The Law of Ukraine

On the State Budget of Ukraine for 2006

Date of entry into force:
January 1, 2006

The present Law approved the State Budget of Ukraine for 2006.

According to the present Law:
  • revenues of the State Budget of Ukraine for 2006 were established at UAH 127,516,631,000.00 (including revenues of the General Fund of the State Budget of Ukraine in the amount of UAH 97,264,420,300.00 and revenues of the Special Fund of the State Budget of Ukraine in the amount of UAH 30,252,210,700.00);
  • expenditures of the State Budget of Ukraine for 2006 were established at UAH 140,199,363,700.00 (including expenditures of the General Fund of the State Budget of Ukraine in the amount of UAH 109,491,625,800.00 and expenditures of the Special Fund of the State Budget of Ukraine in the amount of UAH 30,707,737,900.00).

Also the Law on the State Budget of Ukraine for 2006 approved:
  • the volumes for returning loans to the State Budget of Ukraine in the amount of UAH 2,207,670,100.00 (including for returning loans to the General Fund of the State Budget of Ukraine in the amount of UAH 718,223,000.00 and for returning loans to the Special Fund of the State Budget of Ukraine in the amount of UAH 1,489,447,100.00);
  • the volumes for granting loans from the State Budget of Ukraine in the amount of UAH 2,770,604,300.00 (including for granting loans from the General Fund of the State Budget of Ukraine in the amount of UAH 230,466,900.00 and for granting loans from the Special Fund of the State Budget of Ukraine in the amount of UAH 2,540,137,400.00).

The marginal size of the deficit of the State Budget of Ukraine for 2006 was established in the amount of UAH 13,245,666,900.00 (including the marginal size of the deficit of the General Fund of the State Budget of Ukraine in the amount of UAH 11,739,449,400.00 and the marginal size of the deficit of the Special Fund of the State Budget of Ukraine in the amount of UAH 1,506,217,500.00).

The present Law also established the list of revenues that belong to sources of revenues of the General Fund of the State Budget of Ukraine in 2006 and the list of sources for forming the Special Fund of the State Budget of Ukraine in 2006.

The present Law established the marginal size of:
  • the domestic debt of Ukraine as of December 31, 2006, in the amount of UAH 18,689,481,200.00 and in the amount of USD 1,083,911,900.00;
  • the external debt of Ukraine in the amount that is equivalent to USD 9,172,389,700.00.

Also, the present Law specified that government domestic and international borrowings shall be carried out within the limits of the overall volume of the marginal size of the domestic debt of Ukraine and the external debt of Ukraine established by the present Law. In the instances of receiving funds from domestic (external) financing sources of a certain type but not in full, it shall be allowed to increase revenues from external (domestic) financing sources of another type with the relevant exceeding of the marginal size of the external (domestic) debt of Ukraine by way of exceeding the relevant volumes of borrowings with the relevant adjustment of the overall volume of the national debt and with mandatory provision of information to the Budget Committee of the Verkhovna Rada of Ukraine.

The present Law established the marginal volume for the provision of state guarantees for 2006, in particular:
  • for loans from international financial organizations in the amount of UAH 2,043,585,000.00;
  • for the commitments of the State Mortgage Institution in the amount of UAH 1,000,000,000.00 according to the procedure established by the Cabinet of Ministers of Ukraine upon agreement with the Budget Committee of the Verkhovna Rada of Ukraine.

The Ministry of Finance of Ukraine shall have the right, on behalf of Ukraine, to undertake the commitments related to making borrowings, including regarding the refusal from sovereign immunity in possible lawsuits related to the return of loans and exemption of payments according to agreements from any commission payments, taxes and other mandatory payments during the validity period of the commitment to return the funds borrowed.

The present Law envisaged providing the Ministry of Finance of Ukraine with the right to effectuate operations with the national debt of Ukraine with the aim to economize Budget funds, including operations related to exchange, issuance and buy-out of government bonds on condition of adhering to the marginal size of the national debt by the end of the year. The Ministry of Finance of Ukraine shall provide monthly information to the Verkhovna Rada of Ukraine about effectuating operations with the national debt of Ukraine. The detailed list of effectuated operations with the national debt of Ukraine shall be enclosed as a separate appendix to the annual report on fulfilling the Law on the State Budget of Ukraine that is submitted to the Verkhovna Rada of Ukraine.

The present Law grants the Ministry of Finance of Ukraine the right to effectuate short-term operations on the securities market and to place Budget funds on deposits by way of temporary attraction of funds from the single Treasury account with their subsequent renewal before the end of the year according to the procedure determined by the Cabinet of Ministers of Ukraine upon agreement with the Budget Committee of the Verkhovna Rada of Ukraine.

Revenues for financing the General Fund of the State Budget of Ukraine for 2006 shall include:
  • revenues as a result of carrying out government domestic and international borrowings;
  • 99 percent of funds obtained from privatization of state-owned property and other revenues that are directly related to the privatization process and lending of enterprises;
  • the return of funds from deposits or the presentation of securities that are used to manage liquidity;
  • changes in the volumes of cash of the General Fund of the State Budget of Ukraine.

