Important Draft Laws. Issue 52: Competitions for Administration Heads, New Rules for State Oversight, and the Timber Market

A new procedure for reviewing EU integration bills

Parliament has no separate procedure for bills aimed at aligning Ukrainian legislation with European Union law. Such initiatives—whether from the government, MPs, or the President—move through the standard process, which includes registration, committee review, expert assessments, first and second readings, and a final vote in the plenary hall. Bill No. 13653 (the main one) and Bill No. 13653-1 (the alternative) propose establishing a distinct, simplified procedure specifically for EU integration initiatives.

Both draft laws specify that only bills aimed at aligning Ukrainian legislation with the EU acquis (the body of EU law) or fulfilling Ukraine’s international legal obligations in European integration would receive special status. Such initiatives would be considered under a shortened procedure—in a single reading instead of two. This would be possible only if the bill meets all formal requirements and, in the case of bills submitted by MPs, receives positive opinions from the relevant committee and the Cabinet of Ministers. The bills also stipulate that EU integration initiatives authored by MPs must be sent to the government for expert review to obtain comments and recommendations.

Bill No. 13653 provides that the Cabinet of Ministers would generally be the main initiator of adaptation bills to EU law. This is because the government develops and approves the National Program for the Adaptation of Legislation to EU Law—a new program now being drafted by the Ministry of Justice to replace the current Nationwide Program for the Adaptation of Ukrainian Legislation to the Legislation of the European Union. Only bills included in this program could receive special status and be considered under the simplified procedure described above. Alternative bills to government ones would be allowed only within seven days of the registration of the main bill (currently fourteen days).

Bill No. 13653-1 uses the term EU integration bill. As in the main bill, such a bill would have to be included in the National Adaptation Program and meet the established requirements. However, unlike the main bill, a positive opinion from the government would not be required for bills authored by MPs. As in Bill No. 13653, upon registration, the Parliament’s secretariat would check compliance with the formal requirements and mark the bill as an EU integration bill. However, the alternative bill proposes granting the Parliamentary Committee on European Integration the authority, after this verification, to determine whether an initiative truly qualifies as part of EU integration legislation. This would allow the committee to revoke special status regardless of whether the bill is included in the government program.

Thus, Bill No. 13653 makes the Cabinet of Ministers the primary coordinator of the process and links the status of initiatives to the government’s program. The alternative Bill No. 13653-1, in addition, would grant additional powers to the relevant parliamentary committee.

Proposals to appoint heads of local state administrations through competition and grant them civil service status

Since November 2017, heads of local state administrations have not held civil service status. The President of Ukraine appoints them on the proposal of the Cabinet of Ministers without competitive selection. Bill No. 14029 proposes restoring civil service status for heads of local state administrations and their deputies. The President would still appoint them based on the proposal of the Cabinet of Ministers, but only based on an open competition conducted under civil service law. Such a competition would include testing, knowledge assessments, and an interview. It would be organized by a competition commission established by the National Agency of Ukraine on Civil Service (NAUCS).

The bill provides for the creation of a personnel reserve for the posts of heads of local state administrations—a list of individuals who could be appointed to these positions in the future. To enter the reserve, a candidate must pass a separate competition under the same procedure as competitions for senior civil service positions. The Cabinet of Ministers would determine the winners after they undergo a special background check. Following this, each candidate would receive professional training and annual evaluations under an individual program. NAUCS would oversee this process.

Only Ukrainian citizens may take part in the reserve competition, provided they are fluent in the state language, hold at least a master’s degree, have at least seven years of overall work experience, and three years of managerial experience. Individuals would be excluded from the reserve if they fail to complete training or receive a negative evaluation of professional competencies (NAUCS would set the evaluation procedure). No one may remain in the reserve for more than two consecutive five-year terms, and reapplying would not be possible until three years after that period expires.

Former heads of local administrations who left office at the end of their term or by personal choice could enter the reserve without competition. The reserve size would range from 25% to 50% of all head positions in local state administrations.

Being in the personnel reserve would not give candidates any advantage in competitions for the head of local administration post—all candidates would compete on equal terms. However, those already in the reserve would not undergo background checks and evaluations again, since all the necessary information had already been collected when admitted. This simplifies and accelerates the consideration of their candidacies.

Membership in the personnel reserve would also not require a new background check before appointment, even if several years had passed since the initial selection. During that time, a candidate’s circumstances could change, but if the candidate did not disclose them, such changes would go unnoticed. For example, a candidate might face new risks not apparent during the initial check—such as close relatives moving to temporarily occupied territory, which could create potential security threats.

