Government makes importing equipment easier for large investors

Contents

  1. What has changed?
  2. To whom do the changes concern?
  3. What are the benefits and support for large investors?
  4. What tax and customs benefits are provided to large investors?
  5. What projects are eligible for the state support?
  6. How to get a support?

The Ukrainian Government is promoting and supporting investments in the country’s economy. In 2024, UAH 3 billion has been budgeted to support projects with significant investments. In addition, the Procedure for the import of equipment into the customs territory of Ukraine by an investor with significant investments for their own use in an investment project was amended on January 2024.

What has changed?

  • The applicant is now given five business days to submit the list and volume of imported goods from the date of receipt of the conclusion on the feasibility of the investment project;
  • the period of five business days is set for the applicant to re-apply if the list and volume are not approved by the Ministry of Economy;
  • an increase in the total amount of state support for the implementation of a significant investment project is established as a reason for refusal to approve the list and volumes of goods during the review.  

The government’s changes to the Procedure for importing equipment and components are intended to bring additional clarity and transparency to the process of importing products by investor, which is a positive signal for investors preparing to start a business in Ukraine.

To whom do the changes concern?

These changes apply to large investors. An investor with significant investments is a legal entity registered in Ukraine that is specially established for the purpose of implementing of an investment project with significant investments, and is a party to a special investment agreement and whose economic activity is directed exclusively to the investment project and the execution of a special investment agreement.

What are the benefits and support for large investors?

In general, entrepreneurs implementing projects with significant investments are eligible for several types of support from the state: 

  • the preemptive right to use state or municipal land plots; 
  • financing for the construction of engineering and transport infrastructure(roads) by the state; 
  • tax and customs benefits; 
  • compensation of the costs of connection to engineering and transport networks;
  • the exemption from compensation for losses in forestry production; 

It should be noted, however, that the cumulative state support should not exceed 30 percent of the planned significant investment volume for the respective project. 

What tax and customs benefits are provided to large investors?

Until January 1, 2035, large investors can enjoy a range of tax and customs benefits aimed at fostering significant investments. The reliefs include:

  • import duty and VAT exemption: investors are granted an exemption from import duties and VAT for wide range of new equipment and its component parts when importing them for the purpose of implementing an investment project with significant investments;
  • corporate income tax exemption: investors, excluding those involved in mineral extraction for subsequent processing and / or beneficiation, are eligible for a five-year corporate income tax exemption if the profit is received from the performance of the project with significant investments;
  • local tax incentives: local self-government bodies have the authority to establish lower land tax rates and rental payments for state and municipal land plots with normative monetary valuation that are utilized in investment projects with significant investments (excluding projects in the field of mineral extraction for further processing and / or beneficiation), or even fully exempt investors from paying land tax. 

It should be noted that the stated reliefs have the peculiarities and conditions of application. And thus, their proper use should be carefully considered by investors in each particular case.

What projects are eligible for the state support?

State support is available for investment projects with significant investments that meet all the following requirements: 

  • EUR 12+ million of investment;
  • 10 or more new jobs with salary amount above the average salary in the region (depends on the number of people); 
  • the investment project implementation period must not exceed 5 years;
  • the project involves the construction, modernization, technical and/or technological re-equipment of investment objects;
  • implementation of projects in the sectors defined by the law: processing industry, waste management, transport, logistics, biogas and biomethane production, extraction for further processing and enrichment of minerals, warehousing, healthcare, tourism, and hospitality.

How to get a support?

Firstly, it is necessary to create a legal entity that will be engaged exclusively in the implementation of the investment project. 

After that, to obtain state support for the implementation of an investment project with significant investments, the following documents must be submitted to the Ministry of Economy: an application; a feasibility study of the investment project with significant investments and a draft of a special investment agreement.

The next stage is the evaluation of an investment project with significant investments by the Ministry of Economy and the adoption of a decision by the Cabinet of Ministers of Ukraine to conclude a special investment agreement.

The period for reviewing an application and signing an investment agreement is approximately 180 days.

In summary, Ukraine is currently creating many opportunities for business and investments by providing support and guarantees for large investors, which is critically important at this stage. 

Oleksandr Melnyk – Partner, Attorney at Law

Viktoriia Bublichenko – Counsel, Attorney at Law

Oleksandr Melnyk

Oleksandr Melnyk

Partner, Head of Corporate Law and M&A practice, Attorney at law

Viktoriia Bublichenko

Viktoriia Bublichenko

Partner, Head of Tax, Restructuring, Claims and Recoveries practice, Attorney at law

Practices | Sectors

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