Ukraine: New Laws on State Support to Major Investors

15 March 2021 | By Galyna Zagorodniuk, Illya Sverdlov and Alla Kozachenko

On December 17, 2020, the Ukrainian Parliament adopted the Law of Ukraine "On State Support of Investment Projects with Significant Investments in Ukraine" No.1116-IX, which has become known as the Investment Nannies Law. The development and adoption of the Investment Nannies Law was initiated by the President of Ukraine. On February 13, 2021, the Investment Nannies Law entered into force.

Also, on March 2, 2021, the Ukrainian Parliament adopted Draft Laws No. 3761 and 3762 (together, Draft Tax Laws) regarding tax and customs incentives applicable to qualified investors specified in the Investment Nannies Law. Please note that Draft Tax Laws are still awaiting the president's signature to become fully effective.

Who qualifies for state support

To qualify for state support the investment project of a foreign or a domestic investor must comply with the following requirements:

  1. Economy Sector. The investment project must be implemented in the territory of Ukraine in one of the following sectors: processing industry (except for tobacco and alcoholic beverage industries); mining industry (except for brown and black coal, as well as crude oil and natural gas extraction); waste management; transport; warehousing; postal and delivery services; logistics; education; scientific activity; healthcare; art; culture; sport; tourism; resorts and recreation.
  2. Investment. The investment project must envisage construction, modernization, technical and/or technological re-equipment of the investment objects, as well as purchase of necessary equipment and components, and may envisage construction of ancillary infrastructure at the investor's expense.
  3. New Jobs. The investment project must create at least 80 new jobs with the average wage at least 15% higher than the average wage in the region.
  4. Value. The total value of investments in the investment project must exceed EUR20 million.
  5. Term. The duration of the investment project must not exceed five years.

Special investment agreement

State support is provided on the basis of the concluded special investment agreement, which among other things defines the forms, value and duration of state support, as well as regulates other matters as required by the Investment Nannies Law. The duration of the special investment agreement (and the state support) must not exceed 15 years. The total value of the state support must not exceed 30% of the value of investments within the significant investment project.

The Investment Nannies Law provides that the rights and obligations of the investor are governed by the Ukrainian law effective as of the date of conclusion of the special investment agreement (the so-called grandfather clause). Also, the Investment Nannies Law allows the parties to freely choose in the special investment agreement the governing law and the dispute resolution mechanism (arbitration, mediation etc).

Forms of state support

Pursuant to the Investment Nannies Law, both foreign and domestic investors which make significant investment into Ukraine are eligible to receive state support in the form of:

  1. exemption from certain taxes and duties;
  2. exemption from import duties of the new equipment and its components;
  3. pre-emption right to obtain the land plot into use and subsequently to purchase it; and
  4. state funding of construction of ancillary infrastructure (eg roads, telecommunication lines, utility lines) necessary for the investment project.

The Draft Tax Laws introduce the state support in the form of tax and customs incentives within the Investment Nannies Law.

1) Exemption from import VAT and duty

Importation of the qualified equipment and its components in Ukraine should be exempt from import VAT and customs duty until January 1, 2035, provided that established conditions are met (equipment is produced no earlier than three years before its importation in Ukraine, designated exclusively for implementation of investment project, etc). The Draft Tax Laws provide for the extensive list of the qualified equipment that may be subject to such exemption.

Also, the exemption applies only for the term of implementation of the investment project and for unused state support provided to the investor.

However, the exemption does not extend to equipment (i) originated (imported) from the occupying (aggressor) state (determined as such under Ukrainian law); or (ii) imported from the occupied territory of Ukraine.

2) Exemption from corporate income tax (CIT)

The Draft Tax Laws introduce a special regime of taxation of investors' profits until January 1, 2035, (except for those investors implementing investment projects in mining).

In this regard, the investor may apply for CIT exemption of income arising from executing special investment agreement (except for qualified items of income which are subject to Ukrainian transfer pricing and controlled foreign companies rules). The overall duration of the exemption may last for five consecutive years but should not exceed the term of special investment agreement.

Also, the exempted sum of CIT should be considered within the overall volume of state support provided to the investor. If the investor reaches or exceeds that volume, it loses the right to further apply the exemption and should instead apply the general rules of CIT.

3) Reduced rates of land tax

The Draft Tax Laws entitles local authorities to reduce (even to zero) until January 1, 2035, the respective rates applied to qualified plots of land which are used within implementation of investment project (except for those projects related to the mining industry).

The exempted sum of land tax should be considered within the overall volume of state support provided to the investor. If the investor reaches or exceeds that volume, it loses the right to further apply the respective incentive.

How to receive state support

To receive state support the prospective investor-applicant (Ukrainian or foreign legal entity) must submit the required documents, including the draft special investment agreement, to the Ministry for Development of Economy, Trade and Agriculture of Ukraine, which shall review the documents and provide feedback. If the investment project qualifies, a respective special investment agreement must be executed by the applicant, the investor, the Ukrainian government on behalf of Ukrainian state and in some cases by the relevant municipal authority on behalf of the local community as well.


Finally, the Investment Nannies Law envisages the special state institution will provide free organizational assistance and consultations to the prospective investors and applicants in applying for state support, as well as during the implementation of the investment projects. On February 17, 2021, the Ukrainian government authorized state institution UkraineInvest (Ukraine Promotion Office) to perform such functions.



For more information, please contact:



Galyna Zagorodniuk


Head of Competition




Illya Sverdlov


Head of Tax




Alla Kozachenko


Head of Corporate and M&A