State supervision and control reform — the government approved the draft law

28-07-2021

The Cabinet of Ministers approved the draft law “On Basic Principles of State Supervision (Control)” aimed at reducing the regulatory burden on responsible business owners and introducing additional tools to guarantee the citizens’ rights to a safe environment. The document was developed by the Ministry of Economy together with the State Regulatory Service of Ukraine and BRDO experts and with the support of the USAID Ukraine Competitive Economy Program. 

The main idea of ​​the changes is to introduce a risk-oriented approach during state inspections of businesses. By using a public rating of companies, business entities will be able to assess the possible frequency and duration of inspections, as well as file a complaint in advance in case of disagreement with the rating and risk level assigned.

The duration of control measures will also depend on the risk level of business entities. The higher the risk level of a business entity’s activity, the longer and, accordingly, the more thoroughly it will be inspected. Small and micro enterprises are protected separately: there are restrictions on the duration of state supervision (control) measures, regardless of their risk level.

Moreover, there will be an alternative to state supervision — a voluntary audit of enterprises. That is, business owners will be able to voluntarily initiate own audit. In case of violations, sanctions will not be applied, and in case of a positive conclusion of this audit, the frequency of scheduled control measures regarding such an entity will be reduced.

Corruption risks are prevented — the document provides for a limited period for an unscheduled inspection to verify compliance with the order’s requirements: no earlier than the last date to eliminate the violation specified in the order or other administrative document and no later than two months from this date.

Additionally, the draft law will remove many schemes, including avoidance of inspections due to change of registration data or addresses, avoidance of inspections by not allowing the relevant agencies to conduct inspections without notice, avoidance of inspections due to absence of a head or non-appointment of an authorized person, as well as avoidance of inspections due to failure of a regulatory authority to make a journal entry.

In turn, the functionality of the Integrated Automated System is improved. This will ensure the automation of data processing, as well as promote transparency and legality of all processes related to control measures. Moreover, the interaction with regulatory authorities will take place through a free convenient e-cabinet: options to a complaint and refuse a comprehensive scheduled inspection through the e-system are established.

The next step is the adoption of the draft law in the parliament, so we call on the people’s deputies to support the inspection reform.

For details, please see our presentation (in Ukrainian)

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