Law of Ukraine
“On Prices and Pricing”
Date of entry into force:
August 3, 2012
The Law determines the main principles of the pricing policy and regulates relations that arise in the process of forming, setting and applying prices, as well as in the process of state supervision (oversight) and monitoring in the sphere of pricing.
Article 1 of the Law provides definitions of terms used in it. For example, price is an equivalent of a unit of goods, expressed in monetary terms. The marginal price is the maximal or minimal price level that can be used by a business entity. Declaration of price change and/or price registration is a business entity’s notification of the bodies of state supervision (oversight) and monitoring in the sphere of pricing about the business entity’s intention to set and use a price different from the current one, done according to the established procedure. A trade markup (surcharge) is the sum of expenses of a business entity that are related to trade of goods and incurred in the process of its retail sale, plus income; marginal trade markup (surcharge) is its maximal level that must be observed by the business entity during retail sale of goods. Fixed price is the price established by the Cabinet of Ministers of Ukraine, bodies of executive power and bodies of local self-government, within the scope of their authority, which is mandatory for use by business entities.
According to Article 4 of the Law, state pricing policy is a component of the state economic and social policy and is aimed at ensuring:
- development of the national economy and business activity;
- counteracting abuse of monopolistic (dominant) position in the sphere of pricing;
- expanding the sphere of application of floating prices;
- balancing the goods market and increasing the quality of goods;
- social guarantees for the population in case of price increase;
- necessary economic guarantees for manufacturers;
- aligning the prices of the domestic goods market with the world market price levels.
The authority of the Cabinet of Ministers of Ukraine and the bodies of local self-government in the sphere of pricing is established by Articles 5 and 6 of the Law.
The Cabinet of Ministers of Ukraine and the bodies of executive power consistently take measures to ensure social guarantees for the population, first of all for low-income families, by applying a system of compensatory payments related to price increase, and by indexing the monetary incomes of social-economic population groups according to the legislation. Citizens of Ukraine have the right to contest unlawful actions of the state bodies, bodies of local self-government and business entities in court, and demand compensation of damages incurred by them by sale of goods with violation of the requirements of the legislation on prices and pricing (Article 9 of the Law).
According to Article 10 of the Law, business entities, while carrying out economic activity, use:
- floating prices;
- state-regulated prices.
Prices for goods intended for sale on the domestic market of Ukraine are set exclusively in the Ukrainian currency, unless otherwise envisaged by international agreements ratified by Ukraine and resolutions of the Cabinet of Ministers of Ukraine.
Floating prices are set by business entities independently, by agreement of the parties, for all goods except ones subject to state price regulation (Article 11 of the Law).
Article 12 of the Law envisages that state-regulated prices are applied to goods that have a determining influence of the general level and dynamics of prices, goods have considerable social importance, and goods produced by entities holding a monopolistic (dominant) position on the market. State-regulated prices must be economically feasible (ensure that the price of the goods corresponds to the expenses on its production, sale, and income from sale).
Chapter IV of the Law is dedicated to state regulation of prices. According to Article 13 of the Law, state regulation of prices is done by the Cabinet of Ministers of Ukraine, bodies of executive power, and bodies of local self-government, within the scope of their authority, by means of:
- setting the levels of the following, mandatory for business entities:
- fixed prices;
- marginal prices;
- marginal levels of trade markup (surcharge) and supplier-sale markup (supplier commission);
- marginal profitability standards;
- supplier commission;
- premiums or discounts (discount coefficients);
2) implementing the price change and/or registration declaration procedure.
The procedure for forming and setting prices during export (import) operations and for export (import) goods is established by Article 14 of the Law.
The Cabinet of Ministers of Ukraine, bodies of executive power and the bodies of local self-government that set state-regulated prices for goods at a level below the economically feasible one, must compensate business entities the difference between the two levels, at the expense of funds of appropriate budgets. The Cabinet of Ministers of Ukraine, bodies of executive power and the bodies of local self-government are forbidden to set state-regulated prices for goods at a level below the economically feasible one without determining the sources for compensating the different between these levels at the expense of appropriate budgets; setting of such prices may be contested in court (Article 15 of the Law).
According to Article 16 of the Law, bodies of state supervision (oversight) and monitoring in the sphere of pricing (hereinafter referred to as “authorized bodies”) are:
- the central body of executive power implementing the state price control policy;
- the central body of executive power in the issues of state architectural and construction oversight and oversight in the sphere of municipal economy.
Article 17 and 18 of the Law establish the main functions and rights of the authorized bodies.
Article 20 of the Law envisages that sanctions are applied against business entities:
- for violation of requirements to forming, setting and applying state-regulated prices – seizure of unfounded revenues, equal to the positive difference between the actual revenues from sale of goods and revenues that would have been received from sale at prices formed according to the effective regulation method (except for business entities providing municipal services on a permanent basis or those with a targeted consumer), and a fine equal to 100 percent of the unfounded revenue;
- for charging for goods that are provided free of charge according to the legislation – a fine equal to 100 percent of the value of goods sold;
- for providing untrue information to the authorized bodies – a fine equal to 100 personal exemptions;
- for failing to adhere to instructions of the authorized bodies or for obstructing them in carrying out their functions – a fine equal to 200 personal exemptions.
The final and transitional provisions of the Law envisage introducing appropriate amendments to the Code of Ukraine on Administrative Offences and the Economic Code of Ukraine, and declaring ineffective the Law of Ukraine “On Prices and Pricing” N 507-XII of December 3, 1990.