On February 25, the Latvian bank ABLV Bank published supplementary information for the depositors on its official website in the form of the most common questions and answers to them.

“What should the depositors and clients of the bank do, holding funds at ABLV Bank at the moment?
At the moment, clients do not have access to their funds either in the branches or through the Internet bank. The card system of the bank is turned off, therefore the customers cannot pay by bank cards and cannot withdraw cash from ATMs. Customers can freely transfer securities from their accounts of financial instruments to the bank.

What sum will be paid by the state to the bank’s clients?
The state guarantees each client 100 000 euros in any Latvian bank. In case of the moment of inaccessibility of deposits, payments are made from the funds of the Deposit Guarantee Fund.
ABLV Bank has enough liquid assets to return all sums paid from the Deposit Guarantee Fund!

What funds of the bank’s customers are guaranteed payment?
The guaranteed payment covers all deposits in any currency on all accounts, including time deposit accounts, current accounts, salary accounts, savings accounts, including those opened in the branches of the bank. The amount of guaranteed payment can not exceed 100,000 euros, i.е. if the client’s funds on all accounts in the bank do not exceed 100,000 euros, the client will receive a guaranteed payment in the amount of the balance on all his accounts. Interest accrued on the date of the onset of inaccessibility of deposits is included in the guaranteed payment if the total amount of payment taking into account the interest does not exceed 100,000 euros.

Who has the right to a guaranteed payment of up to 100,000 euros?
All bank customers - both natural persons and legal entities, both residents and non-residents - are entitled to a guaranteed payment of up to 100,000 euros. This right extends to state institutions of the Republic of Latvia, as well as institutions of self-government which budget do not exceed 500,000 euros.

When will the procedure of guaranteed payments start?
The procedure of guaranteed payments will start no later than within 8 working days from the moment of inaccessibility of deposits (that is, not later than 07.03.2018).
Depositors have the right to receive guaranteed payment within five years from the time of inaccessibility of deposits.

In what currency can I receive payment?
In accordance with the law, the guaranteed payment is made in euros. Deposits in other currencies are converted into euros when paid. Normative acts do not provide for the compensation for conversion losses.

What will happen if several clients of the bank held funds in one account, whose total balance exceeds 100,000 euros?
If the bank has identified each such depositor timely, then each such depositor is entitled to a guaranteed payment of up to 100,000 euros.

Is the person who has made the subordinated deposit in the bank entitled to a guaranteed payment?
No. The subordinated contribution is one of the exceptions, there is no guaranteed payment for it.

How will the size of the amount to be paid to the depositor be determined?
The bank’s accounting registers contain information about all clients who are entitled to a guaranteed payment, and about balances on customers’ accounts. This database is supervised and checked by the CRFC.

In what cases can the amount of guaranteed payment exceed EUR 100,000?
The law provides for several cases where natural persons can apply for an additional guaranteed payment of up to 200,000 euros, thus the total amount of payment may reach 300,000 euros. Such an event occurs if, within the latest three months, funds have been credited from (a) the sale of immovable property, (b) social compensation paid by the state, (c) compensation paid for the damage suffered (eg payment under an insurance policy) or (d) compensation for the unfair verdict of the court.

Is the payment due to the client if the encumbrance is imposed on the account?
No, the client will be paid only the amount that was available to the client at the time of taking decision by the CRFC on the inaccessibility of deposits. If the bailiff or tax administrator has levied execution on funds of the client, then the amount claimed in the guaranteed state amount of up to 100,000 euros will be transferred to the bailiff or tax administrator. If, after making settlements with the bailiff or tax administrator, the part of the encumbered amount on the account is unlocked, the client has the right to receive a guaranteed payment later. In this case, the countdown of the statute of limitations (ie 5 years, during which the client can receive a guaranteed payment) starts from the day when the amount subject to guaranteed payment became available to the client.

What will happen to the funds credited to the customer’s account on the next working day after the decision of the CRFC of February 23, 2013 on the restrictions of the bank’s activities?
All investors who meet the client category, who are entitled to a guaranteed payment, irrespective of the time of crediting of funds to the account, are entitled to a guaranteed payment of up to 100,000 euros.

What will happen to other customers whose savings on the bank accounts exceed 100,000 euros?
Follow the information of the FCMC and SCB.

