The Law of Ukraine as of 03.12.2019 № 318-IX (hereinafter – the Law) amended the Law of Ukraine as of 19.12.1995 № 481/95-VR “On the state regulation of production and turnover of ethyl alcohol, cognac and fruit, alcohol beverages, tobacco products and fuel” (hereinafter – the Law № 481).
Purpose of the specified changes is to abolish the state monopoly on alcohol production and promote the un-shadowing of alcohol and alcohol beverage market, as well as to establish the civilized competitive alcohol and alcohol beverage market in Ukraine.
Particularly, changes stipulate:
- abolition of the state monopoly on alcohol production;
- enabling business entities of any form of ownership to obtain appropriate license in order to carry out alcohol production;
- full liberalization of alcohol export from Ukraine.
To protect domestic producers, the Law also stipulates that only the state-owned enterprises authorized by the Cabinet of Ministers of Ukraine will be able to import alcohol until the 1st of January 2024.
Starting from the 1st of July 2021, the commissioning and issuance of permits for construction of new enterprises for the production of ethyl alcohol, rectified grape ethyl alcohol and rectified fruit ethyl alcohol is allowed.
Starting from the 1st of July 2020, the production of ethyl alcohol (including as a medicinal product), rectified grape ethyl alcohol, rectified fruit ethyl alcohol, grain distillate, bioethanol may be carried out by business entities, regardless of ownership, with obtained appropriate license.
In addition, starting from the 1st of July 2020:
- export of ethyl alcohol, rectified grape ethyl alcohol and rectified fruit ethyl alcohol is carried out by business entities that received a license for the production of such alcohol. Import and wholesale of ethyl alcohol, rectified grape ethyl alcohol and rectified fruit ethyl alcohol on the territory of Ukraine are carried out in the presence of license for the wholesale of such alcohol. Wholesale of ethyl alcohol for medical and veterinary purposes may be carried out in the presence of license for the wholesale of ethyl alcohol in health care institutions and business entities (organizations) of veterinary supplies, regardless of ownership. The Cabinet of Ministers of Ukraine shall establish the procedure for maintaining the register of these health care institutions and business entities (organizations) of veterinary supplies;
- business entity that is both a producer of ethyl alcohol and alcohol beverages and received a license for the production of ethyl alcohol, license for the production of alcohol beverages and license for the wholesale of alcohol beverages, has the right to sell its own ethyl alcohol for the production of these alcohol beverages on the basis of relevant license;
- annual volumes of ethyl alcohol, rectified grape ethyl alcohol and rectified fruit ethyl alcohol imported by business entities – producers of ethyl alcohol, may not exceed 10% of the annual volume of produced ethyl alcohol, rectified ethyl grape alcohol and rectified fruit ethyl alcohol by such business entities – producers of ethyl alcohol;
- business entities (including foreign business entities operating through their registered permanent establishments) – producers of ethyl alcohol carry out its sale for export in the presence of license for the production of ethyl alcohol;
- business entities – producers of ethyl alcohol carry out its sale to domestic consumers in the presence of license for the wholesale of ethyl alcohol.
Procedure for issuing licenses for the production and wholesale of alcohol is established by the Law № 481. At the same time, license for the production is issued to enterprises that have installed round-the-clock video surveillance systems for production and sales. Disabling 24-hour video surveillance systems is a ground for denial or revocation of the license.
It should be noted that according to the Regulations on the State Tax Service of Ukraine, approved by the Resolution of the Cabinet of Ministers of Ukraine as of 06.03.2019 № 227, the State Tax Service, in accordance with the tasks assigned to it, issues licenses for business entities, specifically for the production and wholesale of alcohol.
Business entities may submit documents for obtaining the relevant licenses for consideration to the licensing authority – the State Tax Service at the address: 04655, Kyiv, Lvivska Square, bldg. 8.