Ukraine

General Information

direct selling activity is governed by general laws: Civil Code of Ukraine, Commercial Code, Tax Code Law of Ukraine “On consumer rights protection”, Resolution of Cabinet of Ministers of Ukraine from August 23, 2000 N 1336 “On list of specific forms and conditions of activity in trade, catering and services, permitted to carry out payment transactions without the use of cash resister using the accounting books”.

There is no specific legislation on direct selling. However activity of concluding trade contracts outside of point-of-sale or office premise is governed by Article 12. Law of Ukraine “On consumer rights protection”

Rights of consumer in the case of concluding trade agreements (deals) outside of trade or office premises.

1. This regulation not applicable to the contracts concluded outside of point-of-sale or office premise, and which are up to:
   1. contracts of consumer credit;
   2. deals with the real estate;
   3. deals with securities;
   4. insurance contracts.
2. In the case of realization of products outside of point-of-sale or office premise a salesman shall be obliged to give to the consumer a document which certifies the fact of conclusion of contract. Such document must contain information about:
   1. date of conclusion;
   2. name and location of salesman;
   3. name of products;
   4. price;
   5. term of implementation of works;
   6. other substantial conditions of the contract;
   7. rights and duties of sides of contract.In the case of no grant of such information the subject of manage carries the responsibility set by the articles 15 and 23 of this Law.
3. In the case of realization of products outside of shops or office premises an consumer has rights to terminate a contract informing a about it a salesman within fourteen days from the date of receipt of document which certifies the fact of sale outside of point-of-sale or office premise or acceptance of products or its first delivery.
4. In the case of realization of products outside of trade or office premises a salesman (performer) must return the prepaid money without a hitch not later than thirty days from the moment of report by an consumer about dissolution of agreement. An consumer has a right not to return products or job or favour performances to the moment of returning him the sum of money prepaid by him.
5. In the case of realization of products outside of shops or office premises a salesman shall return the prepaid money without a hitch not later than thirty days from the moment of customer’s notice about contract termination. A customer has rights keep the product till money return takes place.
6. In the case of termination of a contract concluded outside of point-of-sale or office premise, a customer shall inform the salesman about a place, where products can be returned.It can be stipulated by the contract that in case of its termination the products or results of works, which were sent via post office shall also be returned by post.Charges related to return of big products are at the salesman expense.In the case of termination of contract, concluded outside of point-of-sale or office premise, a customer shall keep the products for sixty days after its receipt. If a salesman does not take measures for returning the products within the noted period, such products shall be remained with the customer without arising of obligation of payment for it.
7. In the case there is no document or confirmation of sales is given to the customer this fact does not arise any contractual obligations for him/her.In case of failure to provide a document or confirmation of sales a customer notifies the seller on nullification of the contract. The seller within thirty days of receipt of such notice shall return the funds received and reimburse expenses incurred by the consumer in connection with the return of products.
8. For the right to cancel the contract the consumer shall keep obtained products without any change to it.Destruction, damage or spoilage of products that was not made by the fault of the customer, does not deprive the consumer of the right to terminate the contract. Reducing the cost of production due to open packaging, inspection or test product does not deprive the consumer’s right to terminate the contract.
9. If the seller (agent) or a third party provided a credit to the consumer in the amount of funds under a contract concluded outside of point-of-sale or office premise, this credit time shall lapse the time of termination.
10. If violation of this Article within the prescribed time seller does not refund money for products in the event of termination of the contract, the consumer shall be paid with a penalty in the amount of 1% of the cost of production for each day of delay of refund.

Cooling-off Period
Under the Law of Ukraine on consumer rights protection the cooling-off period is 14 days.

Pyramid Schemes
No legislation.

Multi-Level Marketing
No legislation.

Prohibition on Products
The products that cannot be sold through direct selling are as follows: food stuff (excluding ice-cream, alcohol free beverages and beer, pastry (packed by the manufacturer), medical drugs, precious metals and stones, arms and explosives.

There are special rules for selling those products without being specified as those that be sold through direct selling.

Credit Restrictions Country
This activity is governed by Civil Code of Ukraine, Article 11 of Law of Ukraine “On consumer rights protection”.

If a product sale takes place outside of point-of-sale or office premises the credit is not allowed.

Rights for an consumer in the case of acquisition by him products in a credit (from a company).