What should people do who have a loan from ABLV Bank?
Such clients must fulfill their credit obligations in accordance with the concluded loan agreement. If the client fulfills its obligations under the loan agreement, then no one has the right to change the terms of the contract or demand the credit repayment ahead of schedule. There is no reason to worry if the client fulfills its obligations on time”.

The Government of Ukraine has amended Art. 5 of the Law “On Court Fee”, providing for the expansion of the list of applicants and claimants, who are exempt from paying court fee. The changes are confirmed by the Law of Ukraine “On the features of the state policy on securing the state sovereignty of Ukraine in the temporarily occupied territories in the Donetsk and Luhansk regions” and came into force on February 24, 2018.

So, Part 1 of Art. 5 “On Court Fee” is supplemented with clauses 21 and 22 of the following content:

“21) the applicants - in cases on applications for establishing facts of legal significance filed in connection with armed aggression, armed conflict, temporary occupation of the territory of Ukraine, natural or man-made disasters that led to forced relocation from the temporarily occupied territories of Ukraine, death, injury, imprisonment, unlawful deprivation of liberty or abduction, as well as violation of property rights on movable and/or immovable property;

22) the claimants - in cases on suits against the aggressor state, the Russian Federation, on the compensation of property and/or moral damage caused by the temporary occupation of the territory of Ukraine, armed aggression, armed conflict, that led to forced relocation from the temporarily occupied territories of Ukraine, death, injury, imprisonment, unlawful deprivation of liberty or abduction, as well as violation of the right of ownership on movable and/or immovable property”.

According to the opinion of Galina Litvinova, the state expert on legal awareness, the Directorate for Human Rights, access to justice and legal awareness of the Ministry of Justice of Ukraine, the accepted changes are a movement in the right direction. “Those people who have already suffered from the armed aggression should have the possibility of real access to justice and protection of their rights,” the expert comments. “Exemption from paying court fee significantly expands this possibility. However, time will show whether these changes will justify the expectation regarding the strengthening of protection of the rights of the victims. It is likely that in the near future, we will witness the formation of various judicial practices. Obviously, approximately in three-six months, the courts will receive newsletters regarding the application of the new rules. In any case, the judicial practice, first of all, depends on the quality of the materials submitted to the court”.

On February 21, 2018, the Resolution of the Cabinet of Ministers of 7.02.2018 No. 85 came into force, approving the procedure for granting an installment plan for VAT payment when importing the equipment for own production into Ukraine (hereinafter - Procedure) in accordance with clause 65, subsection 2, section XX of the TCU, No.2245-VIII of 07.12.2017.

The Procedure provides that in order to receive an installment plan for the payment of value-added tax, when importing equipment into the customs territory of Ukraine, the payer is obliged to submit an application to the customs office, which form must be also approved by the above-mentioned resolution. The application must specify the term of the installment plan, name, quantity, cost and code of the the UCG FEA of the imported equipment, its location, the purpose of importation, the CFEA of the payer, etc. The payer must attach the following to the application:

  • business project, business plan or other document with a detailed description of the technological process (with economic calculations) and expected performance;
  • available conclusions of state bodies, expert institutions, organizations, state standards and enterprise standards, technical conditions, technical documentation, documents confirming the availability of production capacities, premises;
  • documents provided for in Article 335 of the Tax Code of Ukraine, which are necessary for passing customs control.

Within 10 working days from the date of receipt of the application, the customs authority makes a decision on granting an installment plan for the payment of VAT or its refusal, on the recommendation of the commission established by its decision. It should be noted that if, on the date of receipt of the application, the amount of the tax claimed for installment plan is more than 1,000,000 UAH, then the decision period may take up to 25 working days in connection with the need to coordinate the decision with the Chairman of the State Fiscal Service of Ukraine. Such decisions will be published on the official website of the SFS.
The new Procedure also provides for exceptional cases in which the customs may refuse to provide installment plan, namely in the following cases:

  1. if the right for installment plan of such equipment by the appropriate code of the UCG FEA is not provided for by clause 65 of subsection 2 in section XX of the Tax Code of Ukraine;
  2. non-confirmation of the cost of equipment specified in the application;
  3. confirmation that the equipment comes from or is imported from the territory of Russia;
  4. non-compliance of the CFEA, specified in the application, corresponding to the CFEA, specified in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Associations;
  5. if a taxpayer has a debt in tax payments and some special sanctions applied to him in accordance with Article 37 of the Law of Ukraine “On Foreign Economic Activity”;
  6. non-confirmation of the availability of production capacity or premises or conditions for the registration and storage of goods, finished product;
  7. determination of the circumstances not reflected in the documents of the taxpayer;
  8. non-compliance with other mandatory requirements determined by the current Procedure.

