Practice Areas Review: Occupied Territories

The ATO Zone: Realities and Prospects



Attorney-at-Law, Managing Partner, Law Company Dmіtrieva & Partners. Head of the Higher Audit Bar Committee of the National Bar Association of Ukraine, Head of the Supervisory Board of Ukrainian Advocates’ Association (UAA), member of the Public Council under the Antimonopoly Committee of Ukraine. Specialization: investment activity and currency exchange control, foreign-economic activity, corporate law, tax law, international corporate law and arbitration



Attorney-at-Law, Senior Lawyer, Law Company Dmіtrieva & Partners. Head of the Section of labor law in Ukrainian Advocates’ Association (UAA), member of the Board of Kiev branch of the UAA. Specialization: investment, commercial, tax law, labor and corporate law



3 Dniprovska Naberezhna, Kiev,
02098, Ukraine ,
+380 44 553 7660
+380 67 503 0108

Law Company Dmitrieva & Partners was founded in 1994. For twenty one years the Law Company Dmitrieva & Partners has won credibility on the legal services market both in Ukraine and abroad.

Law Company Dmitrieva & Partners provides services in the following areas:

— Antimonopoly and competitive law

— Foreign economic activity

— Due diligence

— Land legal relations

— Legal and accounting services to the enterprises from ATO zone

— Immigration

— Investment and currency regulation

— Intellectual property

— Tax law

— Real estate

— Corporate law

— Criminal law

— International corporate law and arbitration

— Family law

— Judicial practice

— Accounting outsourcing


Law Company Dmitrieva & Partners has repeatedly been among the 50 leading law firms of Ukraine and in “The Bronze League” on the basis of the results of the research conducted annually by Yuridicheskaya Practika Weekly.

Law Company Dmitrieva & Partners is recommended by Ukrainian Law Firms 2014. A Handbook for Foreign Clients as one of the leading companies in the field of tax, banking and finance, international law and trade.

Law Company Dmitrieva & Partners was recognized as a winner in the nomination “Business Law Firm of the Year in Ukraine” (2014) by the editorial board of Corporate INTL Magazine Global Award.


Managing partner of Law Company Dmitrieva & Partners Olga Dmitrieva is an attorney-at-law, Chairman of the Supervisory Board of the All-Ukrainian Non-Governmental Organization Ukrainian Advocates’ Association, Head of the Higher Audit Bar Committee of Ukraine. The company’s employees constantly improve their professional skills by attending specialist courses, seminars, conferences, fluent in one or more foreign languages, authors of numerous publications in specialized editions. Almost all the lawyers have the certificate of the right to advocacy, are members of the Ukrainian Advocates’ Association and the Ukrainian Bar Association as well as members of the European Business Association.


The main statutory and legal document regulating the situation in the east of our country today is the On Temporary Measures for the Period of Conduct of the Anti-Terrorist Operation Act of Ukraine No.1669-VII of 2 September 2014. The mentioned Act declares a moratorium on accrual of penalties and fines on the principal amount of debt of credit obligations, moratorium on carrying out inspections and moratorium on charging penalties for late payments for housing and communal services. In addition, the Act provides for extending licenses and permits on the territory of conduct of the anti-terrorist operation, the exemption from payment for use of land of state and municipal property, the abolition of rent for use of state and municipal property and also determines the measures of preservation of mortgaged property.

In addition to the above mentioned Act a number of other statutory and legal acts also define the situation in the region, namely: by Decree of the President of Ukraine No.875/2014 of 14 November 2014 On the Decision of the National Security and Defense Council of Ukraine of 4 November 2014 on Urgent Measures of Stabilization of the Socio-Economic Situation in Donetsk and Luhansk Regions in certain territories in the area of conduct of the anti-terrorist operation in Donetsk and Luhansk Regions the activities of state enterprises, institutions and organizations, their affiliates (branches), representative offices have been discontinued. According to the Resolution of the Board of the National Bank of Ukraine No.466 of 6 August 2014 On the Suspension of Carrying out Financial Transactions banks of Ukraine have suspended the carrying out of all kinds of financial transactions in the settlements which are not controlled by Ukrainian authorities. Non-bank institutions and the national operator of post communication have also suspended operations of acceptance (payment) of money orders from (to) the territory which is not controlled by Ukrainian authorities.

In order to somehow resolve the urgent issues of the region at their level various government agencies regularly adopt various statutory and legal acts. So, the State Fiscal Service of Ukraine by its Letter of 7 November 2014 No.6437/6/99-99-19-02-02-15has provided clarification on the write-off of fixed assets and inventories located in the zone of ​ATO. As it is stated in the Letter, in case of impossibility of removal of inventories from the warehouse located in the zone of conduct of the anti-terrorist operation the insured losses (the amount of losses to be compensated by an insurance company) incurred by the payer in the event of loss (damage, destruction) of such inventories are included in expenses in the tax period in which such losses were incurred. At the same time, the amounts of insurance compensation of the mentioned losses must be included in the income of a corporate income tax payer in the period of their receipt. As for the destruction of fixed assets the SFS has informed that in case of the destruction of fixed assets as a result of conduct of the antiterrorist operation a taxpayer ceases to charge depreciation beginning from the month following the month of decommissioning the object of fixed assets and increases costs by the amount of the value which was subject to depreciation, net of accumulated depreciation of such an object of fixed assets. At the same time, citing Article 10 of On Temporary Measures for the Period of Conduct of the Anti-Terrorist Operation Act of Ukraine it is stated in the Letter that the certificate of the Chamber of Commerce and Industry of Ukraine is the only appropriate and sufficient document confirming the occurrence of circumstances of irresistible force (force majeure) which took place on the territory where the anti-terrorist operation is taking place.