A new system of state oversight and control in economic activity

Bill No. 14030 proposes replacing the current law, On the Basic Principles of State Oversight (Control) in the Sphere of Economic Activity. The main emphasis would shift to preventing violations rather than conducting punitive inspections. To this end, a new instrument would be introduced—an audit of a company’s operations. This would be a voluntary procedure: an entrepreneur could apply to a supervisory authority or an independent auditor authorized by the Ministry of Economy through a qualification commission. The auditor would review the company’s activities, identify violations, and prepare recommendations for addressing them. Such audits could be conducted either by state oversight authorities (for example, the State Labor Service in the field of occupational safety or the State Emergency Service in the field of fire safety) or by independent specialists.

If an audit reveals problems, the entrepreneur would receive written recommendations with an agreed timeline for correcting them, set jointly by the entrepreneur and the auditor. If all issues are addressed on time, the entrepreneur will receive a positive conclusion confirming compliance. This conclusion would be entered into the integrated system, sent to the oversight authority, and could serve as grounds for fewer inspections. If the problems are not corrected, a negative conclusion will be issued. It would not result in fines, would not be entered into the integrated system, and would be sent only to the company; it could not serve as grounds for an unscheduled inspection. Instead, it would signal that the violations should be remedied before the next inspection. Under the bill, scheduled inspections would take place as follows: for high-risk companies, no more than once a year; for medium-risk companies, no more than once every three years; and for low-risk companies, no more than once every five years.

The integrated information system would be created and administered by the Ministry of Economy. It would consolidate all information on inspections conducted by state authorities, including orders, acts, sanction decisions, results of their implementation, data from audits reflected in positive audit conclusions, concluded insurance contracts, and company risk ratings. The current law has no such system, so information is now dispersed among different agencies (for example, the State Environmental Inspectorate in the area of environmental protection or the State Service on Food Safety and Consumer Protection in the area of sanitary law).

The bill would provide incentives for compliant businesses: if no violations occur over a two-year period and there is a positive audit conclusion, the interval between scheduled inspections would be extended by a factor of 1.5. In other words, if an inspection were scheduled once every two years, after a positive audit conclusion, it would occur once every three years.

For medium- and low-risk companies, the bill would allow scheduled inspections to be postponed for the duration of a liability insurance contract covering damage to the environment, life, health, or the property of third parties. This mechanism, however, would operate only if Parliament adopts a separate law or amends an existing law in a specific sector (for example, environmental protection, healthcare, or transport) that explicitly provides, for instance: “If a business entity has concluded a liability insurance contract, then scheduled inspections may take place no more often than ….” In other words, even if a company were to take out a 15-year insurance policy, inspections would not automatically be postponed for that entire period. Another law would determine the exact interval. At the same time, unscheduled inspections (triggered by an accident, a complaint, or other legal grounds) would remain possible.

Another innovation would be the creation by the Ministry of Economy of Oversight Councils at each supervisory authority. These councils would review business complaints against state authorities. Each council, established by the Ministry of Economy, would have up to ten members, including officials from the supervisory authority, representatives of business associations, civil society organizations, and academic institutions, with at least half of the membership coming from the public and business sectors. The councils would examine entrepreneurs’ complaints about inspectors’ actions or inaction and about sanction decisions, and issue opinions that the supervisory authority would be required to formally review and respond to within a set timeframe (ten working days). The results of the councils’ work would be published on the supervisory authority’s website and in the integrated state oversight system. The councils’ opinions would be advisory in nature.

Changes to timber market rules

Bill No. 13227-d is a revised version of the main bill and three alternatives we already covered in Issue 44. It maintains the overall approach to exchange trading in timber but introduces a separate system for small wood processors.

The bill provides two separate exchange trading models: one for all wood-processing enterprises and another specifically for small processors. Both models would consist of four stages: primary auctions (price increases), repeated primary auctions (price decreases), additional auctions (price increases), and repeated additional auctions (price decreases). Participation in the general auctions at the first two stages would be limited to wood-processing enterprises included in the official List of Processors. To qualify, an enterprise must submit an annual declaration (a new requirement) with complete details about its operations: the volume of timber purchased, processed, and sold; the number of employees; types of products; equipment; production sites; and so forth. At the additional and repeated stages, other business entities could also participate if they meet the general requirements: being registered in Ukraine, having no tax debt, and not being subject to sanctions.

