New rules of foreigners’ employment in Ukraine and obtaining of temporary residence permit

Verkhovna Rada of Ukraine is trying to simplify the procedure for foreign investment attracting.
The Law of Ukraine “On Amendments to certain legislative acts of Ukraine concerning the elimination of barriers for foreign investments attracting” comes into force on September 27.
Despite the main announcer of the authors regarding the simplification of the investment climate, this law introduces a lot of changes in the procedure of obtaining work permits and temporary residence permit in Ukraine for foreigners and stateless persons.

The law provides right for foreigners and stateless persons to obtain a temporary residence permit in Ukraine on the grounds that they are founders and/or participants and/or beneficiaries of a legal entity in Ukraine.
As distinct from the current version of the law, the new law does not provide the need to obtain the work permit for obtaining the temporary residence permit in Ukraine for such an individual. As of today, a foreign investor who is not at the same time an employee of a legal entity has no right to visit Ukraine freely in order to control the activity of his enterprise. Thus, we have a situation when the investor has to register himself as an employee and pay taxes.
At the same time, the legislator has established certain conditions.
Firstly, the right to obtain a temporary resident permit on this basis is foreseen only for investors, the size of the share in the authorized capital of which is not less than 100 thousand euros at the official exchange rate established by the National Bank of Ukraine on the date of the foreign investment. Thus, this provision of the law can be used by limited category of persons.
Secondly, the owner of legal entity in Ukraine for renewal temporary resident permit must have at least three Ukrainian employees (who work not less than 6 months) or pay income tax not less than 50 minimum salaries for the last full fiscal year.

New law edition expands the category of people who can easily obtain a work permit in Ukraine: IT professionals, creative professionals, and highly paid professionals. The category of highly paid professionals is defined by the legislator as foreigners or stateless persons, whose salary in Ukraine would be at least 50 minimum salaries (3 200 * 50 = 160 000 UAH).

The bureaucratic procedure for obtaining a work permit is simplified. According to the new rules, you will no longer have to apply:
▪ a police clearance certificate;
▪ a document issued by a health care institution that the person is not ill with chronic alcoholism, substance abuse, drug addiction or other infectious diseases, the list of which is determined by the Ministry of Health of Ukraine;
▪ an education certificate.
It’s a good change. Because, it’s quite complicated to collect this specified package of documents, taking into account the fact that in a number of countries their form is different or absence at all.

Changes also include the possibility at the same time to work at different positions for one or more employers subject to additional obtaining a work permit.
The work permit will depend on the duration of the employment contract, but it could not exceed more than three years. Now the work permit can be valid, not more than one year.

The employer will be able to obtain a work permit for a certain category of persons on condition of payment of wages, in one case, in the amount of not less than five minimum wages (3 200 * 5 = 16 000 UAH), and in another - ten (3 200 * 10 = 32 000 UAH). On the one hand, the state creates double standards for foreigners and citizens of Ukraine, defining the minimum wage for its citizens considerably less than for foreigners. On the other hand, the state protects jobs for its citizens, prompting the employer to use cheaper work of internal specialists.
The fee for issuing a permit, according to the new rules, will depend on the period for which it will be issued. As of September 2017, it will be from 3 200 UAH to 9 600 UAH.

Innovation will be the payment for renewal of the work permit for a new period. The size of it will be the same to the size of the fee for issuing the permit.

Employers, foreigners, and stateless persons will feel the consequences of the changes next month. In its turn, the state will have the opportunity to analyze the appropriateness of adopting this law by the end of the year. But already now we can understand that the legislator made a bid for pumping up the state budget.

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.


Author: Mykhailo Baran

12 September, 2017

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