Important Draft Laws. Issue 2: Public Procurement, Social Protection, and Bankruptcy

Important Draft Laws. Issue 2: Public Procurement, Social Protection, and Bankruptcy

Photo: ua.depositphotos.com / shisuka
24 October 2023
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Draftlaws review registered from October 2 to October 15.

Over the past two weeks, the Verkhovna Rada website has registered 37 new draft laws and 35 draft resolutions. The Cabinet of Ministers initiated only four draft laws, and MPs authored the rest. We have selected the most important ones for you.

Public procurement

Public procurement plays a crucial role in Ukraine, especially during wartime, when every hryvnia of public funds becomes exceptionally valuable. In such circumstances, it is important not only to plan and execute procurements carefully but also to ensure maximum honesty and transparency in this process. Violations of the law in this area can lead to budget losses. It is with these considerations in mind that we hope the people’s deputies registered six draft laws on procurement:

Bill No. 10090-1 on measures to counter violations in the procurement sector envisages that the State Audit Service will issue warnings to customers who incorrectly prepare tender documents, set a high level of security deposit, publish tender-related information late, or review proposals from tender participants belatedly. Suppose the customer signs a contract with the bidding winner that does not comply with the winning bid or the requirements of the tender documentation. In that case, the contracting organization may be fined up to UAH 510,000. The fine can be imposed no later than three years (currently two) from the violation date.

Three more draft bills (10149, 10150, 10151) aim to strengthen accountability for the inefficient use of budget funds during public procurement. In particular, Draft Bill No. 10151 proposes amendments to the Criminal Code and the Code of Ukraine on Administrative Offenses. It introduces new provisions related to the inefficient use of budget funds or incorrect determination of the expected value of goods. Employees of the contracting enterprise can be penalized for such violations with a fine of UAH 8,500, corrective labor, or imprisonment.

To introduce such accountability, Draft Bill No. 10149 proposes to amend the Law on Public Procurement to introduce a new concept of the “expected value of the procurement item,” which corresponds to the average market price of this procurement item on the calculation date (currently, there is only a Ministry of Economy order regarding the methodology for determining the expected value). Additionally, Draft Bill No. 10150 introduces the concept of “efficient use of budget funds” into the Budget Code, which means obtaining the maximum result for every budgetary hryvnia spent (procuring high-quality goods and services at the minimum price).

Draft Bills 10130 and 10131 aim to harmonize Ukrainian legislation with European laws and establish that Ukrainian government authorities and courts must take into account decisions and regulations of the European Union related to procurement (Project 10130) and the fields of state aid to enterprises and the protection of economic competition (Project 10131) when making decisions in these areas in Ukraine.

Bankruptcy reform

Draft Bill No.10143 was developed in collaboration with the EU Project Pravo-Justice, the Ministry of Justice of Ukraine, and experts to implement EU Directive 2019/1023 on preventive restructuring frameworks and introduce these procedures into Ukrainian legislation. The goal of the draft bill is to provide businesses with access to effective restructuring procedures to prevent bankruptcy, especially for enterprises that have suffered due to Russian aggression and are facing financial difficulties.

According to the author, adopting this law is a condition for receiving international support of EUR 18 billion, and it needs to be done by the end of 2023. 

Social protection

Let’s highlight seven of the most important draft bills that pertain to various social groups.

Draft Bill No. 10132 defines the rights of individuals who have suffered sexual violence related to Russia’s armed aggression against Ukraine. It also expands the concept of a victimized person to include children born as a result of such violence. The draft bill provides for the definition of “urgent interim reparations,” which refers to measures aimed at restoring the rights and supporting victims and their families, including access to legal protection, compensation, rehabilitation, and other forms of assistance. The draft bill also establishes a Unified State Register of individuals who have suffered from sexual violence associated with Russia’s aggression against Ukraine.

Another project, No. 10133, proposes establishing a Fund to pay urgent compensation to individuals who have suffered sexual violence. The funding sources for the Fund include: 1) funds from international financial organizations, other creditors, and investors; 2) international assistance; 3) funds recovered from Russia as reparations.

Draft Bill No. 10137 stipulates that people living in combat areas or on temporarily occupied territories by Russia can use video communication to present identification documents, apply for pensions, and perform other actions. All actions are recorded by video. This approach ensures security and removes the restrictions of martial law.

Draft Bill No. 10142 provides benefits for veterans of the Russian-Ukrainian war and participants in the Revolution of Dignity who have disabilities (Groups I and II). It proposes reducing the monthly income portion subject to personal income tax.

For example, if the individual mentioned in the project has an income of 10,000 hryvnias, they would typically have to pay a personal income tax (PIT) of 18% on this income, which would amount to 1,800 hryvnias. Thus, the person would receive 8,200 hryvnias in hand. However, if the draft project’s provisions are implemented, the taxable income would be reduced by the subsistence minimum (2,684 hryvnias). This means that the tax would now be calculated based on 7,316 hryvnias (10,000 hryvnias – 2,684 hryvnias), resulting in a tax of 1,317 hryvnias. Under these new conditions, the person would receive an income of 8,683 hryvnias, which is nearly 500 hryvnias more.

Other

Another noteworthy draft bill is the proposed amendment to the Law of Ukraine “On Media” regarding the production and broadcasting of social content (Project No. 10141). It suggests adding a new term, “social content,” to the Law on Media. Social content refers to audiovisual works (videos with sound) containing socially beneficial information aimed at personal and societal development, promoting humane and just ideas, a healthy lifestyle, an inclusive society, and supporting family values.

The draft bill outlines that audiovisual media, at their own expense, should produce a minimum of 10 pieces of social content per year, each with a duration of at least 2 minutes. These media outlets should also broadcast each of the produced social content pieces at least twenty-four times a year. Social content should be clearly marked during broadcasts to distinguish it from other audiovisual media products. 

Authors

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