Corporate law firms Nobles and Phenomena have joined forces in Ukraine.
On Thursday, November 30th, leading legal practitioners from across Central and Eastern Europe gathered in Prague to help CEE Legal Matters celebrate its fourth successful year as the leading chronicle of the legal industry in the region, participating in an expert Round Table conversation about the year just concluded and enjoying an evening of dinner, drinks, and bonhomie.
An unfavorable global financial crunch has affected the Ukrainian banking system. The continued growth of the share of distressed loans in portfolios of Ukrainian banks in recent years ultimately resulted in a number of sonorous bank defaults and, eventually, in the unprecedented nationalization of the largest Ukrainian national bank, Privatbank. According to the National Bank of Ukraine, in August 2017 over 60% of loans in the Ukrainian banking system were non-performing. This resulted in a permanent crisis in liquidity for Ukrainian businesses and a large number of significantly overdue loans. In response to this situation, in 2016 a unique dispute settlement mechanism for creditors and debtors was implemented to provide for financial restructuring of bad assets.
Ukraine has made a great leap forward in the development of transfer pricing rules since the concept of “controlled transactions” was first introduced in the Tax Code in 2013. These transfer pricing rules have been amended in recent years and Ukrainian taxpayers are likely to face many new issues on the subject in 2017.
These days the Ukrainian media is full of news about the detention of officials and business owners, revisions of enterprises allegedly connected with corrupt officials, frozen foreign accounts, and the expected return of assets in the near future. The law enforcement system keeps an eye on ex-representatives of power and business, skillfully bringing them to criminal prosecution, and so-called “resonant” cases with a political flavor appear almost daily in the media.
The growing interdependence of world economies, driven by the reduction and removal of trade barriers, cheaper transport and communication costs, and increased use of the Internet (facilitating easier access to foreign markets), as well as by the growth of multinational corporations, has resulted in unprecedented cross-border trade and capital flows. At the same time, it has also opened up new opportunities for multinationals to reduce their profit in high-taxed jurisdictions by exploiting gaps and mismatches in domestic and international tax rules to artificially shift it to low-taxed countries (or tax havens).
After a period of political and economic instability which put M&A transactions in Ukraine into a dormant mode, the country is starting to show signs of revival. As the economy recovers and new legislation aimed at strengthening the rule of law and simplifying doing business is adopted, investors are again looking towards Ukraine with interest.