Budget, Gas, and Corruption Whistleblowers: What’s Changed for Ukraine in 2020?

Ukraine launched a new gas market as of the beginning of the year, and a new budget and a number of laws came into force. Here are the changes that happened in the life of Ukrainians on January 1, 2020.

Budget

On January 1, 2020, Ukraine starts to live with a new budget. It was approved by the Verkhovna Rada on November 14, 2019, setting the average annual exchange rate of 27.5 hryvnia per one U.S. dollar. Budget revenues should amount to 1.09 trillion hryvnia and expenditures to 1.18 trillion hryvnia.

From January 1, the minimum wage has increased from 4,173 UAH to 4,723 UAH per month. The subsistence minimum remained the same as in December 2019 – 2,102 UAH per month (by the end of 2020 MPs plan to raise it twice – in July and December).

Taxes

The new minimum wage and the subsistence minimum automatically raise taxes for individual entrepreneurs who have a simplified tax system.

• First Group of individual entrepreneurs will have to pay 1,039.06 hryvnia of single social contribution per month and 210.2 hryvnia of the single tax (a total of 1,249.26 hryvnia);
• Second Group of individual entrepreneurs will have to pay 1,039.06 hryvnia of single social contribution and 944.6 hryvnia single tax (a total of 1983.66 hryvnia per month);
• Third Group of individual entrepreneurs will have to pay 1,039.06 hryvnia of single social contribution, but the single tax rate will depend on income (3% of income if the entrepreneur is a VAT payer and 5% if not).

Debts

In 2020, Ukraine will have to pay about 423.6 billion hryvnia of debt, which is one-third of all budget expenditures. The Debt Agency started operating on January 1. The purpose of the agency is to ensure more efficient and politically impartial management of public debt.

Previously, the public debt was managed by the Ministry of Finance, whose heads changed after each parliamentary election and change of government, and this hampered the debt management.

Roads

Road construction and repair will now be planned for 3 years in advance. Also from January 1 there is no need to coordinate this work with the parliamentary budget committee. This has simplified the procedure: first, the government should approve the road development program, and State Agency of Motorway Roads of Ukraine (Ukravtodor) should approve the list of construction and repair facilities that was drawn up by local administrations.

Gas

Since January 1, Naftogaz is no longer the most profitable company in the country. Its most profitable asset – the gas transportation system – is now managed by the Operator of the gas transportation system of Ukraine.

Ukraine has launched a new European gas market model. This means that gas has to be produced and supplied gas by a company that does not have access to its transportation. The unbundling was made in order to sign a contract for the transit of Russian gas to Europe via the gas transportation system of Ukraine according to European rules.

Starting from January 1, the Operator will be getting about $3 billion of revenues a year. At the same time, it is highly likely that gas prices will fall for Ukrainian industrial consumers (but not the population): large volumes of gas have been accumulated in Europe because of fears that Russia would shut off the pipes. And due to oversupply, the gas price will start to fall.

The tariff for the population is fixed for the whole heating season.

Electric cars

The law on electric vehicle infrastructure came into force on January 1. From now on, owners of traditional fuel cars parked in parking lots for electric cars will be fined from 340–510 hryvnias. Parking spaces equipped with electric vehicle charges will be marked with special signs.

New road signs relating to electric vehicles are also being introduced and green numbers will be installed on the electric cars.

Geographical indications

Manufacturers of unique goods and products are now protected by the state. The law on the protection of geographical indications came into force on January 1.

A geographical indication is the name of a product that is manufactured in a specific territory, like cognac, champagne, or feta. The first geographical indication in Ukraine is Hutsul Bryndzia – a cheese made from sheep's milk in the Carpathian meadows in Ivano-Frankivsk, Transcarpathian and partly Chernivtsi regions.

At the same, the products called "cognac", "champagne", etc. will get new names – brandy, sparkling wine, etc.

Land

In 2019, MPs failed to extend the moratorium on the sale of agricultural land. But in fact, the moratorium will continue until the law on land market is passed by lawmakers.

The land market is scheduled to launch in October 2020.

Parliamentary immunity

In 2020, amendments to the Constitution of Ukraine, which abolish parliamentary immunity, will come into force. Article 80 of the Constitution is amended as follows: "The People's Deputies of Ukraine are not legally responsible for the results of voting or expression in parliament and its bodies, except for liability for insult or libel."

Corruption whistleblowers

Corruption whistleblowers – citizens who notify anti-corruption authorities of possible bribery – will officially appear in Ukraine. Citizens can report corruption and other violations anonymously to the National Agency on Corruption Prevention via hotline or email.

Upon receipt of the complaint, the agency is obliged to verify all the facts and obtain explanations from the officials reported by the whistleblower.

If the amount of bribes or damages inflicted on the state is at least 5,000 subsistence wages (about 9.6 million hryvnia), the whistleblower may claim a cash reward.

A reward can be up to 10% of the amount of damages, but may not exceed 3000 minimum wages (about 12.5 million hryvnia). The decision on the reward is made by the court.

The whistleblowers are guaranteed free legal assistance, protection in the event of a threat to life and health, and reimbursement for lawyer's fees.

/Text by Yaroslav Vinokurov

/Translated by Vladyslav Kudryk

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