The Law of Ukraine

“On Government Support for and Specifics of Operation
of Children’s Centers “Artek” and “Moloda Hvardiya”

Date of entry into force:
March 17, 2009

Article 1 of the present Law shall specify that the state shall provide support to state-owned enterprises “International Children’s Center ‘Artek’” (hereinafter referred to as Children’s Center “Artek”) and “Ukrainian Children’s Center ‘Moloda Hvardiya’” (hereinafter referred to as Children’s Center “Moloda Hvardiya”) as facilities for recreation and rehabilitation of children of the national importance by way of instituting tax allowances, identifying the specifics of the legal status of property assigned to these Children’s Centers with the right for economic maintenance and land plots transferred thereto into permanent use. Funds for purchasing vacation packages to Children’s Centers “Artek” and “Moloda Hvardiya” for recreation and rehabilitation of children shall be annually allocated in the State Budget of Ukraine.

It shall be established that the state shall buy out:
  • 90% of vacation packages in Children’s Center “Artek”. The rest of vacation packages shall be sold by the above-mentioned Center without involving third parties;
  • 100% of vacation packages in Children’s Center “Moloda Hvardiya”.

At the same time, it shall be envisaged that transactions to sell vacation packages shall be exempted from taxation with value-added tax.

According to Article 2 of the present Law, Children’s Centers “Artek” and “Moloda Hvardiya” shall not be subject to privatization. Property assigned to these Children’s Centers with the right for economic maintenance shall not be subject to alienation, as well as transfer into lease (except for transfer into lease for the purpose of placing pharmaceutical stands, engineering and technical communication structures, automatic teller machines.

It shall be set forth that the territory where Children’s Centers “Artek” and “Moloda Hvardiya” are located shall belong to the natural reserve fund of the national importance with the right for development exclusively to meet the needs of the above-mentioned Children’s Centers according to the general plan for their development that shall be approved by the Cabinet of Ministers of Ukraine. Land plots with the size of 216.6423 hectares (including 5.8249 hectares of beach area and 2.8 hectares of former recreation facility “Ayu-Dag” along with its beach area) transferred into permanent use to Children’s Center “Artek” and with the size of 33.9 hectares (including 0.95 hectares of beach area) transferred into permanent use to Children’s Center “Moloda Hvardiya” shall belong to the lands that shall be in state ownership and shall not be subject to alienation.

It shall be prohibited for Children’s Centers “Artek” and “Moloda Hvardiya” to act as founders of enterprises with mixed ownership, to conclude contracts for joint (in particular investment) activity, commission contracts, contracts of agency, contracts for property management, and concession contracts that may result in the alienation of state property. Also, it shall be prohibited to establish servitude with respect to property assigned to Children’s Centers “Artek” and “Moloda Hvardiya” with the right for economic maintenance, as well as with respect to land plots transferred to these Children’s Centers into permanent use.

It shall be envisaged that proceeds of Children’s Centers “Artek” and “Moloda Hvardiya” from carrying out activities related to rehabilitation and recreation of children shall be exempted from taxation with enterprise profit tax (amendments to item 7.13. of Article 7 of the Law of Ukraine “On Enterprise Profit Tax”). In addition, it shall be stipulated that tax period for these Children’s Centers shall be one year.

It shall be specified that Children’s Centers “Artek” and “Moloda Hvardiya” shall be exempted from payment of tax on owners of vehicles and other self-propelled machines and mechanisms with respect to vehicles designated for transporting at least 10 passengers, including the driver (amendments to Article 4 of the Law of Ukraine “On Tax on Owners of Vehicles and Other Self-Propelled Machines and Mechanisms”).

According to the present Law, tax debts of Children’s Centers “Artek” and “Moloda Hvardiya” that emerged as of January 31, 2009, shall be written off. Also, debts of Children’s Center “Artek” in the amount of UAH 16.2 million to state-owned enterprise “Ukrinvestbud” that shall be managed by the State Administrative Department shall be written off.

The present Law shall prohibit the construction of residential houses on the territory of Children’s Center “Artek”, and it shall be imperative to move away individuals that reside in already constructed houses with the provision of compensation thereto in the form of living space with the application of a coefficient 1.5.

Prices and rates for residential services, gas and electricity supply services that shall be used for in-house needs of Children’s Centers “Artek” and “Moloda Hvardiya” shall be established at the level of prices and rates set for residential consumers.
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