Successful online business becomes dangerous?

Do not believe the talk about that the IT sector in Ukraine is blossoming. If one would draw a graph of its ups and downs, he would end up with the “unknown” to the young IT specialist domestic “mechanism” as a washboard side-drawn – continuous ups and downs. For example, in the near future Verkhovna Rada may consider in the second reading the bill drafted by Party of Regions deputy Maksym Lutsky, which would allow to close any website or file sharing platform without a court order. People’s Deputy Lesia Orobets wrote in her blog that if the law is adopted, the financial and legal sanctions, up to closing, could be applied without a court order to any Ukrainian ISP or file sharing platform.

It should be noted that the colleague of Lutsky the Regions Party deputy Viktor Yanukovych (Junior) has opposed such an initiative. On his Facebook page (which he, according to what he said, is now using as a “deputy’s public reception office”) he wrote: “My fundamental position is that it should not be done without a court order. Otherwise, the Internet resources will simply transfer their hosting abroad and everyone will just lose from it.” Indeed, in less than a day after tax inspectors visit to the hosting company, which provided service for the servers of the online store Rozetka.ua, they “transferred” to German hosting. [Read more about the vision of Yanukovych Jr. on how to solve the problems from which the Ukrainian Internet players are now reeling in his interview for The Day in the upcoming issues. – Author.]

However, according to lawyers, even if the abovementioned bill is not adopted as a law, Ukrainian Internet resources will try to “hide” their servers abroad. “Today it is not safe to use domain names registered in Ukraine and served by Ukrainian hosting companies due to the malpractice of blocking domains and blocking hosting services for any occasion. Security consultants will advise business owners to transfer service sites abroad – far away from the jurisdiction of our law enforcement agencies. As a result, the web hosting business in Ukraine can suffer greatly,” stated the expert of the law firm “Yuskutum” Andrii Parkhomenko. “I doubt that the number of online stores will be rapidly reduced: most likely, the smaller players will get for a short period of time the segment of the market left from the deceased monsters. However, the case of Rozetka.ua makes the prospects of online market and IT market development look very sad.” The lawyer also stressed that in general it becomes dangerous to run a successful business in Ukraine.

Recently, Prime Minister Mykola Azarov in his lecture for university students noted: “We need to redistribute the state order to increase the specialists in the sphere of IT technologies.” Today, according to the prime minister, only nearly 5,000 IT specialists graduate from all of the Ukrainian universities, while there is a need for at least 25,000 of such specialists. The prime minister said that at the present moment this sphere produces the total volume of product worth nearly 15 billion hryvnias and the government intends to increase its revenues by 10 times.

Natalia Korolevska, MP, head of the Committee on Industrial and Regulatory Policy and Entrepreneurship considers wider access to the Internet to be one of the leading trends of innovative development. She stressed: “It has been proved that the development of the Internet by 10 percent results in 1.5 to 2 percent GDP increase. Therefore, one of the tasks the state has now is expanding of the Internet access.”

This problem affects not only the Internet users but also the telecom operators, who are often denied access to telecommunication networks. This was discussed at the roundtable on the issues of their common usage. Serhii Prokhorov, first vice-president of the Ukrainian Union of Industrialists and Entrepreneurs noted that “the absence of comprehensive regulation of market activity may lead to the situation when local authorities will have a desire to burden the telecommunication companies with certain extra payments, create them some barriers to the networks that have to be in public use and by doing so to inhibit the growth of the market.” Petro Yatsuk, head of the National Comission for Regulation of Communications also admitted that there are such problems. He warned that in the course of the development of the appropriate orders, not only the interest of the local state agencies should be taken into account, because otherwise they will “continue to block the work of operators and providers and no regulatory document would force them to speed up those procedures.”

“Ukraine can not ignore the global trend of understanding the concept of Internet access as one of the fundamental human rights,” said Ivan Petukhov, president of the Group of Telecommunications Companies “Adamant.” He gives an example of such neglect: “At this point we have neither standard rates, nor permits to implant the IT-Telephony in city sewage system…” Petukhov noted that the situation with the access to the telecommunication networks in Ukraine is fundamentally contrary to European norms and principles of local authorities, whose efforts should be directed to meet the needs of the population. In many cities, according to the president of “Adamant,” there were created intermediary utilities companies, cooperatives of “one room office” type, which regardless of any rules collect money from operators and service providers and use the money not for the development of the telecommunications market, but for some strange purposes. “Thus, money are simply washed out of the high-tech industry,” said Petukhov. He continued: “We know for sure that our equipment becomes outdated already after a year of exploitation and requires lots of money for modernization.” According to Petukhov, the representatives of such intermediary companies say that they have mayor’s or governor’s instructions and they have to carry them out.

COMMENTARY

Tax inspectorate can impound rozetka.ua servers any time

Olha SPEKTOR, CEO, Spektor law firm:

“The Tax Inspectorate’s actions are perfectly legitimate. Impoundment of articles relating to the case is part of the investigation procedures. Even if they have not as yet impounded the rozetka.ua servers, they can do so any time, on absolutely legal grounds because these servers contain data concerning this online store. On the other hand, if and when these servers are impounded, the company will stop functioning and suffer heavy losses. Criminal prosecution can last for years and so rozetka.ua will be unable to do business; moreover, they will have to cover all their losses using their own resources. Even if the criminal case is closed or the company acquitted, this online store will have no legal reasons for claiming damages because the tax authorities acted under the Code of Criminal Procedure of Ukraine. This would be a heavy blow to the company. The same applies to Microhost whose servers rozetka.ua uses.

“Practically each online store can find itself in a similar situation in Ukraine. Often criminal prosecution turns out ungrounded and tax inspections are done contrary to Ukrainian legislation. This could be the basis of rozetka.ua’s defense strategy. Procedural errors in the course of the search may allow the defense to challenge the tax authority’s actions in court. If such errors are proved, all information received in the course of this search will not be admitted as incriminating evidence. Practice shows, however, that challenging authorities’ actions in such cases is easier said than done.”