Advantages and drawbacks of the law on supporting large investment projects
January 14, 2021
On 16 December 2020, Ukraine unveiled a range of new incentives for major investors, as it looks to accelerate the economic recovery from the pandemic. The Verkhovna Rada passed a law on "Government Support for Major Investment in Ukraine" which applies to both Ukrainian and foreign companies that are 100% owners of an established, resident legal entity in Ukraine.
The Government views this law as a tool for accelerating investment into Ukraine by granting certain benefits and preferences to investment projects that meet specific criteria (investments of EURO 20m or more, creation of at least 80 new jobs, etc.). These benefits and preferences include:
- Five-years' exemption from corporate income tax;
- Exemption from VAT and import duties on equipment required for the project;
- Preferences on buying and using land plots;
- Ukraine Treasury financing of infrastructure construction required for the investment project.
- The law also contains a non-regression clause applicable throughout the project implementation term.
These benefits and preferences should be stipulated in a special investment agreement between the investor and the Government and a local government body. A duly authorised organisation to be determined by the Cabinet of Ministers will provide assistance to qualifying investment projects. Should the Law be signed off by the President, the first special investment agreements may be concluded starting 1 January 2022.
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For further discussion on the subject of this paper, please contact: Roman Sukhyy, Senior Counsel, r.sukhyy@kesarev.com
