The Second Wave. FAQ for new e-declarants: what to declare and how?

13 Feb 2017

 The Law on corruption prevention provides for the transparency and disclosure of the majority of data for the public by making them openly accessible on the Internet. This is an important pre-requisite for the effective financial control, as the public availability of information about the property, income and expenses of declarants makes the illicit enrichment by them much harder and helps to reveal the conflicts of interest.

Originally published in ‘Ukrainska Pravda’ on 31 January 2017

By Dmytro Kotliar

On 1 January 2017, the second stage of electronic asset disclosure was launched. From now on, all public officials of Ukraine – approximately 700,000-800,000 persons – are required to submit their e-declarations.

This is the second part of the article. Please, read the first part here.

The second wave covers officials and employees of the state and local self-government authorities, state and municipal institutions and organizations, including some education and healthcare sector professionals.

We explained earlier who has become subject to mandatory electronic asset disclosure starting from 2017, who was supposed to submit their declarations for the second time, and what were the deadlines for reporting significant changes in assets.

Now we discuss the main issues related to proper completion of an e-declaration to help to understand what to declare and how. We also explain the responsibility for violating the financial control requirements.

 

HOW TO SUBMIT A DECLARATION?

The first step for the declarant is to receive an electronic digital signature (EDS) which is necessary to register in the system and submit a declaration.

The declarations have to be completed and submitted at the website of the National Agency for the Prevention of Corruption (NAPC) following the authorization in the system using the EDS.

Each declarant has his personal account in the system where he can create draft declarations, input data in them and come back at any time to finalize completion of the declaration.

The declarants are supposed to receive their EDS by themselves. To do so, they need to contact the respective accredited certification centre of electronic keys. More information is available at the webpage of the Central Accreditation Authority of the Ministry of Justice.

Another option for the declarant is to seek clarification on obtaining the EDS from an information officer at his place of work.

 

WHAT TO DECLARE AND HOW?

Let us recap the information that is well known to the declarants of the first wave.

The declaration consists of 16 sections, and its content is described in Article 46 of the Law of Ukraine “On Corruption Prevention,” and the NAPC adopted specific declaration template.

New items that should be declared and that were not required in the previous declaration template:

  • Real estate construction in progress irrespective of the stage of construction and the land plots where this construction takes place;

  • Valuable movables – jewellery, artwork, electronic devices, etc., if the value of one item exceeds 100 living wages (see Table below).

    At the same time, the valuable movables – except for the vehicles – that was acquired (bought, received as a gift, etc.) before the declarant submitted his first declaration in the new electronic may be declared without specifying its value and the date when it was acquired;

  • Legal entities in which declarant or his family members are beneficiary owners (controllers);

  • Property which formally belongs to a third person but which is controlled and may be effectively disposed of by the declarant or his family member – the so-called beneficiary ownership;

  • Information about the co-owners of the property, as well as about owners of the property which the declarant or his family members lease or use otherwise;

  • Balances on any bank accounts, including current and card accounts;

  • Cash (not on a bank account), if overall monetary assets of the declarant exceed 50 living wages;

  • Any income, including the information about its source – for example, it is necessary to specify who made a gift to the declarant or his family member, who paid a fee or a salary;

  • Money which the declarant or his family member loaned to each other or to a third person;

  • Intangible assets – intellectual property items, etc.;

  • Side job of the declarant;

  • Membership of the declarant in civic associations and their managerial, audit or supervisory bodies.

When completing a declaration, the declarant should keep in mind the declaration thresholds – the minimum value (amount) of an asset starting from which it should be mentioned in the e-declaration.

It should also be noted that starting from 1 January 2017, the thresholds are based on the living wage for employable persons as of 1 January of the reporting year rather than on the minimum wage as earlier.

For example, the annual declarations due by 1 April 2017 should use the living wage effective as of 1 January 2016, or UAH 1,378 (see the respective thresholds in a Table below).

Although the Law “On State Budget for 2017” increased the living wage to UAH 1,600 starting from 1 January 2017, this increased amount will only apply to declarations that concern 2017 – for example, the declaration before the dismissal/resignation that would be submitted in 2017, if the respective declarant has already filed his declaration for 2016.

At the same time, the threshold for notifications of significant changes in assets should be based on the living wage as of 1 January of current year when income was received or an asset was acquired, or UAH 1,600 after 1 January 2017.

 

DECLARATION THRESHOLDS FOR VARIOUS ITEMS

Declaration item

Declaration thresholds for 2016 (for example, for annual declaration covering 2016 to be submitted by 1 April 2017)

Valuable movables (jewellery, artwork, electronic devices, etc.)

To be declared if value of one item exceeds UAH 137,800 (100 living wages)

Gifts (in monetary form)

If the value of such gifts received from one person (a group of persons) during the year exceeds UAH 6,890

Gifts (in non-monetary form)

If the value of one gift exceeds UAH 6,890

Monetary assets

To be declared if total value of monetary assets in various forms exceeds UAH 68,900

Expenses

To be declared if one-time expense exceeds UAH 68,900

Notification of significant changes in assets

To be reported within 10 days after obtaining an income or acquiring a property worth over 50 living wages (since 1 January 2017 – more than UAH 80,000)

Declarants are also encouraged to read the detailed clarification of the NAPC on completing various sections of the declaration.

