As a result of the war, more than 70% of small and medium businesses completely or partially stopped operating in Ukraine. At the same time, about a third of entrepreneurs still plan to resume operations.
Unfortunately, many companies find themselves in hot zones where active hostilities are taking place, so the problem of relocation to safe regions of Ukraine is acute for them. In this difficult period, it is crucial that business representatives work and revive the economy because this is the basis for maintaining the country’s defense capabilities.
Here are some tips if you are planning to evacuate your business:
- Search for office or production space
A modern business center in Lviv with an area of over 4,500 m2, an industrial building in Chernivtsi with an area of 26,000 m2, an office space with an area of 142 m2 in the center of Kamianets-Podilskyi — this and other property of any size and purpose can be purchased or rented in the Prozorro.Sale system to relocate business. It continues to operate and conduct online auctions under martial law.
In addition to real estate, you can buy vehicles, office supplies, equipment, and more in the Prozorro.Sale system.
- Transportation of employees and equipment
If you do not have the ability to transport equipment and employees yourself, the country will help evacuate the business. To do this, the government has launched a special program. It can be used by any company in the risk zone or hostilities.
You must leave an application to participate. It should provide information about the company, its specialization, employees, and needs at the location (premises, resources, and raw materials for production).
The Ministry of Economy collects and processes all applications, determines their priority. The first to receive assistance will be strategically important enterprises, in particular those that produce essential goods for the civilian population and the military.
When the application is confirmed, the state will help move to a new place, find space to accommodate production, as well as resettle staff and find new employees.
- Organization of labor relations
It should be remembered that an employee can be transferred to another location only with their consent. This must be formalized by an appropriate order. In case of relocation, the employee must be paid:
- property transportation costs;
- per diem for the time spent on the road;
- one-time assistance for the employee and each family member moving.
In addition, the law guarantees the payment of wages for days of getting ready to relocate and resettlement (no more than 6 days), as well as the time spent on the road.
Moreover, during the period of martial law, an employee can be transferred to another job, even without their consent. However, this is the case only if it is necessary to avert or eliminate the consequences of hostilities, or if other life-threatening circumstances have arisen.
Another important condition is that a new job should not pose contraindications for health reasons. The level of payment for it should not be lower than the average salary at the previous job.
Recently, the Verkhovna Rada has adopted a Law that establishes new rules for the organization of labor relations under martial law. In particular, relocated enterprises were allowed to conclude fixed-term employment contracts with new employees for the period of martial law or for the period of replacement of a temporarily absent employee.
Moreover, according to the law for the period of martial law:
– the duration of employees’ working hours shall not exceed 60 hours per week;
– the start and end time of daily work is determined by the employer;
– the prohibition to work on weekends and their rescheduling is canceled;
– festive and non-working days are canceled;
– employers shall pay wages, but they shall not be liable for a delay due to hostilities or capture of the enterprise or other force majeure. The term of payment may be postponed until the resumption of the activity of the enterprise.
The Verkhovna Rada adopted several changes to support Ukrainian business in the conditions of war.
Temporarily, from April 1, 2022, until the abolition of martial law:
- sole proprietors of the first and second groups operating under the simplified system of taxation have the right not to pay a single tax;
- large enterprises with an income of up to UAH 10 bln, regardless of the number of employees, can register as payers of an ST of the third group. This does not apply to businesses whose activities are related to excisable goods, gambling, currency exchange, extraction and sale of minerals, banks, insurance companies, non-residents, and others;
- the single tax interest rate for the third group of taxpayers may be set at 2% of income.
Important: in order to temporarily switch from 5% to 2% of the ST from April 1, 2022, it is necessary to submit an application to switch to the simplified taxation system by March 31. In line, 5.1.1. It is necessary to indicate the reduced rate — 2%. This can be done through the taxpayer’s electronic account. Payment of a single tax by such payers will be made on a monthly basis, and reporting will be made on a quarterly basis.
For the period of martial law, taxpayers of the third group with a reduced rate are exempt from charging and paying VAT on operations for the supply of goods, works, and services in Ukraine. Entrepreneurs who lost warehouses, production, or stores as a result of hostilities will not pay VAT on the destroyed goods. Moreover, there will be no need to pay VAT on the goods that were transferred for the needs of the defense.
In addition, since March 1, 2022, and within 12 months after the abolition of the martial law, sole proprietors, persons who carry out independent professional activities, and members of agricultural holdings are exempt from paying the USC for themselves. At the same time, the insurance period for the period of non-payment will not be accrued. Taxpayers of the second and third groups paying under the simplified taxation system are allowed not to pay the USC for mobilized workers. Such amounts will be paid from the national budget.
In addition, for the period of martial law:
- non-residential real estate tax, land tax, and rent for national and municipal land plots located in combat zones and temporarily occupied territories shall not be accrued and paid;
- entrepreneurs can use bank accounts without registering them with the tax authority;
- tax audits are canceled and stopped (except for actual and office audits on VAT reimbursement), a moratorium on documentary audits of the correctness of the accrual, calculation, and payment of the USC was introduced. The State Labor Service of Ukraine also canceled its audits;
- the course of all period of limitations specified by the Tax Code stops;
- the taxpayer is exempted from liability for violation of tax legislation if they were unable to fulfill their tax duty in a timely manner. However, they must comply with it within three months after the abolition of martial law.
In war, entrepreneurs can choose whether to pay individual taxes or not. Therefore, if your enterprise receives income and is able to support the country’s economy — do it!
How else does the state help business?
- The Cabinet of Ministers launched a compensation program for entrepreneurs who hire internally displaced persons. According to it, the employer is paid UAH 6,500 monthly from the national budget for each hired IDP. Such compensation for labor costs may be received no longer than two months from the date of employment of the person, during the period of martial law, and within 30 calendar days after its cancelation.
You can receive funds under the following conditions:
- the employer is registered as a USC payer and has submitted tax reporting for 2021;
- the employee’s salary is not lower than the amount of the minimum wage.
In order to receive compensation, you need to file a corresponding application with the local employment center, either in paper form or through the Diia portal — in electronic form.
- As part of the eSupport program, an SP may receive one-time assistance in the amount of UAH 6,500 if he/she is registered as a USC payer and submitted tax reporting for 2021. You can receive assistance through the Diia Portal mobile app by submitting an application by March 31, 2022.
- The government has expanded the “5-7-9” lending program. Any Ukrainian company (where the ultimate beneficiaries with a share of more than 50% are Ukrainians) during the martial law and one month after its abolition can receive a loan at 0% for a period of up to 5 years. After the martial law is lifted, the credit rate will be 5%. The maximum loan amount was increased to UAH 60 mln.
- Deregulation of economic activity. The Cabinet of Ministers abolished the need to obtain permits in many areas of business for the period of martial law — education, medical and veterinary practices, mediation in employment abroad, security activities, recycling of household waste, etc.
- Local authorities do not stand aside and help businesses. For example, in Lviv, catering establishments located in municipal premises are partially or fully exempt from paying rent. Moreover, the business in the city was exempted from paying for the use of advertising media. In all regions of western Ukraine, contact centers are created for communication with entrepreneurs who want to relocate production. They are assisted in finding premises, warehouses to launch a business. More regional business support programs can be found at the link.
If your enterprise receives income and is able to support the country's economy — do it!