Updated legal incentives for investors in Ukraine

Ukraine/December 2015

The investment climate in Ukraine is bound to undergo a wave of improvement as the Government is proceeding with the implementation of wide-ranging reforms.

Amendments are mostly geared towards economic recovery and focus on increasing transparency in state-owned enterprises, removing regulations, reconstructing procurement processes, and simplifying the tax code with a target to create a welcoming business environment for investors and entrepreneurs.

Recently, the Parliament of Ukraine adopted Law No. 2844 on amendments regarding the removal of regulatory obstacles for developing industrial parks. These amendments prescribe a simplification of the procedures for creation and functioning of industrial parks. Industrial parks can be an effective tool for attracting investments in the priority sectors of the economy by providing incentives for investors, lifting regulatory barriers and guaranteeing essential support by the government. A company directly managing an industrial park is exempted from paying rent for the use of land parcels in state or municipal ownership for a period of three years. It’s important to stress that amendments to the Land Code specify the notion of industrial park as an entity which has the right to land parcels as well as other facilities within the industrial park and the company managing the industrial parks and the lessor (the initiator of the park creation) are authorized to sub-lease land parcels to industrial park participants without a preliminary agreement from the owner of the land parcels. The sources of funding of projects within industrial parks may be funds from government and local budgets or resources of private investors on the basis of public-private partnership model.

A second significant tool for the implementation of investment projects and attracting investments is the public-private partnership model. On 24 November 2015, the Law No. 1058 on amendments regarding the removal of regulatory obstacles for the development of public-private partnerships was adopted. This law includes a number of amendments to the law on public-private partnership (PPP) and the laws on concessions, management of state-owned assets and international private law. The amendments introduced to these laws tackle systemic flaws including the lack of clear definition of projects implemented in the frames of public-private partnership and the lack of effective tools of state support. The law aims to attract the interest of international companies mostly in the housing and utilities sphere, as well as in the sectors of construction (developing ports, constructing roads, and managing airports) and healthcare.

After the adoption of the above-mentioned laws, Ukraine can gain by implementing powerful investment tools such as the PPP model and the industrial parks, both of which will result in advanced technology transfer as well as economic and social development. The industrial parks will serve as special point of interest for potential investors who may benefit from an established infrastructure and incentives. Additionally, the PPP model will create favorable conditions for new industrial production in Ukraine by introducing strong fiscal incentives that will attract new FDI, well-paid jobs with higher labor productivity and additional tax income for the country.

Yulia Rybak
T. +380445021068+380445021068
E. yulia.rybak@eurofast.eu