The State Agency of Ukraine for Investment and Development

The law of Ukraine “The State Budget 2007” determined principles of direct stimulation of investment activity development in Ukraine. State budget 2007 provides credit facilities on investment and innovations projects in economy branches and also for finance promotion on investment and innovation projects through the mechanism of credits reduction.

Particularly, the Agency is the manager of the State program “Finance promotion of investment and innovations projects, the first part in hi-tech providing which are realized in industry branches and also technological parks through the mechanism of credits reduction”. The Decree of the Cabinet of Ministry of Ukraine from March, 1, 2007 № 329 predicates System of facilities applying in, provided in State Budget fat finance promotion of investment and innovations projects.

The Agency is also the manager of the State investment program “Extend credits on investment and innovations projects in economy branches realization, the first time in providing of hi-tech energy-saving technologies and technologies on producing of alternative oil sources”. The Decree of the Cabinet of Ministry of Ukraine from March, 14, 2007 № 455 proclaimed the System of credits reduction on investment and innovations projects in economy branches applying provided in State Budget 2007.

Point 4.2.5 of article 4 of the Law of Ukraine “On Enterprises profit taxation” preceded that the sums or price of funds, which payer receives as direct investment or reinvestment in corporative rights, which emitted by such tax payer, also property and monetary fees, according to agreements on cooperation activity on the territory of Ukraine without legal person creating, are not being included in gross income. There by, the Law provides such sums not to be taxed on gross income of enterprises.

In the sphere of joint investment institutes activity the taxation defines by the tax legislation of Ukraine, particularly by the Law of Ukraine “On Gross Income Taxation” and “On Physical persons profit tax”.

Legislation defines that while investors’ funds are being located in investment fund they should not be taxed.

The profit of investors should be taxed in the following situations:

Sales of capitals of joint investment institutes to third person;
Buying out from investors of companies managing joint instruments’ funds, issued by the joint investment institutes or its’ company on actives managing ( for example while buying out joint investment institutes’ funds during the fund liquidation;
On the investors’ application in any day for opened funds and in predicted by the Prospect of funds’ emission date for interval funds;
Dividends paying to investment funds, if it is predicted by Prospect of funds’ emission of joint investment.

In the situation while investor sales the funds of joint investment institutes the difference between the price of its’ buying and the price of its’ sailing should be taxed. While investment profit receiving as dividends the sum received by investor should be taxed.

Tax rate and tax system are different according to investors’ orientation to physical or legal person. In case of investor is physical person his investments’ to fund profit should be taxed by the 25% rate.

The investment profit received by physical person investor in case of social investment institute buying out (the company of actives management of social investment institute) of joint investment funds should be taxed by the 5 % rate. The benefit received in kind of dividends on joint investment institutes funds and the benefit received by the result of sailing funds to third person , should be taxed by the 13 % rate.

According to point 4.2.8 of the Law of Ukraine “On Enterprises profit tax” recourses attracted from investors from joint investment institutes, profits from actives operations of joint investment institutes or benefits charged on joint investment institutes actives should not be included to taxed profit. There by, if you are the holder of joint investment institutes funds you should not pay taxes by the moment of that funds realization or by the moment of joint investment institutes funds dividends payment. In case of personal holding of funds or property, the profit from the operations with this actives or profit, paid by this actives (percents, dividends, rents) are included to taxed profit.

Taking into account previous, investing into joint investment institutes funds has various tax benefits in difference with direct investment into funds or property objects.

In August 1, 2006 the Cabinet of Ministry of Ukraine proclaimed the Direction № 447-r «On industrial parks Conception approves». The main task of Concept is activities implementation of industrial parks creating step by step, particularly on the first time (2006–2007) there are predicted the legislation base on creating and functioning of industrial parks implementation, finding out the perspective territories for industrial parks situating, creating of pilot projects realization on industrial parks creation.

Conception activities realization makes the possibility of following:

create smooth conditions for new enterprises dislocation in regions as well as foreign;
activization of investment attraction;
increase tax impayments to budget;
create new jobs;
provide productive usage of innovative potential of enterprises;
increase the capacity of competitive goods production;
expedite the restructurisation processes in metallurgical, machine building, mineral recourse and other branches of industry.

In 2006 the realization of step by step tax impact decreasing program began. Besides, according to the Law of Ukraine “On the State Budget of Ukraine for 2006” charges on retirement insurance while buying cash foreign currency were cancelled and rates of charges while buying cashless currency were reduced from 1,5% to 1,25%.

The effective legislation mechanism of similar implementation of regulatory rules all around Ukraine was created and the system of regulatory activity involvement estimation, consultations with interested parts, preventing informing of SMEs concerning changes in legislation were provided.

By means of simplifying of the procedures of entrepreneurship activity creation 677 offices were created through all regions of Ukraine. They provide the registration of SME by the principle of “one stop shop office” which fundamentally shorts the time of the calculation in predict authorities. Since June 2004 the new system of state registration of physical and legal person’s entrepreneurs has been provided by the principle of one stop shop office, which is quite simple and realizes the enterprise registration within 1–3 days.

Taken into force the Law of Ukraine “On changes implementing into the Law of Ukraine” On Banks and Banks Activity”, which should promote the development of bank system of Ukraine by foreign capital attraction, modern banks’ technologies, widening of sector of banks’ services for consumers, and acceleration integration of Ukraine into WTO.

The favorable fields for investment activity realization were created by the Laws of Ukraine “On Agreements of goods distribution”, “On Concession”, “On Concession at building and exploitation of roads”.

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20.08.10