Regarding changes in the sphere of alcoholic beverages and tobacco circulation

Regarding the Law of Ukraine dated 18.06.2024 No. 3817-IX "On State Regulation of Production and Turnover of Ethyl Alcohol, Alcohol Distillates, Bioethanol, Alcoholic Beverages, Tobacco Products, Tobacco Raw Materials, Liquids Used in Electronic Cigarettes and Fuel".

On July 27, 2024, the Law of Ukraine No. 3817-IX "On State Regulation of Production and Circulation of Ethyl Alcohol, Alcohol Distillates, Bioethanol, Alcoholic Beverages, Tobacco Products, Tobacco Raw Materials, Liquids Used in Electronic Cigarettes and Fuel" (hereinafter - Law No. 3817) came into force.

Paragraph 2 of Section XII "Final Provisions" of Law No. 3817 provides that:

The Law of Ukraine No. 481/95-BP dated December 19, 1995 "On State Regulation of Production and Circulation of Ethyl Alcohol, Alcohol Distillates, Alcoholic Beverages, Tobacco Products, Liquids Used in Electronic Cigarettes and Fuel" (hereinafter - Law No. 481) shall cease to be effective as of January 1, 2025, except for Article 8 of Law No. 481 ("Certification of Production of Ethyl Alcohol, Alcohol distillates, bioethanol, alcoholic beverages and tobacco products"), which is valid until the entry into force and implementation of Article 33 of Law No. 3817 ("Certification of the production of ethyl alcohol, alcohol distillates, bioethanol, alcoholic beverages, tobacco products, liquids used in electronic cigarettes and fermentation of tobacco raw materials");

► the provisions of Law No. 481 shall be applied to the extent that they do not contradict the provisions of Law No. 3817 until the day it becomes invalid.

Paragraph 1 of Section XII "Final Provisions" of Law No. 3817 establishes the date of entry into force of this law - from the day following the day of its publication, except for its individual provisions, in particular

► clause 85 of part one of Article 1, where the definition of "tobacco products" is supplemented by other nicotine-containing products for oral use, Article 67 "Maximum Retail Price for Tobacco Products, Tobacco, Industrial Tobacco Substitutes and Liquids Used in Electronic Cigarettes" (as regards other nicotine-containing products for oral use) of Law No. 3187, which shall enter into force and be put into effect on September 1, 2024. Thus, starting from September 1, 2024, the production of other nicotine-containing products for oral use, wholesale and retail trade will be subject to licensing.

Please note that pursuant to paragraph 21 of Section XIII "Transitional Provisions" of Law No. 3817, until October 1, 2024, it is allowed to store and/or transport and/or sell goods (products) under the code 2404 91 90 00 according to UKTZED without excise tax stamps in the customs territory of Ukraine, if such goods (products) were manufactured in Ukraine or imported into the customs territory of Ukraine before September 1, 2024.

The provisions of Law No. 3817 relating to electronic traceability of the circulation of alcoholic beverages, tobacco products and liquids used in electronic cigarettes, excise electronic document, electronic system for the circulation of alcoholic beverages, tobacco products and liquids used in electronic cigarettes, electronic excise stamps shall come into force and be put into effect on January 1, 2026.

In accordance with clause 1 of Section XII "Final Provisions" of Law No. 3817, Section VII "Licensing" of Law No. 3817 shall enter into force and be implemented on January 1, 2025 (except for clauses 22, 23, 25 of part two of Article 46 "Termination of a license for the right to conduct a relevant type of economic activity", which establishes the grounds for the licensing authority to decide to terminate a license for the right to conduct a relevant type of economic activity, and Article 49 "Procedure for informing business entities about the cost of licenses for the right to conduct a relevant type of economic activity").

Clause 24 of Section XIII "Transitional Provisions" of Law No. 3817 for the period of martial law in Ukraine and within 30 days from the date of its termination or cancellation:

► the right of a business entity to store fuel consumed for refueling an electric generator set in the amount of up to 2000 liters at each facility equipped with an electric generator set without obtaining permits (permits, licenses for the right to store fuel, results of other administrative services);

► the storage of fuel consumed for refueling an electric generator set in the amount of more than 2000 liters at each facility equipped with an electric generator set is carried out by a business entity on the basis of a declaration on conducting business activities for fuel storage, which is submitted free of charge to the territorial body of the central executive body that implements the state tax policy.

Pursuant to paragraph 3 of Section XIII "Transitional Provisions" of Law No. 3817, licenses for the right to conduct the relevant type of business activity issued in accordance with Law No. 481 before January 1, 2025 shall be considered valid and confirm the right to conduct the relevant type(s) of business activity until the expiration of the term for which they were issued (for licenses issued for a fixed term) or until the day of their termination in accordance with the procedure established by Law No. 3817.

Clause 6 of Section XIII "Transitional Provisions" of Law No. 3817 regulates the actions of business entities in conducting business activities from the date of the introduction of martial law in Ukraine until the date of entry into force of Law No. 3817 (hereinafter - the period specified in clause 6).

In particular, a business entity that carried out business activities during the period specified in clause 6 on the basis of a license for the right to conduct the relevant type of business activity, the validity of which expired during this period, and which did not obtain a new license for such activities, is obliged to:

► within three months following the month in which Law No. 3817 came into force, submit an application for a new license to conduct the relevant type of business activity in accordance with the procedure set forth in Law No. 481;

► pay the regular payments for the license to conduct the relevant type of business activity that were not paid during the specified period, including for the period from the date of expiration of the previously issued/granted license - until the last day of the third month following the month in which Law No. 3817 came into force, or until the date of obtaining a new license.

A business entity that has carried out business activities during the period specified in clause 6 on the basis of a license for the right to conduct the relevant type of business activity, the validity of which has not expired during such period, but for which regular payments have not been made, is obliged to pay the regular payments for the license for the right to conduct the relevant type of business activity that have not been paid during the specified period within three months following the month in which Law No. 3817 came into force.

A business entity that has ceased to conduct business activities subject to licensing in accordance with Law No. 481 within the period specified in clause 6 is obliged, within two months following the month in which Law No. 3817 came into force

► submit to the licensing authority an application for termination of the license in connection with the termination of the business activity subject to licensing;

► to pay the regular payments for the license for the right to carry out the relevant type of economic activity that were not paid for the period prior to the date of termination of the economic activity subject to licensing.

Paragraph 6 of Section XIII "Transitional Provisions" of Law No. 3817 also establishes:

► the mechanism for calculating the amount of unpaid regular payments to be paid in accordance with this clause;

► the right of a business entity to apply to the licensing authority to clarify the amount of unpaid regular payments to be paid;

► consequences for the business entity in case of failure to comply with the requirement to pay regular payments (invalidation of the license from the date of its expiration and recognition as carried out without a license with the application of financial sanctions specified in Law No. 481 - for licenses that expired within the period specified in clause 6; termination of the license in accordance with the procedure specified in Law No. 481 from the date of non-payment of the first regular payment - for licenses that did not expire during the period of martial law).

From the date of entry into force of Law No. 3817, liability shall apply in the amounts established by:

► Article 73 of Law No. 3817 for violation of the provisions of Law No. 3817 and Law No. 481, during the period of validity of the provisions of Law No. 481;

► Article 17 of Law No. 481 - in cases set forth in paragraph 6 of Section XIII "Transitional Provisions" of Law No. 3817.