Financial state support programs

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 in the high military risk zone for investment purposes;
up to 3 percent per annum - for business entities operating in the area of high military risk for working 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 and/or in the areas of processing industry, reconstruction, energy services, and operating capital financing
up to 13 percent per annum - for loans granted for working capital financing, except for the areas specified above;
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%":

setting the compensation rate for medium and large enterprises at 11% per annum with the possibility of reducing it to 9% per annum if new jobs are created;
setting the compensation fee for micro and small enterprises at 9% per annum with the possibility of reducing it to 7% per annum if new jobs are created.

Support under factoring agreements includes:

Investment Nanny Program maximum financing limit per counterparty and group - up to 95% of the monetary claim amount, or 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;
the state compensates to the entrepreneur the expenses on payment of the basic remuneration up to the level of 13% per annum.

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.

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
Land tax exemption or reduced land tax rates, etc.

This program is mainly regulated by the Law of Ukraine “On State Support of Investment Projects with Significant Investments in Ukraine” No. 1116-IX dated 17.12.2020 and the Law of Ukraine “On Amendments to the Tax Code of Ukraine Concerning Peculiarities of Taxation of Business Entities Implementing Investment Projects with Significant Investments in Ukraine” No. 1293-IX dated 02.03.2021.

Requirements for an investment project with significant investments for which state support may be provided (according to the expected changes provided for by the draft law No. 8138 of 19.10.2022):

An investment project is implemented on the territory of Ukraine in the areas of processing industry (with some exceptions), extraction for further processing and/or enrichment of minerals (with some exceptions), waste management, transport, warehousing, postal and courier activities, logistics, education, scientific and scientific and technical activities, healthcare, art, culture, sports, tourism and resort and recreational activities, information and electronic communications, real estate transactions, production of energy-efficient building materials, climate control equipment and equipment for heating, ventilation, air conditioning, and hot water supply systems.
An investment project involves the construction, modernization, technical and/or technological re-equipment of investment objects, purchase of necessary equipment and components thereto, and may also involve the construction of adjacent infrastructure facilities necessary for the implementation of an investment project at the expense of an investor.
Creation of an investment project with significant investments during the period of implementation of the project at least:

10 new jobs with an average salary of employees not less than 50 % higher than the real average salary for the relevant type of activity in the region where the project is implemented for the previous calendar year; or
30 new jobs with an average salary of employees that is at least 30 % higher than the real average salary for the relevant type of activity in the region where the project is implemented for the previous calendar year; or
50 new jobs with an average salary of employees that is at least 15 % higher than the real average salary for the relevant type of activity in the region where the project is implemented for the previous calendar year;.

The amount of significant investments in the investment objects during the term of implementation of the investment project exceeds the amount equivalent to EUR 12 million.
The term of implementation of an investment project does not exceed 5 years.