Law on support of large investors in Ukraine adopted
On 17 December 2020, the Verkhovna Rada of Ukraine adopted Law On State Support of Investment Projects with Significant Investments. In addition to the sectors of state support for investment projects with significant investments and creation of new jobs, this law, also defines the stimulation of economic development of regions and increases the competitiveness of Ukraine’s economy.
A new type of investor has been distinguished – an investor with significant investments, as well as an investment project with significant investments. Moreover, the law provides a number of benefits for such investors and defines forms (tools) for providing state support to investment projects with significant investments.
Investment project criteria
Under the Law, an investment project with significant investments must meet the following requirements:
1. it must be implemented in the sectors of processing industry (except for production and circulation of tobacco products, ethyl alcohol, cognac and fruit, alcoholic beverages), mineral extraction for further processing or enrichment (except for coal and lignite, crude oil, and natural gas), waste management, transportation, warehousing, postal and courier operations, logistics, education, science, research and development, healthcare, arts, culture, sports, tourism, resorts and recreation;
2. the project must create at least 80 new jobs with an average salary of employees at least 15% higher than the average salary for the relevant activity in the region (where the project is implemented) for the previous calendar year;
3. amount of contribution in investment objects during implementation of the investment project with significant investments must exceed the equivalent of 20 million euros;
4. the project must include construction, modernization, technical and/or technological re-equipment of investment objects, purchase of necessary equipment and its components, and may also include construction of the infrastructure necessary for the investment project at the expense of investor;
Forms of investor support
The law also stipulates that state support of investment projects with significant investments may be provided to an investor in the following forms:
- exemption from income tax for 5 years, as well as from payment of VAT and duties on import of new equipment;
- granting the preemptive right to use a state or municipal land plot for implementation of the investment project. This involves using (renting) a state or municipal land plot with rent to be paid under conditions provided by a special investment contract. Furthermore, the investor may be granted the preemptive right to acquire ownership of the land plot after expiration of the special investment agreement;
- provision of construction, reconstruction, restoration, major overhaul of related infrastructure (highways, communication lines, heat, gas, water, and electricity supply facilities, utilities, etc.) required for implementation of the investment project at the expense of the state, local budgets and other legal sources.
Which investors will not be provided with support?
State support will not be provided for implementation of investment projects in the sectors of renewable energy, crop production, and the financial sector.
Following categories of investors will not be able to be applicants for state financial support:
- non-profit organizations,
- legal entities that have not disclosed information on their ultimate beneficial owners,
- enterprises registered in offshore zones, or enterprises with more than 50% of the authorized capital shares belonging to legal entities registered in offshore zones,
- legal entities registered in the Russian Federation.