Наталя Хандусенко Hot News 14 May 2025, 16:28

Draft law on strengthening the independence of the NCEC. Ukraine wants to introduce contributions (1.5% of annual revenue) for the telecom market to maintain the state regulator

The Internet Association of Ukraine (InAU) has sent a letter to the NKEC regarding the draft law “On Amendments to Certain Laws of Ukraine on Strengthening the Independence of the NKEC,” which proposes to introduce contributions for the electronic communications sector to maintain the commission. What exactly does the draft law propose and what comments do representatives of the Ukrainian telecom market have about it?

What changes does the bill propose?

As stated in the explanatory note to the bill, its goal is to strengthen the independence of the National Commission for State Regulation in the Fields of Electronic Communications, Radio Frequency Spectrum, and Postal Services (NCEC).

The justification for the changes includes the practice of financing regulatory authorities in the field of electronic communications in the EU through contributions from market participants. They also link the need to implement such a model in Ukraine to Ukraine's obligations to integrate into the EU and the EU's Digital Single Market.

If the project is adopted, the activities of the NCEC and its apparatus will be financed by revenues from the special fund of the State Budget of Ukraine for regulatory contributions, which will be paid by business entities operating in the field of electronic communications. However, if the annual income does not exceed 1,167 times the minimum wage, the company does not pay contributions.

According to preliminary calculations of the commission, approximately 335 business entities whose income exceeds the above criterion may pay such contributions. In particular, the total income of such entities in 2023 was taken into account for the calculation and determination of the relevant criterion, namely - 87,689,921,030.00 UAH.

The commission will review the contribution amount quarterly, but it cannot exceed 1.5% of the total income of payers.

"The implementation of the norms of the draft act will not require additional expenses from the state or local budgets. At the same time, such a financing model will allow reducing the expenditure part of the state budget of Ukraine by the amount of financing for the National Energy and Power Generation Company from UAH 181.7 million (provided for by the State Budget of Ukraine for 2024) to UAH 309.5 million (the need for the National Energy and Power Generation Company in 2025)," the document states.

What is the position of the Internet Association of Ukraine regarding the draft law?

In the EU, there are different funding models that are generally independent of the economic development of the countries, and the predominant funding model is either a mixed model or funding from the state budget. InAU provided examples of funding for regulators in some EU countries with references to the relevant laws of these countries.

The need for a multiple increase in the funding of the National Energy and Power Corporation (2.5 times - from UAH 199 million 767.5 thousand according to the State Budget of Ukraine for 2025 to UAH 500 million for 2026 according to the draft estimate provided to the participants of the meeting on May 5, 2025) seems unfounded , especially taking into account the war realities, the Association notes.

"On the contrary, the decrease in the population of Ukraine, the number of consumers and providers of electronic communications services, as well as new opportunities for using artificial intelligence objectively require a reduction in costs for state administration bodies, the regulatory burden on the industry, a reduction in the functions and staff of the industry Regulator and, accordingly, budget expenditures for its activities," the InAU explained.

Among other things, the Association also emphasizes that in the draft, despite the presence of broad rights and powers in the current Law on NCEC, the regulatory body actually insists on unlimited power, the absence of any control by the state (state bodies) over its actions and decisions, and the use of funds .

They also noted the calculations of the regulatory contribution and financing needs, namely:

the calculation includes “monitoring the quality of electronic communication services” (40 million UAH). In the opinion of the Association, the implementation of such work is not absolutely necessary in today's Ukrainian realities;
also, in the opinion of the InAU, the necessary costs for “payment of court fees and enforcement of court decisions” are overstated — over 12 million UAH;
In addition, the Association doubts the need for over 20 million UAH for "purchase of office equipment, computer equipment, furniture for NKEK personnel", plus over 3 million UAH for the item "components for computer equipment, stationery, furniture", which amounts to over 100 thousand UAH per NKEK employee per year;
The feasibility of spending almost UAH 15 million on “the development and implementation of the information system “Tool for comparing offers of providers of electronic communications services”, as well as the need to spend more than UAH 80 million on “the development and implementation of an electronic regulatory platform” is also questionable.

"Given the above, in the current situation of martial law and the peculiarities of the domestic electronic communications market, we consider it inappropriate to introduce regulatory contributions as a source of funding for the regulatory body," InAU concluded in its letter and proposed creating a working group on the basis of the National Commission for Electronic Communications with the involvement of representatives of the Ministry of Digital Economy, other state bodies, and specialized associations.

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