THIS LEGAL INFORMATION IS VALID AS OF THE DATE OF PUBLICATION, THEREFORE IS INFORMATIVE
In order to stimulate the influx of foreign investment in Ukraine, on December 17, 2019, the Law of Ukraine "On State Support of Investment Projects with Significant Investments in Ukraine" was adopted, which provides for the creation of favorable conditions for attracting significant investments to Ukraine by providing tax incentives and other state support to such investors.
The law requires the conclusion of a special investment agreement between the applicant and an investor with significant investments, from one entity, and the state of Ukraine or a territorial community, which determines the form and amount of state support provided to the investor for the implementation of the project
To obtain the right to receive state support, an investment project must fit in the requirements specified in Article 5 of the said Law, namely:
1) an investment project with significant investments is being implemented on the territory of Ukraine in the processing industry (except for the production and circulation of tobacco products, ethyl alcohol, cognac and fruit, alcoholic beverages), extraction for the purpose of further processing and / or enrichment of minerals (except for stone and brown coal, crude oil and natural gas), waste management, transport, warehousing, postal and courier activities, logistics, education, scientific and scientific and technical activities, health care, art, culture, sports, tourism and resort and recreational areas ;
2) an investment project with significant investments provides for the construction, modernization, technical and / or technological re-equipment of investment objects in the areas specified in paragraph 1 of this part, the acquisition of the necessary equipment (equipment) and components for it, and may also provide for construction at the expense of funds investor, which is necessary for the implementation of an investment project with significant investments in adjacent infrastructure facilities;
3) the creation during the implementation period of the investment project with significant investments of at least 80 new jobs
with the average salary of employees, the amount of which is at least 15 percent higher than the average salary for the corresponding type of activity in the region in which the project is being implemented, for previous calendar year;
4) the amount of significant investments in investment objects during the implementation period of an investment project with significant investments exceeds the amount equivalent to 20 million euros
, calculated at the official exchange rate established by the National Bank of Ukraine as of the first business day of the quarter in which the application is submitted, and on the date of actual implementation of significant investments in investment objects pursuant to a special investment agreement;
5) the term for the implementation of an investment project with significant investments does not exceed 5 years
State support for investors with significant investments consists of:
1) all funds exempt from taxation - the amount of taxes and fees that are not paid to the budget and remain at the disposal of an investor with significant investments in accordance with the terms of a special investment agreement. If a land plot is provided for use (lease) for the implementation of an investment project with significant investments with the collection of land payments for the provided land plot in an amount that is less than the amount established by the local government body for the relevant category of land in the relevant territory, the size of the difference is taken into account when determining the total amount of state support for the implementation of an investment project with significant investments;
2) the total cost of all objects of related infrastructure required for the implementation of an investment project with significant investments and built to fulfill a special investment agreement, as of the date of putting such objects into operation.
In pursuance of the aforementioned Law on 03/02/2021, Laws No. 1294-IX and No. 1293-IX were adopted, which amended the Tax and Customs Code regarding the specification of benefits for investors with significant investments (hereinafter - investors).
According to the above laws, the Tax Code of Ukraine and the Customs Code of Ukraine were supplemented with the following provisions:
✔️ Temporarily, until January 1, 2035, they are exempt from taxation by import duty and value added tax
when imported into the customs territory of Ukraine and placed in the import customs regime - new equipment (equipment) and components to it, imported by investors with significant investments for their own use due to the implementation of an investment project with significant and investments in pursuance of a special investment agreement concluded in accordance with the Law of Ukraine "On State Support of Investment Projects with Significant Investments in Ukraine", provided that the relevant goods were manufactured no earlier than three years before the date of their import into the customs territory of Ukraine, were not in use and classified by such codes according to UKT VED: 8402-8405, 8406 82 00 10, 8406 82 00 90, 8411, 8 40 00 00, 8413 50, 8413 60 20 00, 8413 60 70 00, 8413 60 80 00, 8413 70 21 00, 8413 70 29 00, 8413 70 30 00, 8413 70 35 00, 8413 81 00 00, 8413 82 00 00, 8414 10, 8414 40 90 00, 8414 80, 8416, 8417, 8418 (except 8418 10 20 10, 8418 10 80 10, 8418 21, 8 9 8419, 8420, 8421, 8422 (except 8422 11 00 00), 8423 (except 8423 10 10 00, 8423 81 25 00, 8423 90), 8424 4 0 8425 49 00 00), 8426-8431, 8433 60 00 00, 8434, 8435 (only machines and mechanisms for the production of juices or similar drinks), 8436-8442, 8443 (except 844 448 448, 8449 00 00 00 , 8451, 8452 (except 8452 10, 8452 30 00 00, 8452 90 00 00), 8453-8466, 8470 30 00 00, 8 5, 8477, 8479, 8480, 8481 (except 8481 80), 8483, 8486, 8487 , 8501, 8502, 8503 00, 8504, 8506, 8507, 8 8537, 8538 10 00 00, 8543, 8607, 8608 00 00 00, 8709, 9006 30 00 00 (only for cameras intended for medical and surgical examination of internal organs ), 90 00, 9011, 9012, 9018 (except 9018 31, 9018 32, 9018 39 00 00), 9019, 9020 00 00 00, 9022, 9023 00, 922, 902 9 are approved by the Cabinet of Ministers of Ukraine together with the conclusion of a special investment agreement ... BUT
