Ukraine has a number of government programs aimed at providing financial support to businesses, namely
The State Program “Affordable Loans 5-7-9%” provides for:
Interest compensation to a business entity in order to reduce its actual costs of paying the base interest rate to the appropriate level:
- up to 1 percent per annum in the first two years of lending, and 5 percent per annum thereafter - for business entities carrying out economic activities and/or whose production facilities are located in the high military risk zone for investment purposes;
- up to 3 percent per annum - for business entities operating and/or whose production facilities are located in the area of high military risk for operating capital financing.
For business entities conducting business activities outside the zone of high military risk, the compensation interest rate is reduced:
- to the level of 5 or 7, or 9 percent per annum- for loans granted for investment purposes;
- to the level of 7 or 9, or 13 percent per annum - for loans granted for operating capital financing;
- up to 15 percent per annum - for loans granted to an individual entrepreneur.
Within the framework of the State Program “Affordable Financial Leasing 5-7-9%”:
Compensation of remuneration to a business entity in order to reduce its actual costs of paying basic remuneration to the appropriate level:
- to the level of 9 or 11 per cent per annum - for financial leasing agreements concluded in non-priority areas;
- to the level of 5 or 7 per cent per annum for financial leasing agreements concluded in priority areas.
Support under factoring agreements includes:
- maximum financing limit per counterparty and group - up to UAH 150 million (taking into account received state support under lending and leasing programs);
- maximum term of factoring financing use for a business entity - 360 days.
These programs are mainly regulated by the Resolution of the Cabinet of Ministers of Ukraine On providing financial state support No. 28 dated 24.01.2020.
INVESTMENT NANNY PROGRAM
This program provides for:
- CIT exemption (for 5 years by choice)
- Exemption from VAT for importing new equipment and components to it and Exemption from import duties for new equipment and components to it (the list and volumes of equipment are approved by the Cabinet of Ministers for each project)
- Lease of state or communal land plots without land auctions
- Compensation for the costs of connecting and joining the engineering and transport networks necessary for the implementation of the project
- Land tax exemption or reduced land tax rates, etc.
The total amount of government support for the implementation of an investment project is set out in a special investment agreement and should not exceed 30% of the planned amount of major project investments.
This program is mainly regulated by the Law of Ukraine “On State Support of Investment Projects with Significant Investments in Ukraine” and Tax Code of Ukraine.
The Law of Ukraine “On Government Support for Major Investment Projects” defines the organizational, legal and financial framework for state support of investment projects to create favourable conditions for attracting significant investments (domestic and foreign) to Ukraine, creating new jobs, stimulating economic development of regions and increasing the competitiveness of the Ukrainian economy.
Areas of investment project implementation
To receive government support under the Investment Nanny Program, an investment project with major investment should be implemented in Ukraine in the following areas:
- processing industry (except for activities related to the production and sale of tobacco products, ethyl alcohol (except for the production of bioethanol intended for use as a fuel component), cognac and fruit, alcoholic beverages)
- production of biogas and biomethane (including liquefied or compressed)
- extraction of minerals for further processing and/or enrichment (except for coal and lignite, crude oil and natural gas)
- waste management
- transport
- logistics
- warehousing
- postal and courier activities;
- education
- scientific and scientific-technical activities
- healthcare
- art and culture
- sports
- tourism
- resort and recreation
- electronic communications.
Requirements for investment projects
- Minimum investment: The project should involve investments of at least EUR 12 million for the implementation of the investment project.
- Construction and modernization: An investment project involves the construction, modernization, technical and/or technological re-equipment of investment objects in certain areas, and the purchase of the necessary equipment and components.
- Creation of new job positions: The project must ensure the creation of at least:
- 10 new job positions with an average salary of employees at least 50 per cent above the actual average salary;
- 30 new job positions with an average salary at least 30 per cent above the real average salary;
- 50 new job positions with an average salary at least 15 per cent above the real average salary.
- Duration of project implementation: The maximum project implementation period may not exceed 5 years from the date of conclusion of the special investment agreement.
Special investment agreement
To get government support, an investor should enter into a special investment agreement with the Government of Ukraine. This agreement contains, in particular, the following mandatory terms and conditions:
- Investment amount
- Project implementation period
- The number of job positions created and their minimum wage
- Terms and forms of government support, etc.
Requirements to investors
- An investor can be either a domestic or a foreign legal entity.
- The investor should register an investment company in Ukraine, which will be responsible for the implementation of the project.
- The investor should confirm the amount of significant investments made into the investment object.