Government Support for Major Investment Projects
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 project implementation
To receive government support, 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.
Forms of providing government support for major investment projects
Government support for major investment projects may be provided to an investor with major investments in the following forms:
- exemption from certain taxes and fees;
- exemption from import duty on new equipment and components imported exclusively for the implementation of an investment project;
- provision of the preemptive right to use a state-owned or municipally owned land plot for the implementation of an investment project — provision of a state-owned or municipally owned land plot for use (lease) for the implementation of an investment project and with the investor's preemptive right to acquire the land plot upon termination of the agreement;
- provision at the expense of the state, local budgets and other sources not prohibited by law of construction of engineering and transport infrastructure facilities (roads, communication lines, heat, gas, water and electricity supply, engineering communications, etc.) or compensation at the expense of the state, local budgets and other sources not prohibited by law, for the cost of engineering and transport infrastructure facilities built by the applicant or investor with major investments necessary for the implementation of the major investment project;
- compensation for the costs of connecting and joining the engineering and transport networks necessary for the implementation of the project;
- exemption from compensation for losses of the investor's forestry production;
- assistance to the investor when connecting to heat, gas, water and electricity supply networks, engineering communications, 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.
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.