Manufacturing localisation in Ukraine

Today, Ukraine is one of the countries offering exceptional investment conditions to large foreign companies. As a result, despite the challenging geopolitical situation, the country has managed to create an attractive investment climate that has already seize the interest of large investors.

What makes Ukraine a good investment destination?

• State support for encouraging foreign investment, full cooperation with large businesses at the government level
• Low tax burden (compared to other countries in Eastern and Central Europe)
• Good geographical location, large ports and access to the sea
• Promising economy of a developing country
• Cheap and skilled labour in various industries with knowledge of English (23% of the population of Ukraine speaks English with proficiency)
• Low cost of existing manufacturing facilities in the country
• Growth prospects and lack of foreign investment in most sectors of the economy
• Urgent demand in the defence, infrastructure, energy and metallurgical industries

What benefits and preferences await investors?

• Refund of up to 30% of the investment project cost through tax credits, benefits, cancellation of import duties, compensation for the cost of engineering and transport infrastructure and connection to it
• Exemption from income tax
• Assistance from an investment nanny – the state institution Ukraine Invest, whose main task is to ensure the smooth development of projects with significant investments
• Comprehensive assistance in the implementation of an investment project at both the state and local self-government levels
• The possibility of using a preferential tax regime – Residence in Diia.City
• Minimal amount of operating expenses

What are the investment requirements?

All established requirements are rather nominal for large-scale production. In order to take advantage of the benefits offered by the current Ukrainian legislation, the company must:

• operate in one of the industries described below;
• implement an investment project on the territory of Ukraine;
• the total investment amount must be more than EUR 12 million;
• the investment project must create at least 10 new jobs;
• the investment must include the construction/modernisation/purchase of equipment;
• the project implementation period cannot exceed 5 years.

In essence, they set a minimum investment threshold so as not to apply to small businesses.

Which companies can benefit from the proposed benefits? 

Almost all of them, preferences were granted to businesses in the process manufacturing (except for tobacco and alcohol products), biogas and biomethane production, extraction with further processing or enrichment of minerals (except for gas, oil, hard and brown coal), waste processing, transport, warehousing, postal and courier services, logistics, education, research and development, healthcare, art, culture, sports, tourism, resort and recreation, and electronic communications. 

The most popular industries for investment are IT, energy, metallurgy, construction, agriculture and defence.

In addition to the benefits offered to businesses by the Law of Ukraine “On state support of investment projects with significant investments in Ukraine”, there are additional opportunities in some industries. For example, manufacturers of technological products in the defence sector and UAV design and manufacturing plants have the opportunity to register in Diia.City, taking advantage of a special preferential tax regime that offers one of the lowest tax rates in the world. 

How to localise your business?

Send us an email. If you want to localise your production in Ukraine, GOLAW team will help you develop a step-by-step strategy for entering the Ukrainian market, providing exceptional legal support at all stages, from setting up a legal entity to optimising the tax burden on your profits. 

Our services include:

• advising on incorporation and business structuring;
• advising on licensing and regulatory requirements;
• investment structuring and assistance in obtaining business financing;
• M&A transaction support and due diligence of business and assets;
• advising on taxation;
• structuring the distribution of dividends and profits;
• supporting lease and privatisation of state and municipal property, public-private partnerships and concessions.

The material was prepared by:

Oleksandr Melnyk, Partner, Head of Corporate and M&A Practice at GOLAW, Attorney at Law

Nazarii Zeliak, Associate of Corporate and M&A Practice at GOLAW