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The Verkhovna Rada, Ukraine's parliament, has passed bill No. 3761 to amend Section XX "Transitional Provisions" of the Tax Code of Ukraine as regards specifics of taxation of business entities implementing investment projects involving significant funds.
Some 246 lawmakers backed the draft law in the second reading and as a whole with the required minimum being 226 votes, an UNIAN correspondent reported on March 2.
Read also Capital investment in agriculture, forestry, fisheries shrinks by over 45% Head of the Verkhovna Rada Committee on Finance, Tax and Customs Policy Danylo Getmantsev says the draft law does not provide for full tax exemption.
"This isn't about a fifteen-year benefit, but about those that can be provided within a fifteen-year term of a particular project [implementation]. At the same time, it's no more than five years for corporate profit tax, and as regards total benefits – it's up to 30% of the investment amount. This is the logic of the bill," he said.
The draft law is a supplement to the previously passed legislation on the so-called "investment nannies."
As the explanatory memo says the bill proposes VAT exemption for transactions carried out from January 1, 2021, to January 1, 2035 (but not exceeding the period and volume of state support specified in a special investment agreement), involving imports by an investor of equipment to implement a large-scale investment project.
The bill also suggests relieving of corporate profit tax any large-scale investor's company that is party to a special investment agreement concluded in line with the law of Ukraine on state support of investment projects with significant investments. Such companies are exempted from corporate profit tax for a period of five years after an investment project has been commissioned, within the validity period of a special investment agreement.
A prerequisite for exemption from corporate profit tax is the fulfillment by such an investor of his liabilities under said agreements.
In December 2020, In the Verkhovna Rada passed bill introduced by President Zelensky in the second reading to support large-scale investment projects, the so-called bill on "investment nannies."
The bill provides for support of both Ukrainian and foreign investors implementing projects worth EUR 20 million in investment or more as regards processing industry (except for the production and circulation of tobacco products, ethyl alcohol, cognac and fruit spirits, and alcoholic beverages), extraction for the purpose of further processing and/or beneficiation of minerals (except for hard and brown coal, crude oil and natural gas), transportation, waste management, warehousing, postal and courier activities, logistics, education, scientific and technical activities, art, culture, tourism, health care, sports, as well as resort and recreational sphere.
According to the draft law, an investor must create at least 80 new jobs with an average salary of employees, which is at least 15% higher than the salary for the corresponding type of activities in the region where the project is to be implemented.
Such investors receive a direct contract with the government and an incentive package. Thus, state support can be provided to an investor in the form of tax and customs benefits or provision of related infrastructure facilities necessary for the implementation of said projects. Noteworthy, the total amount of state support shall not exceed 30% of the planned funds to be invested in the project.
Reporting by UNIAN