The LDN expert initiated legislation changes to support the small and medium business

Publication date: July 1, 2022

The issue which an entrepreneur from the Sumy region turned to the Legal Development Network became a worthwhile legal initiative. Anna Karpenko, the LDN finance and taxation consultant, submitted a request to the Ministry for Communities and Territories Development of Ukraine. This request prompted changes in the legal framework that should help small and medium-sized businesses receive compensation for utility costs.

In May 2022, the Legal Development Network surveyed small and medium-sized businesses (SMEs) to determine their needs and problems in the context of full-scale war in Ukraine in the legal, labor, tax, and financial spheres*.

During the survey, one of the respondents, Mr. Volodymyr**, shared his pressing question with Anna Karpenko, the LDN finance and taxation consultant, who conducted the survey.

He said that since the first days of the war, the Territorial Defense Force had been located on the premises of their enterprise and had been there for over a month.

When the Territorial Defense Force left and the enterprise resumed work, its management received huge bills for utility costs – precisely for the period of stay of the Territorial Defense Forces. In addition, the utility service providers warned that the debt must be paid immediately – otherwise, the provision of services to the enterprise will be stopped.

Given that the enterprise could not work for a long time and did not have the funds to pay such large debts, its management turned to local authorities with a request to receive compensation for utility costs from the local budget, which would allow paying off the debt and continue production. However, the entrepreneurs received a response to their request that the local authorities do not have an approved algorithm for the coordination and payment of such compensations, – Anna Karpenko explains.

After analyzing the case, the expert determined to find out whether there really is no such reimbursement algorithm in Ukraine. Anna prepared and sent a request to the Ministry of Economy to provide information on the issue of compensation for utility costs to enterprises (organizations), in the premises of which the Territorial Defense Forces of the Armed Forces of Ukraine were located.

The response to the request came from Ministry for Communities and Territories Development of Ukraine within a week. It stated that the Procedure for compensation of costs for utility costs was approved by the resolution of the Ukrainian government of March 11, 2022, No. 261. And the document regulates that compensation can be obtained only in the case of accommodation of temporarily displaced persons (IDPs).

Therefore, the current edition of the mentioned resolution does not apply to the buildings (premises) of which the Territorial Defense Forces of the Armed Forces of Ukraine are located directly.

At the same time, the ministry promised to consider the issue raised by the entrepreneur and to make changes to the resolution in the future, considering the possibilities of the state budget reserve fund.

“We understand that more than one Ukrainian organization or enterprise could be in such a situation. Therefore, we hope that the issue of compensation for utility costs used by the Territorial Defense Forces during their stay on the premises of such organizations (enterprises) will be considered and considered in the successive amendments to the procedure. And this will give people the right to receive compensation from the local budget,” – comments Anna Karpenko.

And she advises small and medium-sized businesses to turn to the Legal Development Network for help and advice, as well as to remember that “the doors only open to those who continually knock.”

* The survey results (in Ukrainian) are available at the link: https://ldn.org.ua/useful-material/podatky-ta-relokatsiia-dlia-maloho-i-seredn-oho-biznesu-v-umovakh-povnomasshtabnoi-viyny-v- ukraini-zvit-opytuvannia/

**Name has been changed for ethical reasons.

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