Law and regulation of industrial and logistics investment in Ukraine

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:

  • co-financing investment projects via state budgetary funds;
  • providing state guarantees in support of the investee company’s debt financing for an investment project;
  • providing debt funding for an investment project via state budgetary funds;
  • full or partial compensation of interest payments under debt financing obtained for an investment project.

2. 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 an exemption from customs duties on 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 a new law, No. 3760, “On State Support for Investment Projects with Significant Investments” (the "Draft Law"), which Parliament passed on its first reading, although it still the needs to be finalised, adopted and signed by the President.

The Draft 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, heating, gas, water, electricity, etc.) necessary for the implementation of an investment project, including through construction/renovatio 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 Draft 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 design their investment projects and obtain approval for these projects from the government authorities; facilitating the implementation of approved investment projects and the fulfilment of obligations under the relevant special investment contracts. All such services will be free of charge for the investors.

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

The following tax exemptions or preferences are available to all investors (including the Industrial&Logistics sector):

  • VAT exemption available for construction services in affordable housing projects or State-sponsored construction projects;
  • VAT exemption for the import of energy efficient 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 implemented in industrial parks.

4. 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.