Ukraine introduces new regulation to draw important international funding | Dentons


On February 13, 2021, Ukrainian Regulation No. 1116-IX “On State Assist for Funding Tasks with Giant Investments in Ukraine” of December 17, 2020 (the “Regulation“) entered into drive. This regulation goals to draw high-value international funding to Ukraine and defines the primary guidelines and ensures for the implementation of funding initiatives (the”funding challenge”).

During which sectors can an funding challenge be carried out?

A Ukrainian or international investor can implement an funding challenge within the following industrial sectors:

  • Processing trade (besides manufacturing and circulation of tobacco merchandise, alcohol and alcoholic drinks)
  • Extraction for additional processing and / or processing of mineral sources (besides coal, oil and fuel)
  • Waste Administration
  • Transport, storage
  • Postal and courier actions, logistics
  • Instructional, scientific, analysis and technical actions
  • Well being care
  • Arts, tradition, sports activities, tourism and resort and recreation

An funding challenge might be carried out by the use of building, modernization, technical and / or technological re-equipment of the funding goal, buy of the mandatory tools and its parts, and it could possibly additionally present for the development of auxiliary infrastructure.

What are the standards of the funding challenge?

The funding challenge and the following particular funding settlement (the “Settlement”) Should meet the next necessities:

  • The quantity of the funding should exceed 20 million euros.
  • The implementation interval of the funding challenge should not exceed 5 years from the date of conclusion of the contract.
  • The entire worth of State assist for the implementation of the funding challenge should not exceed 30% of the quantity invested within the challenge.
  • The funding challenge should create not less than 80 new jobs, the place the common wage is not less than 15 p.c extra than the common wage paid for the exercise involved within the area.

What does authorities assist present for the funding challenge?

State assist for funding initiatives can take the next types:

1) Tax advantages reminiscent of: (i) exemption from customs duties and VAT for tools imported by an investor to Ukraine for the implementation of the funding challenge and (ii) exemption from company tax investor for 5 years. The draft regulation on exemption from revenue tax and VAT is pending earlier than the Verkhovna Rada of Ukraine and is anticipated to be adopted at one of many subsequent periods.

2) Exemption of apparatus and its parts from import duties.

3) The correct to make use of (lease) land owned by the State or the group with a purpose to implement the funding challenge, in addition to the proper of the investor to buy mentioned land upon expiration of the time period of the Settlement.

4) The development, on the expense of the State, of the ancillary infrastructures (highways, communication traces, warmth, fuel, water and electrical energy distribution installations, distribution traces of public providers) crucial for the belief of the funding challenge.

What’s the process for implementing the funding challenge?

To use for assist for an eligible funding challenge, the investor should submit an software and supporting paperwork to the particular public physique or native self-government authority (for regional initiatives). If the funding challenge is authorized, the Cupboard of Ministers of Ukraine or the native council will enter into an settlement establishing the phrases and situations and process for the implementation of the challenge. The funding settlement can solely be concluded with an investor having a authorized entity registered in Ukraine. If a international investor implements the funding challenge, he should create a authorized entity in Ukraine with 100% of the participations (shares) owned by this international investor.

The federal government has three to 6 months to assessment the appliance and conclude the settlement.

What are the restrictions?

An software for the implementation of the funding challenge can’t be deposited by:

1) Ukrainian or international authorized individuals, which:

  • Are registered or managed by residents of the Russian Federation or international locations included within the FATF record
  • Are topic to particular financial measures or different restrictive measures (sanctions) in Ukraine
  • Are topic to chapter, liquidation or reorganization proceedings
  • Have tax arrears on the date of the request
  • Are registered in international locations (or territories) categorised as offshore areas

2) Firms, establishments and non-profit organizations;

3) Public and municipal enterprises, through which greater than 50% of the shares (participations) of the share capital are held by the State or the territorial group

The Cupboard of the President of Ukraine believes that this regulation will contribute to the resumption of funding actions in Ukraine after the 2020 disaster.



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