If the customs authority makes a positive decision, during the entire period of using the installment plan, the taxpayer will be obliged, not later than the working day following the day of payment of the part of extended amount of VAT, to submit the report on the targeted use of the imported equipment, which form is also approved by the Resolution No. 85 of the Cabinet of Ministers, to the relevant main office of the SFS in the region, in Kyiv or in the office of large taxpayers of the SFS .

The European Parliament plans to create a new committee on financial crimes, tax evasion and tax planning. This decision was taken by the Chairmen of the factions of the European Parliament on February 8 and it is awaiting approval in the plenary vote.
The main goal of the committee, which will last 12 months, will be the completion of work done by the members of the pre-existing TAXE 1, TAXE 2 and PANA committees, as well as focusing on the so-called “Paradise Papers” - recent information leaks.
Thus, the co-chairman of the Greens / European Free Alliance (Greens / EFA) fraction, Philippe Lamberts, noted: “Paradise Papers demonstrated the existence of clear objectives and serious volume of work that we must do if we want to ensure fiscal justice throughout the European Union. We want to be sure that the national treasuries are able to collect funds which are necessary to maintain the common prosperity of the EU”.
According to the official, the EU Parliament’s Panama Papers Committee has already developed a well-prepared plan of measures to reduce the cases of tax evasion. The new committee will ensure the maintenance of the progress achieved and the implementation of the necessary measures by the Commission and governments throughout the European Union.

The Verkhovna Rada supported on second reading and in general the law “On Limited Liability Companies and Additional Liability Companies” (No. 4666) with technical and legal amendments. According to the Interfax-Ukraine Agency, 285 people’s deputies voted for the document.
As the Chairman of the Verkhovna Rada Committee on Economic Policy Andrey Ivanchuk (the fraction “People’s Front”) has noted, presenting the law in the parliament, now this issue is regulated by the legislation adopted back in 1991. At the same time, according to the words of the official, limited liability company is the most popular type of Ukrainian companies, and today there are more than half a million of them.
Andrey Ivanchuk also added that regarding the law No. 4666, they received 503 amendments on second reading, 360 of which were taken into account.
The law provides that the value of the LLC’s share is established as of the day before the meeting of the LLC members, at which the decision to exclude the member from the LLC was made.
The transitional provisions of the document also contain the provisions for the compulsory acquisition of a share by a member.

The Ministry of Finance of Ukraine has developed a draft Resolution on the further operation of the VAT risk system. This mechanism is a necessary measure aimed at the prevention of VAT embezzlement schemes and uninterrupted process of automatic VAT refund.
We remind that in December last year, the work of the VAT risk system was suspended in order to develop a coordinated effective solution which would not entail new risks.
So, the MFU together with the SFS have developed and agreed upon a decision that was made public on the official website of the Ministry on February 9, for public discussion.
Now the draft Resolution is under consideration of people’s deputies of the Tax and Customs Policy Committee. It includes the following changes:

  • In order to reduce the cases of suspension of the registration of tax invoices, a “cutoff criterion” of 3% and a threshold of the volume of supply for the month of 500 thousand UAH are established.
  • Earlier, the coordination of evaluation criteria continued for some time, that allowed some payers to use a fictitious loan. It is proposed the SFS to establish criteria for risk assessment for a prompt response. In order to ensure the transparency of this
    process, the SFS should first agree on these criteria with the Ministry of Finance and publish it on the official website.
  • Indicators of a positive tax history are introduced for small and medium-sized businesses. Tax invoices with a risky operation for the payers with a positive tax history will not be suspended.
  • An electronic register of suspended tax invoices is introduced where the payer will be able to find the information on the consideration and status of the suspended tax invoices in the online mode. This decision will make the process more transparent.
  • For the efficiency of consideration of explanations and documents, it is envisaged to create commissions at the regional and central level. The decisions made by the regional and central level commissions come into effect after they are registered in the electronic Register of the suspended tax invoices.
  • If the decisions of the commissions are not registered within seven working days, the tax invoice is suspended/ the adjustment calculation is registered automatically.
  • The form of the decision on refusal in registration has been finalized. In particular, the decision will have a clear reasoned ground for the refusal. In the event of non-submission and/or submission of the documents drawn up in violation of the law, the form will
    indicate the specific document which it concerns.
  • The project regulates the issue of registration of TI/AC for the payers, for which TI/AC was suspended until 01.12.2017 and no explanations and documents were provided.

