I&L Investment Incentives in CEE-17

In this chapter, CMS and Sorainen have provided a country-by-country guide to understanding and comparing what incentives are potentially available to Industrial & Logistics investors seeking to start operations in one or more the CEE countries covered in the report. Investment incentives are a key element of the decision-making process when investors are selecting countries and locations. Therefore, we look at some of the more frequently asked questions and provide an overview of the general conditions that were applicable at the time of preparation.

Ukraine

Legal incentives for investments specifically in the Industrial & Logistics sector in CEE-17

In 2012, Ukraine adopted a ten-year special regime (for 2013–2023) available for state support for investment projects in priority industries, including Industrial & Logistics.

General state support is available for investment projects that the state authorities select on a competitive basis. State support may take the form of: a) co-financing investment projects via state budgetary funds; b) providing state guarantees in support of the investee company’s debt financing for an investment project; c) providing debt funding for an investment project via state budgetary funds; d) full or partial compensation of interest payments under debt financing obtained for an investment project.

General incentives, from which investors in the I&L sector in CEE-17 can benefit, if no specific ones are available

Investors that decide to operate in industrial parks can enjoy the new beneficial regime offered to the residents of industrial parks. The available support includes: (i) relief from payment of infrastructure development duty; and (ii) exemption from customs duties for the import of the equipment, components and materials used for an investment project in an industrial park. The president promotes state support for major investments in Ukraine and recently proposed new law, No. 3760, “On State Support for Investment Projects with Significant Investments” (the “New Law”), which Parliament passed on its first reading, although it still needs to be finally adopted and signed by the President. The New Law states that state support can be provided to a local or foreign investor in the form of: tax benefits, such as an exemption from corporate income tax or duties on imports of new equipment into Ukraine; granting preferential rights and special land use fees for using state- and municipality-owned land for the implementation of an investment project; and providing related infrastructure facilities (roads, communication lines, heat, gas, water and electricity, utilities, etc.) necessary for the implementation of an investment project, including through the (re)construction of such facilities at the expense of the state or municipality. The maximum amount of state support cannot exceed 30% of the overall amount of project investments. In addition, the New Law provides for the appointment of a state institution to support participating investors for the duration of their investment projects. This institution will be responsible for: assisting investors that apply for participation in the state support program; helping investors designing their investment projects and obtaining approval for these projects from the government authorities; and facilitating investors’ implementation of approved investment projects and the fulfilment of their obligations under the respective special investment contracts. All such services will be provided to investors free of charge.

Available tax exemptions or preferences for investors specifically in the I&L sector in CEE-17

The following tax exemptions or preferences are available for all investors (including the Industrial & Logistics sector): VAT exemption available for construction services in projects constructing affordable accommodation or State-sponsored construction projects; VAT exemption for the import of energy effective equipment and equipment/materials used for the production of renewable energy (application limited); VAT exemption for city transportation services (except for taxis); deferral of import VAT available for imports of equipment and parts to be used in ship construction and certain projects in priority sectors of the economy; and exemption from import customs duties available for projects realised in industrial parks.

General tax exemptions or preferences for investors in CEE-17 that would apply to the I&L sector

In Ukraine, corporate income tax exemption is available for investment funds, including investment projects in the Industrial & Logistics sector.

Key contacts

Helen Rodwell
Helen Rodwell
Managing Partner
Managing Partner, Prague and Bratislava