 

WHICH INFORMATION IN THE DECLARATION IS CONFIDENTIAL?

The Law on corruption prevention provides for the transparency and disclosure of the majority of data for the public by making them openly accessible on the Internet.

This is an important pre-requisite for the effective financial control, as the public availability of information about the property, income and expenses of declarants makes the illicit enrichment by them much harder and helps to reveal the conflicts of interest.

The declaration contains personal data of the declarant and his family members. Therefore, immediately after the declaration is submitted to the system, its copy without some personal data that the Law considers confidential is published on the open website. The following data remain confidential:

  • Tax ID,

  • Passport serial number,

  • Place of residence,

  • Date of birth,

  • Full address of a real estate that belongs or is used by the declarant or his family members (it is only the region, district and village/city where such real estate is located that is made public).

Restricted access to this information is important to protect privacy and security of declarants. Full access to data in the declarations is granted only to the authorized NAPC staff members and law enforcement officers.

It is worth noting that after the first asset disclosure wave it turned out that the electronic system was not in full compliance with the requirements of the Law as regards transparency of information.

Unfortunately, the open website restricted access to the information about legal entities declared by the officials (e.g., to their registration number). This contradicts the Law and should be fixed.

 

WHO IS CONSIDERED A DECLARANT’S FAMILY MEMBER?

The Law sets forth that the family member of the declarant is his spouse (husband or wife), even if they, in fact, live separately.

A family member is also considered any person meeting all of the following three criteria: living together with the declarant, having a common household, and having mutual rights and responsibilities of family nature. This definition excludes, for instance, a joint lease of a real estate without family relations between the tenants.

A family member may be the declarant’s relative – for example, a child or parent – as well as a person who lives together with the declarant.

So the declaration should not specify information about declarant’s relatives, even the closest ones, if they live separately from the declarant. Indeed, the Law does not consider them family members. Furthermore, a person cannot be considered a family member only because he or she is registered at the same residence as the declarant. Only the combination of three criteria listed above makes someone a family member for the purposes of the e-declaration.

The Law does not specify how long the persons should live together to be envisaged as family members.

According to the NAPC clarification, it is the last day of the reporting period that matters. For example, if all three criteria were in place as of 31 December, the respective person should be declared as a family member in the annual declaration.

 

CAN A FAMILY MEMBER REFUSE TO PROVIDE INFORMATION ABOUT HIS/HER ASSETS?

The Law allows family members to refuse to provide information about themselves for the purpose of filling out the declarations. Indeed, submitting a declaration is the declarant’s duty, and only he is responsible for failure to declare certain information or for stating false data.

A declarant may be aware that his family member has an asset to declare (for example, a real estate), but may not know the details and ask the family member for them. The latter can refuse to answer, however.

If it happens, the declarant should report all the information about this asset that he knows of, and make a note “Family member refused to share information” regarding the missing information.

At the same time, if it is proven that the declarant was aware of the information about the family member’s asset but failed to report it, he might be brought to responsibility for stating knowingly false data.

It is also necessary to keep in mind that if at least one field in the declaration form is marked with “Family member refused to share information,” such declaration should undergo a full verification. The NAPC will have to verify all the data both the declarant and his family member.

 

RESPONSIBILITY FOR VIOLATING THE FINANCIAL CONTROL REQUIREMENTS

1. Late submission of a declaration:

Late submission of a declaration without a justified reason – e.g. a disease, business trip, mobilization – is subject to administrative liability (fine of UAH 850 to 1,700).

2. Wilful non-submission of a declaration:

If the NAPC revealed the fact of non-submission of the declarations and allowed the declarant to submit it and the latter failed to do it, it may invoke criminal liability.

3. Stating knowingly false information in the declaration:

  • submitting false data that concerns the property items worth 100-250 living wages (from UAH 160,000 to 400,000 since 1 January 2017) is subject to administrative liability (fine of UAH 17,000 to 42,500).

  • submitting false data that concerns the property items worth over 250 living wages (more than UAH 400,000) is subject to criminal liability – fine of UAH 42,500 to 51,000, or public works, or imprisonment for up to two years and disqualification to hold the respective positions.

If false data concerns the property items worth less than 100 living wages (UAH 160,000), it may only result in disciplinary liability.

A declarant may only be brought to liability if the false information was submitted knowingly. That is, misprints and unintentional errors are not punishable.

A declarant has the right to submit a corrected declaration only once within seven calendar days after the original declaration was submitted.

After this, the declarant can also make additional corrections, but only if he notifies and receives the respective permit from the NAPC.

Submitting the corrected declaration does not relieve a declarant from the liability for stating the knowingly false data.

Dmytro Kotliar, expert of Enhanced Public Sector Transparency and Integrity project of UN Development Programme in Ukraine supported by the Ministry of Foreign Affairs of Denmark, for Ukrainian Pravda

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