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Ukraine: Law on Investment Nanny

Ukraine: Law on Investment Nanny

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A new Law “On State Support of Investment Projects with Significant Investments” was adopted. The Law provides for a state agency to be entrusted with the intensive supervision of particularly large investment projects in Ukraine. Earlier in 2020 President Zelenskiy somewhat mockingly referred to this agency as “investment nanny”. However, this is only a small part of the investment promotion.

The Law provides for special support for investment projects that meet the following criteria:

  • Investment project concerns the manufacturing industry (except for tobacco and alcohol), extraction of mineral resources for further processing (except coal, oil and gas), waste management, transport, storage, postal and courier services, logistics, health care, arts, culture, sports, tourism and leisure;
  • Construction, modernisation or technical equipment of facilities / buildings for the above-mentioned purposes;
  • Investment volume into fixed assets min. EUR 20 million;
  • The implementation of the project will not exceed 5 years;
  • Creation of at least 80 new jobs with average salaries at least 15% above the normal regional salary for equivalent jobs for the preceding year.

By means of a special investment promotion agreement, the investor can be granted the following benefits or subsidies:

  • Exemption from certain taxes (to be determined)
  • Exemption from import duties for new equipment
  • Priority right for lease of state or municipal land with the right of later pre-emptive acquisition
  • Establishment of infrastructure (roads, communications, energy) at the expense of the state or municipality.

The total value of benefits or subsidies may not exceed 30% of the planned investment. The conditions of state support for each investor will be provided in special investment agreements.

The state guarantees that the investor’s rights stipulated in the investment agreement are governed by the law applicable at the time of investment, unless the law changed to the benefit of the investor (decrease of tax burden, simplification of control procedures, etc).

Interestingly, the investment agreement can also be concluded under foreign law and a non-Ukrainian arbitration court can be chosen for disputes.

It is important to note that the new law does not cover public-private partnerships, concession, product sharing agreements and privatization.

By Julian Ries, Senior Partner and Head of International Offices, and Vasyl Yurmanovych, Counsel, Integrites

Integrites at a Glance

INTEGRITES is a full-service law firm with the head office in Ukraine, offices in Kazakhstan and Russia, and representative offices in Germany, the Netherlands, and the UK.

We provide legal services to companies seeking comprehensive advice on large deals and major disputes, as well as day-to-day operation. INTEGRITES is highly recommended for its cross-border work (whether sophisticated transactions or complex dispute resolution) and for the projects in energy, in particular, renewable.

Our mission is to help companies concentrate on development of their business while we take care of the legal issues. With profound industry-focused expertise, we deliver legal solutions that add value to the business of our clients and help them successfully handle legal challenges.

In 14 years INTEGRITES has served more than 850 clients from around the globe, including Fortune 500 companies and international financial institutions. Clients in our portfolio are recognized leaders in various industries: from manufacturing, pharmaceuticals, and retail to agriculture, logistics, and renewables. Currently 80% of the companies we serve are international.

INTEGRITES has been consistently recognized by the leading international legal directories and rankings: Chambers Global/Europe, The Legal 500 EMEA, Who’s Who Legal, IFLR 1000, Best Lawyers, FT Innovative Lawyers.

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Firm's website: www.integrites.com