Rada passes first reading of bills on preferential regime for industrial investment
The Verkhovna Rada has approved at first reading bill No. 13414 (amending the Customs Code) and bill No. 13515 (amending the Tax Code), which aim to launch a model of industrial investment compensation through tax incentives.
According to the parliament's live broadcast on Tuesday, November 4, both bills received 245 votes in favor.
Committee Chair Danylo Hetmantsev said the bills introduce a tax-based investment compensation model intended to encourage businesses to move away from a raw-material export model and invest in the development of the processing industry.
He said the legislation provides for preferential tax conditions for 10 years (2026–2035) for investors implementing projects involving the construction, modernization, or technical re-equipment of enterprises, as well as the purchase of equipment or land for production purposes.
The scale of tax and customs benefits will depend on the investment volume: EUR 100,000 – 1 million, up to 70% of the investment amount; EUR 1 – 20 million, up to 50%; and EUR 20 – 50 million, up to 30%.
Proposed incentives include profit tax exemptions (provided that 90% of income comes from sales of the company's own processed products), VAT and customs duty exemptions on new equipment, and potential land tax relief from local authorities.
In an interview with Interfax-Ukraine, Hetmantsev said that international partners, including the IMF, which sent an official letter, oppose the initiative.
"Therefore, we believe the law can be adopted, but only after reaching agreement with our partners. We certainly won't proceed against their position," he said.
First Deputy Chair of the Finance Committee Yaroslav Zhelezniak (Holos faction) said the estimated cost of the incentives is UAH 20–40 billion. He reminded that Ukraine already has several preferential regimes, including investment nannies, industrial parks, mining towns, the White Business Club, Diia.City, and Defense City.
"But investment still hasn't materialized. Investors won't put money into a business if tomorrow a local State Bureau of Investigation officer can seize it under any pretext. Half of this chamber couldn't care less that we have no plan for covering the state budget gap, no clarity on whether we'll get EU funding, whether there'll be an IMF program, or how to address the UAH 300 billion underfunding of the military next year," he added.
Zhelezniak also said the Finance Ministry and the European Union oppose the draft laws.
As reported, on August 6, the Center for Economic Strategy (CES) called for revising the bill due to loopholes that could be exploited by unscrupulous investors. On August 12, the parliamentary finance committee endorsed the bills.