Leasing in Ukraine
Today many Ukrainian leasing companies avoid using the term "leasing". Instead they employ terms, like "long-term rent", "temporal rent", "installment sale", "credit", etc. The contradictory leasing legislation forces companies to play linguistic tricks constantly. The conflicts abound in the leasing legislation. For example, the depreciation rates envisaged in the law "On Leasing" decrease the demand for the leasing itself substantially. According to the article 4 of the law, the property rights transfer of the leased subjects is feasible after the 60% depreciation; therefore, the depreciation rate change can affect the term of validity after which the leased subject can become property. The draft law "On Leasing" resolves this issue by allowing leasor and lessee to set up the term of the financial leasing agreement validity on their own. But the draft is not yet a law.
According to the current law "On Leasing" individuals have no right to lease. The draft foresees leasing rights for both legal entities and individuals. The same pertains to the installment sales and credits. However, most of the leasing companies refuse dealing with individuals because of the high non-payment risk.
The experts in the field are unanimous that the current legislation makes leasing practically impossible. They also believe that the Tax Code and Civil Code drafts pose threat for the leasing operations and their approval will drastically reduce the number of leasing agreements
Nonetheless, the ratification of the draft law "On Leasing" in the first reading leaves some sanguine hope for the better prospects. There is still a chance for the foreign and domestic companies to make a more effective use of the leasing services.