According to current legislation the presence of the certificate of the Chamber of Commerce and Industry of Ukraine also allows a taxpayer to write off an uncollectable tax debt and to extend the term of filing tax accounts. But in practice everything is different. The CCI really does issue certificates of installment and deferment of money obligations or tax debt of a taxpayer, but today the CCI doesn’t write off a bad tax debt in the order of Article 101.1. of the Tax Code of Ukraine, referring to the fact that ascertainment of the grounds for the remission of the said debt is beyond the competence of the CCI. For its part, in its Letter No.5694/6/99-99- 26-01-15 of 27 October 14 detailing the procedure of writing off a bad tax debt the State Fiscal Service of Ukraine shifts full responsibility for writing off to the CCI, at the same time reminding that writing off a bad tax debt on the basis of decisions that have been adopted unlawfully “could lead to budget losses” and “the threat of the violation of public interests, protection of which is provided by the prosecution.” Under such circumstances the CCI naturally is in no harry to issue relevant certificates and the situation is unlikely change for the better in the near future.

For the purpose of settlement of the issue of accounting and financial reporting in Donetsk and Luhansk Regions by its Order No.1214 of 19 December 2014 the Ministry of Finance of Ukraine amended Regulation No.879 of 2 Septem- ber 2014 On the Inventory of Assets and Liabilities, approved by the Ministry of Finance. According to the amendments, enterprises, which are located in the temporarily occupied territory and/or in the territory of conduct of the anti-terrorist operation, take inventory in cases, mandatory for its taking, when it will be possible to ensure safe and unobstructed access of authorized persons to assets, primary documents and accounting records, in which the liabilities and equity capital of these enterprises are represented. The said enterprises are obliged to take an inventory as of the 1st day of the month following the month in which the obstructions of access to assets, primary documents and accounting records disappeared and to represent the results of the inventory in accounting for the particular reporting period.

In order to provide uninterrupted servicing of the urgent financial needs of army units, economic agents and population in certain territories by its Decision No.798 of 8 Decmber 2014 On Changes to the Manual on the Organization of Work of the Banking System in Emergency Regime the National Bank of Ukraine allowed banks to organize their own mobile sub-units.

In mid-January the Verkhovna Rada of Ukraine adopted Act No.1543 On Changes to Article 25 of the Act On Leaves. Under the said Act employees working in the territory of conduct of the anti-terrorist operation are entitled to be given leave without preservation of wages for the whole period of conduct of such an operation taking into account the time required to return to the job after passing the decision on its suspension.

Despite numerous attempts to improve the situation in the Donetsk and Luhansk Regions, the key issues of the activity of the region remain unsolved. Under these conditions most business entities find the only possible way out of this situation — to transfer business to another location. But here they face certain difficulties.

According to Order of the Ministry of Justice 1849/5 of 5 Novem- ber 2014 On Carrying Out Registration Actions as Regards Legal Entities and Individuals — Entrepreneurs, Location / Residence of Which is the Territory of Conduct of the ​​Anti-Terrorist Operation registration actions as regards changing the location of the said legal entities and individuals — entrepreneurs and conduct of other registration actions  concerning these persons are now carried out by any state registrars.

The said Order has really improved the situation for limited liability companies. As to joint-stock companies of this region, the situation remains very difficult here. Because of the real threat to the lives of shareholders and employees today these companies are not able to hold extraordinary meetings of shareholders to pass necessary resolutions on change of the location and introduction of relevant amendments to the articles of association. Under Article 35 of the On Joint Stock Companies Act of Ukraine the general meeting of shareholders is held on the territory of Ukraine, within the settlement at the place of location of the company, except for the cases when as of the day of convening the general meeting 100% of shares belong to foreigners, stateless persons, foreign legal entities and international organizations. That is, the only possibility for exemption from the liability for non-compliance with the requirements of the current legislation for Ukrainian joint stock companies founded by Ukrainians with the number of shareholders exceeding 25 persons, in which change of the location is carried out through amendments to the articles of association and, respectively, through the general meeting of shareholders, is the certificate of the Chamber of Commerce and Industry of Ukraine issued in accordance with the laws.

As we can see, in general the situation remains extremely difficult and without resolving the economic and legal status of this region at state level no improvement in the situation is expected. In this context the issue of creation of a special economic zone in these territories, similar to the free economic zone in Crimea, is discussed more often, but how it will improve the situation and whether there will be the possibility to implement this strategy at all is so far unknown.