, in case of alienation of equipment (equipment) and components for it, imported into the customs territory of Ukraine in this manner, earlier than five years from the date of their importation into the customs territory of Ukraine or in case of early termination of a special investment agreement (except in cases where early termination a special investment agreement is due to a violation of the state's obligations to provide state support under a special investment agreement or the occurrence of force majeure (force majeure circumstances), the investor is obliged to pay tax liabilities for value added tax, import duty and penalty interest. Either tax liabilities for value added tax are demanded to be executed in case of improper use of such equipment (equipment) and components.
✔️ Temporarily, until January 1, 2035, the peculiarities of taxation of the profits of an enterprise
- an investor with significant investments (except for those implementing investment projects in the areas of extraction for the purpose of further processing and / or enrichment of minerals) are applied, which is a party to a special investment agreement, provided that such profit is derived from the performance of this special investment agreement.
The specified profit of an enterprise - investor is exempt from taxation with corporate income tax
for 5 consecutive years starting from the first day of the first month of the calendar quarter determined by the taxpayer - investor with significant investments in the application submitted by him to the supervisory authority on the use of the right to apply such exemption, but not earlier than the date of submission of such a statement, as well as the date specified in the register of investment projects with significant investments of the date of the investor's fulfillment of the obligations provided for by a special investment agreement. BUT
, if an investor - a payer of corporate income tax carries out controlled operations within the framework of activities related to the implementation of a special investment agreement, then the object of taxation with corporate income tax, taxed at the base (basic) rate, is determined separately at the level:
- excess of the price determined according to the arm's length principle over the contract (contract) value (the value at which the corresponding operation should be reflected in accordance with national accounting regulations (standards) or international financial reporting standards) of goods (works, services) sold;
- excess of the contractual (contract) value (the value at which the corresponding transaction should be reflected in accordance with national accounting regulations (standards) or international financial reporting standards) of the purchased goods (works, services) over the price determined according to the arm's length principle. Controlled transactions are the business transactions of the taxpayer that can affect the taxable object of the tax on the profit of the taxpayer's enterprises, namely: a) business transactions with related non-resident persons; b) foreign economic transactions for the sale and / or purchase of goods and services through non-resident commission agents; c) ongoing business transactions exist with non-residents registered in the states (territories), in included in the list of states (territories) approved by the Cabinet of Ministers of Ukraine (https://zakon.rada.gov.ua/laws/show/1045-2017-%D0%BF# n10), or are residents of these states; d) business transactions carried out with non-residents who do not pay income tax (corporate tax), including from income received outside the state of registration of such non-residents, and / or who are not tax residents of the state in which they are registered as legal entities. е) business transactions carried out between a non-resident and his permanent representative office in Ukraine.
If the investor is a controlling person, a separate object of taxation with corporate income tax taxed at the base (base) rate is the adjusted profit of a controlled foreign company, determined in accordance with Article 39-2 of the Tax Code of Ukraine (comes into force from 01.01.2022). Such objects of taxation, as well as controlled transactions, are not exempt from taxation and are subject to taxation in accordance with the general procedure.
✔️ Temporarily, until January 1, 2035, in terms of payments for land plots
, the normative monetary valuation of which has been carried out, used in the implementation of investment projects with significant investments (except for investment projects in the areas of production for the purpose of further processing and / or enrichment of minerals) in in accordance with the Law of Ukraine
"On State Support of Investment Projects with Significant Investments in Ukraine", local governments can
- to establish rates of land tax and rent for state and communal land in an amount less than the amount of land tax established by a decision of the relevant local government body for a certain category of land paid in the relevant territory;
- exempt from payment of land tax.