The Law of Ukraine “On Amendments to the Law of Ukraine “On the Basic Principles of State Supervision (Control) in the Sphere of Economic Activity” regarding the liberalization of the system of state supervision (control) in the sphere of economic activity”, which was developed by a team of experts back in the summer of 2014, was adopted by the Verkhovna Rada of Ukraine on November 3, 2016.

The newly adopted Law is awaiting signature by the President of Ukraine and should enter into force the day after its official publication.

The problems that necessitated the development of the draft law were, in particular, the inefficiency of the existing system of state supervision (control) in business activity, the unreasonably wide scope of supervisory and control powers of state bodies, the predominance of fiscal (punitive) functions in the activities of these bodies, their focus primarily on identifying offenses and applying sanctions to entrepreneurs, as well as increased corruption risks that accompany the activities of control bodies.

It is worth noting the most significant novelties in the Law of Ukraine “On the Basic Principles of State Supervision (Control) in the Sphere of Economic Activity”, which are introduced by the new law.

Thus, the presumption of legality of the behavior of a business entity is further legally enshrined - similar to the presumption of legality of the behavior of a taxpayer, enshrined in Article 4 of the Tax Code of Ukraine. That is, in cases where individual legal norms can be interpreted ambiguously - both in favor of entrepreneurs and in favor of regulatory authorities - such norms should be interpreted in favor of the business entity, justifying its behavior.

The law also directly prohibits the establishment of any planned indicators for holding business entities accountable. It should be noted that entrepreneurs massively complain that employees of regulatory authorities are focused on “implementing the plan” for imposing penalties, although at the official level the existence of such a plan is denied in every way.

Another advantage of the new Law for entrepreneurs is that it abolishes quarterly inspection plans - planning of state supervision (control) measures will be carried out exclusively for the annual period. This will protect business entities from unnecessary stress and contribute to business stability, because from now on, every entrepreneur will be able to know for sure whether he will be subject to a planned inspection next year, even before December 1 of the current year, when annual inspection plans must be published on the Internet.

In addition, the law establishes a strict limitation on the frequency and duration of planned control and supervision measures. Planned inspections of business entities whose activities are classified as high-risk will be carried out no more often than once every two years, and other business entities will be inspected by state authorities no more often than once every three years. At the same time, planned measures regarding business entities will be carried out starting from the second year after their state registration, i.e. the first year the business is guaranteed to operate without inspections.

The law stipulates that the duration of a scheduled inspection cannot exceed 10 working days, and for a small business entity - 5 working days. At the same time, the total duration of all scheduled measures applied during the calendar year to a business entity should not exceed 30 working days, and for a small business entity - 15 working days.

The law also specifies and narrows the grounds for carrying out unscheduled measures of state supervision (control). So, if currently the basis for an unscheduled inspection is the failure of an entrepreneur to submit mandatory reporting, then after the new Law enters into force, an unscheduled measure will be applied in the event of failure to submit reporting for two reporting periods in a row without good reason or without providing written explanations about the reasons that prevented reporting. The law also directly prohibits repeated unscheduled inspections for the same reasons for which the entrepreneur was already inspected.

The newly adopted Law expands the rights of business entities in relations with regulatory authorities, in particular, the grounds on which entrepreneurs have the right to refuse state officials access to an inspection are expanded. For example, an entrepreneur can quite legally prevent inspectors from inspecting if he has not received notification of the relevant planned or unplanned event in the manner prescribed by the Law, as well as if the duration of the inspection exceeds the above-mentioned time limits.

Finally, according to the new Law, entrepreneurs will be subject to a minimum fine for offenses for which they are held liable for the first time.

Thus, it is to be hoped that the new Law will help entrepreneurs to conduct their own business more comfortably, as well as to feel more predictable and confident in their relations with state structures.