The United Kingdom of Great Britain and Northern Ireland has introduced new requirements for registration and reporting regarding the trust management mechanisms both within the state and outside it. The introductions stipulate that British and non-British trustees are obliged to register all corresponding to these requirements trusts in the new service (register) on disclosing information on Trust Reporting Service by March 5, 2018, in accordance with these requirements. Otherwise, there is a threat of imposing fines.
The scope of application of the rules is quite wide. Thus, all the so-called “express trusts” (trusts established according to the intentions of the parties and recorded verbally or in writing, in contrast with the trust by court order) created anywhere in the world that have undertaken the corresponding tax liabilities under the UK law within the tax period (April 6 - April 5) and meet a number of other conditions, are demanded to register and report the information about the trust, its founders, beneficiaries and assets. These data will be kept in the registry of the UK government, which is available to law enforcement and tax authorities. The following taxes and fees are included in the tax liabilities accepted by the trusts:

  • income tax;
  • capital gains tax;
  • inheritance tax;
  • postage tax;
  • land tax and construction;
  • stamp duty on transactions with non-documentary securities.

Trustees may be liable to pay one or more of the above taxes if the trust has acquired or retained certain types of British assets - including shares and other British securities, UK debt instruments, as well as real estate and land in its territory.
The information to be entered in the Trust Reporting Service is relatively extensive.
Thus, regarding the intermediaries and beneficiaries, the trustees must provide detailed identification information, some kinds of which are not disclosed to date. It includes full name, date of birth, social security number, or unique tax identification number, or permanent residence address. If any of the reporting entities is a legal entity, then the registration information, tax residence and address of the registered office should be provided.
The trustees of business trusts with a large number of beneficial owners (such as pension programs for employees, charitable trusts and trusts for employees) will be suggested to determine the beneficiary class if the number of the indicated persons exceeds 10.
This requirement was introduced in response to the 4th EU Money Laundering Directive and in accordance with reporting requirements, operating both in the territory of the European Union (especially of France and Italy) and outside (for example, in Israel and South Africa ). Therefore, the above introductions should be considered in the global context of registration and reporting requirements for certain trusts and trustees in the territory of different jurisdictions.

On February 2, 2018, the Hong Kong Special Administrative Region officially formalized the process of ratifying the OECD’s Multilateral Competent Authority Agreement (MCAA). That means that the jurisdiction will join soon the existing multilateral network of data exchange between the tax authorities of many countries and territories around the world.
The Hong Kong Tax and Fees Department introduced the Ordinance on Automatic Exchange of Information on Financial Accounts (AEOI), which will optimize the process of obtaining information by the countries with which the jurisdiction agrees to exchange. This refers to the exchange both under the Common Reporting Standard (CRS) and the intercountry reporting exchange under the BEPS Plan.

After joining of Hong Kong the Multilateral Agreement, the authorities of the country will be able to pass a rather formal procedure for finalizing the relations with other participants through the OECD secretariat.
If we compare this process with the conclusion of separate bilateral agreements with a number of the countries, it is much faster and easier.
It is important to note that until the end of this year, the old (bilateral) rules for automatic exchange will remain in force in Hong Kong, and the new obligations will come into effect on January 1, 2019. Thus, the local financial institutions still have time to prepare and bring their internal control and reporting process in line with the new rules to be able to exchange the information for 2019 at the end of 2020.

