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Strategic investors in Ukraine's economy will be exempt from many taxes


The Verkhovna Rada adopted in the first reading the Draft Law “On Amendments to Section XX ‘Transitional Provisions’ of the Tax Code of Ukraine on Peculiarities of Taxation of Business Entities Implementing Investment Projects with Significant Investments”.

The draft law is designed to stimulate the attraction of strategic investors into the economy of Ukraine, increase the investment attractiveness of Ukraine, as well as increase the competitiveness of the Ukrainian economy through the introduction of state support for large investment projects.

The draft law proposes:

  • exemption from January 1, 2021 to January 1, 2035 (but not more than the term and amount of state support specified in the special investment agreement) from value added tax on the import of goods into the customs territory of Ukraine under the customs regime of import (paragraph 15 item 4 of XXI Customs Code of Ukraine). The list and volumes of such goods with the definition of their codes in accordance with the UKT FEA are approved by the Cabinet of Ministers of Ukraine together with the conclusion of a special investment agreement;
  • exemption from corporate income tax for enterprises - investors with significant investments for five consecutive years from the date of application but not earlier than the date of submission of such application and the date of commissioning of the facility constructed (in respect of which reconstruction, restoration, overhaul ) in the framework of the investment project.

"This decision of the Verkhovna Rada will help attract investment in New Pig Production 2025" - said Mykola Babenko, CEO of Meat Industry Association 

It is assumed that (by January 1, 2035) local governments may set land tax rates and rents for state and communal lands in the amount less than the amount of land tax established by the decision of the relevant local government for a certain category of land paid in the relevant territory, or exempt from land tax for land plots, the normative monetary valuation of which is carried out, used in the implementation of investment projects with significant investments, respectively.

During the preparation of the bill for the second reading it is assumed to:

  • determine the specific entity to which the VAT exemption will apply;
  • editorially clarify issues related to transfer pricing (single out as an independent object of taxation of economic entities that implement investment projects with significant investments - profit in the amount of the discrepancy between the price determined by the "outstretched hand" principle and the contractual value);
  • clarify the conditions for obtaining a benefit in the form of exemption from corporate income tax in terms of investment objects (whether the equipment can be an independent and sufficient investment object to obtain the relevant tax benefit).

According to the author of this legislative initiative, the adoption of the bill will contribute to:

  • ensuring the competitive advantages of Ukraine as a direction of investment
  • creation of new high-paying jobs;
  • improving the quality of life of citizens of Ukraine;
  • creation of added value of products produced within Ukraine;
  • stimulating economic development of regions;
  • capacity development of high value-added industries;
  • increasing the share of local suppliers;
  • increasing the share of sectors with identified comparative advantages;
  • increasing the volume of exports of high-tech product;
  • integration into global supply chains.

The draft law was registered at № 3761