The sources for forming the Special Fund of the State Budget of Ukraine for 2006 in the part related to financing shall be:
  • loans attracted by the state from international and foreign organizations for the purpose of their further re-lending or the provision of transfers for implementing development projects;
  • one percent of funds obtained from privatization of state-owned property and other revenues that are directly related to the privatization process and lending of enterprises, but not more than UAH 59,987,000.00, with due consideration for the next item;
  • funds that will come from privatization of objects of uncompleted construction that were built according to the Chornobyl Construction Program, but no more than UAH 130,000.00.

The present Law envisaged that the State Property Fund of Ukraine shall ensure, in 2006, revenues to the State Budget of Ukraine from privatization of state-owned property in the amount that is not lower UAH 2,121,532,000.00.

The present Law prohibited increasing Budget allocations for the General Fund and the Special Fund of the State Budget of Ukraine for:
    • labor remuneration of employees of budget-financed institutions by way of reducing other expenditures;
    • development expenditures by way of reducing Budget allocations for consumption expenditures;
    • expenditures under Budget-financed programs related to the functioning of government bodies by way of reducing other expenditures.

The State Treasury of Ukraine shall make payments upon instruction of managers of the State Budget funds exclusively on condition that there are passports of budget-financed programs approved according to the established procedure.

The State Treasury of Ukraine shall carry out expenditures of the State Budget on the basis of registered financial obligations of the main managers of funds.

In terms of the economic structure of expenditures, protected articles of expenditures of the General Fund of the State Budget of Ukraine for 2006 shall include the following articles:
  • labor remuneration for employees of budget-financed institutions;
  • payroll taxes;
  • purchases of medications and bandaging materials;
  • support with food products;
  • payment for residential services and energy resources;
  • payment of interests under the national debt;
  • transfers to the population;
  • transfers to local budgets;
  • other types of expenditures.

Revenues of the General Fund of local budgets in 2006 shall include, in particular:
  • personal income tax;
  • subsidies and subventions from the State Budget of Ukraine;
  • penal sanctions as a result of the failure to fulfill agreements concluded by a manager of budget funds with business entities for the purpose of purchasing goods, works and services at the expense of funds of local budgets.

Fixed tax shall be transferred to the relevant local budgets according to the procedure specified in the Budget Code of Ukraine for personal income tax.

Corporate profit tax on enterprises that are in communal ownership and whose founder is the Verkhovna Rada of the Autonomous Republic of Crimea, oblast, regional, district, city, town, settlement, and village councils shall be transferred respectively to the budget of the Autonomous Republic of Crimea, oblast, regional, district, city, town, settlement, and village budgets.

The present Law established that, throughout 2006, the Cabinet of Ministers of Ukraine shall have the right to re-distribute the overall volume of approved subventions for local budgets from the State Budget of Ukraine for the provision of benefits, subventions and assistance to the population among their types, proceeding from actually calculated volumes of the relevant benefits and subsidies to the population, and to re-distribute the volume of subventions from the State Budget of Ukraine among local budgets, proceeding from actually calculated volumes of the relevant benefits, subsidies and assistance to the population.

The procedure for re-distributing additional subsidies shall be determined by the Cabinet of Ministers of Ukraine.

The present Law approved additional subsidies in 2006 from the State Budget of Ukraine to the budget of the Autonomous Republic of Crimea, oblast budgets and the Sevastopol Municipal Budget in the amount of UAH 839,619,800.00.

Subventions from the State Budget to local budgets (approved by Article 50 of the present Law), specifically for:
  • purchasing Ukrainian folk instruments in the amount of UAH 10,000,000.00; the distribution of funds for the above-mentioned subvention shall be carried out by the Cabinet of Ministers of Ukraine upon an application of the Ministry of Culture and Tourism of Ukraine;
  • supporting orphans and children deprived of parental care, in family-type childrens homes and foster families in the amount of UAH 50,000,000.00.

If expenditures are made from the relevant local budget, provided that such expenditures should be made from another budget, according to the Budget Code of Ukraine, such action shall be qualified as non-targeted utilization of Budget funds. The volumes of such expenditures shall be indisputably withdrawn from the relevant local budget to the State Budget of Ukraine by bodies of the State Treasury of Ukraine according to the procedure established by the Cabinet of Ministers of Ukraine, including at the expense of reducing transfers to the relevant local budget for the relevant amount.

Revenues of the General Fund of the State Budget of Ukraine that are used for conveying equalization transfers shall, in particular, include:
  • corporate profit tax;
  • value-added tax (without the consideration for Budget refunds of value-added tax with the help of pecuniary resources);
  • a fee for special utilization of forest resources of the state importance;
  • a fee for special utilization of water;
  • payments for utilization of deposits of the national importance.

