May 24, 2017
New Guarantees for Entrepreneurs
New edition of the Law “On Guarantees of Freedom of Entrepreneurial Activity” came into force on May 3.
Average annual number of employees now includes part-time employees, contractors and other workers employed under civil contracts.
The time period of deprivation of privileges, guarantees and rights, in case of violation of the average annual number of employees, has been decreased by 3 months.
Individual entrepreneurs performing handicraft activity are now allowed to engage in the production process up to 5 apprentices for remuneration.
Entrepreneurs are now allowed to act as founders (or participants) of another legal entity and freely dispose of the income remaining after payment of all production expenses, taxes and statutory duties. They are also entitled to receive loans or attract monetary means or other property of other legal entities or individuals on contractual basis.
Entrepreneurs are imposed further obligations. Thus, they are now obliged to establish salary rate of the employees at no less than the legally determined minimum size. They also must timely pay the salary, insure the employer’s civil responsibility and observe requirements of competition and consumer protection laws.
One of the most important guarantees introduced for entrepreneurs is priority of the entrepreneurial entity. The priority implies that all unavoidable inconsistencies or ambiguities of legislation, arising in the course of performing entrepreneurial activity in the relations with state bodies, controlling or law enforcement bodies and banks, shall be construed in favor of the entrepreneur.
The new edition of the Law introduces prohibition of unfair competition. According to it, all actions aiming at obtaining privileges contradicting the legislation or business custom and causing damage or reputational harm to other competing entrepreneurs are prohibited.
State registration of entrepreneurial entities can now be performed on the “one window” principle.
An entrepreneur is now entitled to choose a form of reporting: either on paper or on electronic data device. The software for electronic reports must be distributed by the government on a free or privileged basis.
According to the new edition of the Law, only legal entities are allowed to perform a type of activity not specified in the constitutive documents. Types of activity for entrepreneurs shall be determined by the Cabinet of Ministers.
The new edition strengthens the guarantees of entrepreneurs to dispose monetary means deposited on their bank accounts by way of restriction of use of these funds by the bank or other credit organizations.
The maximum term has been established for receipt of monetary means to the account, transfer of the funds to another account and other operations requested by the entrepreneur. These actions now may not be performed later than the day following the day of the appropriate written application unless otherwise is legally prescribed. In case of a violation of this term the bank shall pay an interest to the entrepreneur. Also, the bank shall pay interest to the entrepreneur for usage of the funds deposited on its account.
The new Law also provides entrepreneurs with the guarantee to apply to state bodies, economic management bodies or supreme organs with complaints, proposals or petitions. The term for reviewing the applications is established at 1 month from the submission, save for the ones requiring additional consideration.
The new edition provides for creation by state bodies and economic management bodies of regularly updated web-site for submission by entrepreneurs of complaints relating to illegitimate decisions, actions or inactions of state bodies and their officers.
The new Law also restricts inspections of the entrepreneurs. The Law strictly determines grounds for initiation of an inspection and allows entrepreneurs to deny an inspection unless appropriate grounds exist. Inspections of activity of an entrepreneur can be initiated by state tax bodies only if violations revealed on the basis of examination of financial and tax reports submitted by the entrepreneur.
Application of financial sanctions to entrepreneurs is also restricted. In case of proper fulfillment by the entrepreneur of instructions of controlling organs and restitution of damage in proper time and size, financial sanctions shall not apply.
The new edition of the law contains grounds for termination of activity of the individual entrepreneur. The grounds shall be either decision of the individual or a court’s decision.