Parliament Facilitates Share Emissions at Market Price

Parliament yesterday adopted legislation exempting shareissue income from corporate income tax, which is expected to be signed shortly by President Yushchenko and come into effect on January 1. Currently, taxes are applied to any income from share issues in excess of the par value of the shares, which is why Ukrainian companies price newly issued shares at their par value, rather than at their market value. The measure is part of an omnibus tax reform bill which was approved with Yushchenko’s suggested changes incorporated. The final version of the bill included increases in oil and gas royalties, but excluded tax and duty privileges for “special economic zones”. Tom Warner: The exemption of share issue income was one of the legislative changes that participants at the Ukraine investment forum earlier this week in Frankfurt said was most urgent. Already planned share issues are likely to go ahead under the current system, but by early next year we should start to see a switch to pricing of newly issued shares at market price.