In the instance when amounts transferred by the relevant department of the State Treasury of Ukraine in the Autonomous Republic of Crimea, oblasts and the city of Sevastopol do not ensure the receipt of the monthly amount of an equalization subsidy according to the norms for daily deductions specified in Appendix 6 to the present Law, the State Treasury of Ukraine shall transfer the rest of the due monthly sum of an equalization subsidy that has not been received to the account of the relevant local budget from the General Fund of the State Budget of Ukraine before the tenth day of the following month.

The present Law envisages that the Ministry of Finance of Ukraine shall write off outstanding debts of the State Budget of Ukraine to local budgets under mutual settlements in the amount of UAH 10,236,500.00 and outstanding debts of local budgets to the State Budget of Ukraine under mutual settlements in the amount up to UAH 740,451,600.00 and under budget-financed loans in the amount of UAH 155,752,200.00 that accumulated over the period of 1998-2005 and is accounted by the State Treasury of Ukraine, and also the debt in the amount of up to UAH 95,809,400.00 under medium-term loans obtained by local budgets from the State Budget of Ukraine in 2005.

Also, for 2006, the present Law established:
  • the guaranteed minimum subsistence level for assigning assistance according to the Law of Ukraine On government social assistance for impoverished families and the Law of Ukraine On government social assistance for individuals who are not eligible to receive pension and for disabled individuals;
       the size of assistance according to the Law of Ukraine On government support for families with children and the Law of Ukraine On the universal state social insurance due to temporary disability and expenditures caused by birth and burial. 

Separately, the present Law identified the sources for forming the Special Fund of local budgets in 2006, in particular:
1. revenues of the development budget of local budgets that include, in particular:
  • revenues from the alienation of property that belongs to the Autonomous Republic of Crimea and property that is in communal ownership;
  • revenues in the form of dividends accrued upon shares (stocks and portions) of business associations that are in the ownership of the relevant territorial community;
  • revenues that are transferred from another part of the relevant local budget according to a decision of the relevant council;
2. tax on owners of vehicles and other self-propelled machines and mechanisms (including tax on owners of vehicles and other self-propelled machines and mechanisms registered in the city of Kyiv, which is included into revenues of the Special Fund of the Kyiv Municipal Budget), which is transferred in the following proportion: 30 percent to the budget of the Autonomous Republic of Crimea and oblast budgets and 70 percent to the budget of the city of Simferopol and budgets of cities and towns that are oblast centers in the instance when vehicles are registered on the territory of these cities and towns; or 50 percent to the budget of the Autonomous Republic of Crimea and oblast budgets and 50 percent to city, town, settlement or village budgets in the instance when vehicles are registered on the relevant territory;
3. payments for purchasing trade patents by points-of-sale of petroleum products (gas filling stations and gas filling points);
4. own revenues of budget-financed institutions that are supported at the expense of funds of the relevant local budgets.

The present Law established the minimum subsistence level per one individual per month for 2006 in the amount of UAH 453.00 from January 1, 2006, UAH 465.00 from April 1, 2006, and UAH 472.00 from October 1, 2006, and for those included into the main social and demographic groups of the population:
  • for children aged up to six: UAH 400.00 from January 1, 2006, UAH 410.00 from April 1, 2006, and UAH 418.00 from October 1, 2006;
  • for children aged from six to eighteen: UAH 514 from January 1, 2006, UAH 527.00 from April 1, 2006, and UAH 536.00 from October 1, 2006;
  • for employable individuals: UAH 483.00 from January 1, 2006, UAH 496.00 from April 1, 2006, and UAH 505.00 from October 1, 2006;
  • for unemployable individuals: UAH 350.00 from January 1, 2006, UAH 359.00 from April 1, 2006, and UAH 366.00 from October 1, 2006.

Also, the present Law prohibited making settlements with the State Budget in a non-monetary form, including by way of mutual offsets, the application of bills of exchange, barter operations, and set-off of counter claims for payments in financial institutions, except for some types of operations. 

The present Law established the size of the minimum wage in the amount of:
  • UAH 350.00 per month from January 1, 2006;
  • UAH 375.00 per month from July 1, 2006;
  • UAH 400.00 per month from December 1, 2006.

The present Law included Appendices that shall constitute an integral part of the present Law. Appendices to the present Law shall be:
1. Revenues of the State Budget of Ukraine for 2006;
2. Financing of the State Budget of Ukraine for 2006;
3. The division of expenditures of the State Budget of Ukraine for 2006;
4. The return of loans to the State Budget of Ukraine and the distribution of the provision of loans from the State Budget of Ukraine in 2006;
5. The distribution of expenditures on centralized measures and programs for 2006 among administrative and territorial units;
6. Indicators of inter-budgetary transfers (equalization subsidies and funds that are transferred to the State Budget) between the State Budget for 2006 and local budgets for 2006;
7. Indicators of inter-budgetary relations between the State Budget for 2006 and local budgets for 2006;
8. The list of bodies that shall be responsible for overseeing the collection of payments to the State Budget;
9. Basic rates of payments for utilizing deposits for the purpose of extracting minerals.

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