deals in Kiev region are the speculations

And their share is rising rapidly. Somebody talks that this figure will grow up to 100 % this year. According to Yaroslav Lomakin , such a rush by speculators desire to concentrate in their hands most of the land before the end of the moratorium. Perhaps, the moratorium was prolonged with given reason.

As you know on December 19, 2006, Verkhovna Rada passed a bill that extended the ban on the sale of agricultural land until January 1, 2008 Mr. Lomakin gave, as an example, the concentration of speculative capital near Obukhov highway : “I know sites that was resold five times, and there was still no construction”.

Experts believe that the increase in speculative capital in Kiev region contributes to increases in the price of land and the the moratorium cancelling does not down them because speculators will control the offer.

Today in land deals involved many private persons and companies. Many tycoons do not shy to make that business. They are traditional operate trough affiliated structures so no evidence is possible to get.

Vladimir Stepenko, CEO of SV Development, says the main landlords are large construction companies. Such organizations have a strong lobby in the administration and authorities. Among the biggest land owners experts note Andrei Ivanov and his Kiev Investment Group (KIG), Deputy Prime Minister for Humanitarian Affairs Dmitry Tabachnik, his brother Michael and company HCM Group. And deputy HCM Group, Radomir Tchurkan said that they really looking a big land plots for their logistic projects.

Today the average price in the Kiev suburbia is USD 3 600 for 100 sq.m. which is 25 times higher than the price of land in the country as all. The maximum price increasing in last year was in Borispil destination, where land price increased up to 89%. Second largest growth is in Kievo-Svatosinski district (Zhitomir destination) with 62% growth.

VR plans serious corrections with construction regulation

The parliament is going to create a vertical executive authority for architecture and construction regulation.

The parliament approved a first reading of the draft law No. 2451 "On Amendments to Certain Legislative Acts of Ukraine Regarding Architectural and Construction Control" with 292 votes.

According to the draft law, state architectural and construction control is to be made by the federal executive committee in charge of construction, town planning, and architecture.

A State control within this organisation will be made by the State Architectural and Construction Inspectorate and its territorial departments.

The draft law states that these inspectorates will be financed by constructors via payments to a special funds of a State budget and that the chairman and deputies will have the rights to apply the penalties.

The draft law also stated that a construction permit is not enough to start construction works without relevant permit from the State Architectural and Construction Inspectorate or its territorial departments.

According to the note to the draft law, the document is called to create state architectural and construction control, since presently the time of examination are too long (45-120 days in keeping with the law, however, much longer in practice) and there is no single expert control of construction projects, which results in unsatisfactory and ineffective work of state expert examination services.

Short news - VR proposes new land valuation rules

The Verkhovna Rada of Ukraine adopted in the first reading a bill "About Amendments to Article 18 of the bill "On land" assessment made by the Cabinet of Ministers.

There was 258 votes from total of 440 MP registered in the session.

The draft bill proposed that the monetary valuation of land was stated out :

• located into a settlements borders, regardless of their special zoning - at least once every 5-7 years;
• the non-agricultural land, located out of a settlements borders - at least once every 7-10 years.
• the agricultural land, located out of a settlements borders - at least once every 5-7 years;

Ukraine should impose a tax on real estate.

The president of the Association of Ukrainian taxpayers Sergei Bychkov said this today.

He noted that in a market economy, real estate is an indicator of ability to pay. "In conditions of a transitional economy, this indicator is very important, especially since part of the private incomes is hidden", assumes S. Bychkov.

According to him, a tax on real estate it is important that the rate was variable - from 0.05% to 1.0%. It should establish local authorities, depending on the type of property, the size of housing and other criteria.

S. Bychkov also noted that in Russia Real estate tax is 9% of the total government revenue.

From RBC Ukraine