For small wood processors—enterprises with no more than 50 employees and annual processing volumes of up to 5,000 cubic meters of timber—a separate set of exchange auctions would be introduced, also conducted in four stages. In the first two stages, participation would be limited to those small enterprises whose production facilities and equipment are located in the same region where the timber is harvested. The regional restrictions would be lifted at the additional and repeated stages, and small processors from any Ukrainian region could participate. As with larger wood-processing enterprises, they would be included in the List of Small Processors based on a declaration of their activity.

Participants in the auctions would be required to pay a security deposit. The auction organizer (the exchange) would determine the amount, but it could not exceed 1.5% of the lot’s starting price or UAH 1.5 million.

All information—applications, contracts, participant data, and digital identifiers of timber lots—would be recorded on the Unified Electronic Forestry Portal, administered by the State Forestry Agency. Declarations of wood-processing activity would also be submitted through this portal. The system would enable the state to track the origin of timber, its movement, and its final use.

The bill would ban exporting unprocessed timber (Customs Code 4403) and fuelwood (Code 4401) for the duration of martial law and five years after it ends. The timber export ban had long been one of the main stumbling blocks in Ukraine–EU relations before the full-scale war, and under a court ruling, Ukraine was required to lift the moratorium. The European Commission proposed that Ukraine impose a moratorium on logging rather than on exports to safeguard forests. However, this proposal failed to gain support from the Ukrainian government or Parliament.

Changes to rules on dealing with debtors

Today, the Unified Register of Debtors is already in operation. The Ministry of Internal Affairs refuses to re-register vehicles for debtors, notaries do not certify contracts for the sale of their property, and banks freeze funds, lifting the freeze only based on an enforcement officer’s order or a court ruling. At the same time, other institutions—for example, depositories or state real estate registrars—are not required to check the register automatically.

Bill No. 14005 would extend freezes to electronic money and allow them to be lifted not only by court order but also automatically once repayment of the debt is confirmed in the system.

For banks, the bill would expand the obligation to provide information to enforcement officers: in addition to account details and balances, they would have to report the type of account, the term of any deposit, the existence of collateral or mortgages, and the amount of debt if the bank itself is the creditor. As with the current rules, banks must also notify enforcement officers of the opening or closing of accounts, including electronic money accounts. For notaries, the obligation to check the register would extend to sale-and-purchase contracts and pledge and mortgage agreements.

State real estate registrars must check the register each time and refuse registration if the owner is a debtor, except in specified cases such as bankruptcy or mortgage foreclosure.

Depository institutions would be required to check the register when opening or closing securities accounts and to notify enforcement officers of the results.

Reforming the credit history bureau system

Bill No. 14013 is an updated version of Bill No. 12260, which we covered in December 2024. At that time, MPs decided to submit it for public consultation, which resulted in only two proposals: to clarify the deadlines for entering data into the bureau (information about the transfer of a debt to a new creditor would have to appear in the bureau no later than two working days afterward), and to allow individuals to transfer their credit history to third parties themselves.

The relevant committee recommended revising Bill No. 12260 and resubmitting it for a repeated first reading. However, as noted in the explanatory note to Bill No. 14013, due to procedural rules, the Rada did not set deadlines for reconsideration (as required under Article 115 of the Rules of Procedure), which made further progress on the bill impossible and led to its withdrawal. As a result, a new bill—No. 14013—was introduced, which incorporated the proposal to shorten the update period to two days but not the provision on transferring credit histories to third parties. Overall, there are no significant differences between the two bills.

The government again proposes to tax income from online platforms

The government has registered Bill No. 14025 in Parliament, which would establish rules for taxing the income of citizens who earn money through online platforms such as OLX, Prom, Kabanchik, or Airbnb. This is an updated version of the earlier Bill No. 13232 (which we covered previously), withdrawn after the government’s resignation, which also required standard taxation of such income (18% personal income tax and 1.5% military levy). The core idea of both bills is that platforms would have to report annually to the Ukrainian tax authority on their users and the amounts they earn. If they process payments, they must also withhold and remit taxes automatically. The new element in Bill No. 14025 is an electronic account for nonresidents (to be administered by the State Tax Service)—a separate online system where foreign companies could register, file reports, and receive notices from the Ukrainian tax authority.

Like its predecessor, Bill No. 14025 would also introduce an automatic mechanism for international data exchange: if, for example, a Ukrainian rents out an apartment through Airbnb in Ireland, the Irish tax authority would transmit that information to the Ukrainian tax authority, and the income would be taxed under Ukrainian rules. In this way, even if the platform is not Ukrainian, the state would still be able to track its citizens’ income and require payment of taxes.