1. A contract about the extension of consumer credit shall be concluded between creditor and consumer, in accordance with that contract the creditor gives facilities (consumer credit) or contracts to give them to the consumer for acquisition of products in a size and subject to the conditions, set by an contract, and an consumer is obligated to turn them together with the charged extra percents.Regardless of suggestion of consumer credit of warning about possibility of grant of him during acquisition of products.
2. Before the conclusion of treaty about the extension of consumer credit of the creditor is under an obligation to reveal to the consumer in writing about:
   1. person and location of the creditor;
   2. credit terms, in particular:
      1. purpose, which a consumer credit can be spent for;
      2. forms of his providing;
      3. present forms of crediting with the thumb-nail sketch of differences between them, in that number between the obligations of consumer;
      4. type of interest rate;
      5. sum, which a credit can be given out on;
      6. reference combined cost of credit and cost of service in registration of contract about the extension of credit (list of all charges, related to the receipt of credit, his service and returning, in particular such as administrative charges, charges on insurance, legal registration and others like that);
      7. term, on what credit can be got;
      8. variants of returning of credit, including the amount of payments, their frequency and volumes;
      9. possibility of ahead of schedule returning of credit and his condition;
      10. necessity of realization of property estimation and, if such estimation is necessary, who she is carried out by;
      11. tax mode of payment percents and about state subsidies, on which an consumer has a right, or information about that, from whom an consumer can obtain more detailed information;
      12. advantages and lacks of the offered charts of crediting.In the case of no grant of the noted information the subject of menage, which must to give her, carries the responsibility set by the articles 15 and 23 of this Law.
3. the creditor has no authority to require from an consumer information which are not up to determination of his solvency and are not necessary for the extension of consumer credit.The personal information got from an consumer or other person in connection with the conclusion and implementation of contract about the extension of consumer credit can be used exceptionally for estimation of the financial state of consumer and his possibility to fulfil engagement by such contract.It is not violation of positions of indention second of this part of report of the creditor information about the consumer of Bureau of credit histories, which is engaged in collection, treatment, storage, protection and use of information in accordance with the legislation about forming and conduct of credit histories.Financial institutions carry responsibility for violation of rights for consumers in the field of personal data protection pursuant to a law.
4. An contract about the extension of consumer credit consists in writing, one of originals of which is passed to the consumer. The duty of leading to of that one of originals of contract was passed to the consumer, is laid on the creditor.A consumer is not under the obligation to pay to the creditor some collections, percents or other cost elements of credit, which were not marked in an contract.In an contract about the extension of consumer credit is marked:
   1. credit sum;
   2. detailed description of total worth of credit for the consumer;
   3. date of delivery of credit or, if a credit will seem parts, dates and sums of grant of such parts of credit and other terms of extension of credit;
   4. right for ahead of schedule returning of credit;
   5. annual percentage rate on credit-side;
   6. other terms certain by the legislation.

In a contract about the extension of consumer credit can be marked, that an interest rate on credit-side can change depending on the change of registration rate of the National bank of Ukraine or in other cases. About the change of interest rate on consumer credit-side it is revealed to the consumer from the creditor in writing during seven calendar days from the date of its change. Without such report some change of interest rate is invalid.

Money Collections
No legislation.

Licences
No legislation.

Status of Direct Sellers
According to Civil Code Direct sellers shall be registered as private entrepreneurs.

Earnings Claims
No legislation.

Taxes and Fees
Direct sellers as individual entrepreneurs are personally responsible for all the tax payments (these are personal income tax, VAT, social tax and Pension Fund contributions). In some regions for particular types of activities the unified tax on imputed income (so called fixed tax) is implemented. This tax includes all the above mentioned types of taxes. An individual entrepreneur can choose between two other tax regimes (on voluntary basis): ordinary and simplified taxation system. Again, the list of activities subject to simplified taxation system and the corresponding rates depend on local authorities and are different in various regions. General Taxation System:

• Personal Income tax – 15-17%.
• VAT – 20% (recoverable). VAT exemption is available for those whose revenue for three months does not exceed 300 000 UAH (apr. $ 37 000);

Simplified Taxation System
For those who receive commission from companies they shall be registered as tax payers of III group and pay 5% tax or 3% but being VAT payers (exceeding a limit of 300 000 UAH). Tax shall be paid after quarter reporting period.

Total revenue limit is 3 000 000 UAH (apr. $ 373 000) a year.

Social Security
Individual entrepreneurs are entitled to get pensions if they were properly registered and paid Pension Fund contributions.

Others
No legislation.

The WFDSA International Guide to Direct Selling Legislation is a guide and is not exhaustive either in terms of subjects presented or for all areas of concern to direct selling companies. It is intended to cover general areas of concern. The Guide is not a substitute for legal counsel but only intended to alert you to the general nature of laws and regulations affecting the direct selling industry in a particular country. Consequently, before beginning an operation in any foreign country, it is strongly recommended that competent legal counsel be consulted. While every effort has been made to insure that the information contained in this Guide is accurate, the variety of sources used makes absolute verification difficult. Further, laws and regulations also can change from time to time without notice. Therefore, the WFDSA cannot be held liable for the information included in this publication.