On January 31, at the meeting of the Ukrainian government, it was decided to exclude 5 countries from the list of offshore companies, namely Estonia, Latvia, Georgia, Malta and Hungary.
We remind that on January 19, the Ministry of Finance of Latvia announced that the inclusion of this country in the list of offshore zones was unreasonable.
Earlier, Ukraine included Estonia in the list without notification of the Estonian government, so the Prime Minister of the state Jüri Ratas reacted by a statement on the need to remove the jurisdiction immediately from the offshore list. It took place on January 26, during his meeting in Davos with the Prime Minister of Ukraine Vladimir Groysman and the Minister of Finance of Ukraine Aleksandr Danilyuk.
In total in 2017, Ukraine expanded the list of the countries, the operations with counterparties of which are subject to control in the administration of the law of transfer pricing, to 25 countries. Guadeloupe, Guatemala, French Guiana, the Commonwealth of Dominica, the Dominican Republic, Estonia, Iran, Cuba, Laos, Latvia, Lebanon, Mauritius, Malta, Morocco, Monaco, the United Arab Emirates, Singapore, Georgia and Hungary were added to the list. At the recent meeting, Latvia and Estonia called for their exclusion from the Ukrainian offshore list.

On January 24, 2018, the Companies (Amendment) Bill 2017 was passed, which mandates incorporated companies of Hong Kong to keep a Significant Controllers Register (SCR). The new legislation will enter into force on March 1, 2018. The Hong Kong Companies Registry has set up a special section on SCR on its website containing, amongst others, a detailed Guideline on the Keeping of SCR and specific forms for the companies to use.

The main requirements for the new SCR regime are listed below.

Who are required to keep a SCR?

All companies “formed and registered” in accordance with the the Hong Kong Companies Ordinance, including dormant companies, financial institutions, charitable organizations, companies limited by guarantee and any other types of companies incorporated in Hong Kong, except for the listed companies, and foreign companies registered under Part 16 of the Hong Kong Companies Ordinance, must keep a SCR.

What should be contained in the SCR?

The SCR must contain information on the significant controllers of the applicable company, namely registrable persons (i.e., a natural person or a specified entity such as a government and international organisation) and/or registrable legal entities (i.e., a legal person, but not a specified entity, which is a member of the company) who have significant control over the company.

Significant control

A person has significant control over if one or more of the specified conditions have been fulfilled, which include holding directly or indirectly more than 25 percent of the issued shares (or voting rights) in the company, the right to exercise or to have significant impact or control over the company.

The examples are given in the Hong Kong Companies Registry SCR Guideline explaining what may constitute “exercising significant influence or control”, such as having veto rights in adopting or amending the company’s business plan or appointing (removing) the CEO.

Particulars Required

Registrable persons: name, address, identity card/passport number, date of registration of a person, and nature of control.
Registrable legal entities: name, address, registration number, legal form and governing law, date of registration of a legal entity, and nature of control.

How to prepare the SCR?

The applicable company has an obligation to ascertain the identity of any significant controller. In other words, the company that is subject to the new SCR regime must:

  1. take reasonable steps to identify its significant controllers and the required particulars;
  2. send out written notice to significant controllers requesting required particulars (or confirmation of particulars) within seven days after 1 March 2018;
  3. enter the date of Notice in the SCR;
  4. enter the particulars in SCR within seven days after receipt of all required particulars provided or confirmed by the addressee of the Notice and date of receipt of such confirmation (in the case where no confirmation is received within the statutory period of one month); and
    follow similar steps for any change in particulars to keep the SCR up-to-date, i.e; and
  5. send the notice to a person within seven days, knowing (or having reasonable grounds to believe) that a particular person (or entity) is a new significant controller; or in the case where the identity of the new significant controller is unknown, send the notice to third party whom the company believes (or having reasonable grounds to believe) to know the significant controller within the prescribed time; and
  6. to enter the particulars within seven days after receiving the confirmation by the significant controller (or a negative statement if it is appropriate).

Where is the SCR to be kept?

The SCR must be kept in English or Chinese language at the company’s registered office or at a prescribed place in Hong Kong. The Company must notify the Registrar of Companies of the place where the SCR is kept within 15 days after its creation or any change in location.

Access to SCR is limited only to officers of Companies Registry and law enforcement officers (who currently include Police officers, Independent Commission Against Corruption, Securities and Futures Commission, Hong Kong Monetary Authority, Insurance Authority, Customs and Excise, Immigration, or Inland Revenue Department). The company will have to appoint a representative who will serve as a contact point for providing information about the SCR and appropriate assistance to law enforcement officers.