Ukrainian Parliament proposes reduced tax rates for industrial parks

The Ukrainian parliament has adopted a bill that introduces tax benefits for companies participating in industrial parks, proposing tax exemptions or reduced rates for corporate profit tax, property tax, land tax and value added tax when importing equipment and components.

Some 227 lawmakers voted for the adoption of the bill in first reading while the required minimum is 226 votes.

Head of the Verkhovna Rada Committee on Industrial Policy and Entrepreneurship Viktor Halasyuk said, when presenting the bill, that industrial parks could become one of the main instruments to raise investment in Ukraine and develop production in the country.

”This bill provides for special tax treatment to be in effect on a temporary basis … Such a bill does not carry any risk to the fiscal budget, as it will be applicable only to new investment and newly established production facilities,” Halasyuk said.

The bill introduces certain amendments to the Tax Code of Ukraine, as stated in the explanatory note to the bill. In particular, among them is exemption of companies participating in industrial parks from corporate profit tax for five years. What is more, it proposes halving the reference rate, which is now set at 8%, for the following five years.

The bill also suggests that imports of equipment and components by residents of industrial parks into the customs territory of Ukraine under the customs regime be exempt from value added tax if such materials are used to develop the industrial parks or carry out economic activity within such parks.

It is proposed that residents of industrial parks be temporarily exempt from the payment of tax on real estate, other than land, as well as tax on land plots and rent for using land in state or municipal ownership, which was used to create the industrial parks.

The parliament also adopted in the first reading a bill on amendments to the Customs Code of Ukraine in terms of developing domestic production by facilitating investments in the real economy through the industrial parks. This bill offers a special list of equipment, components and materials that are not excisable goods and are imported by initiators and managing companies of industrial parks without paying customs duties. The mentioned goods should be used for developing and carrying out economic activities in industrial parks.

Currently, there are 17 industrial parks registered in Ukraine, according to the State Agency for Investment and National Projects of Ukraine. In November 2015, the Ukrainian parliament passed a draft law that simplified the establishment and operations of industrial parks. The document aimed at boosting investment in Ukraine to enhance the country`s production capacities.

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