Verkhovna Rada Approves Draft Law on Tax Compensation for Capital Investments

The Verkhovna Rada of Ukraine supported in the first reading draft laws No. 13414 and No. 13415, which provide for compensation of part of the capital investments in the manufacturing industry through tax incentives. This decision brings Ukrainian industrialists closer to utilizing effective investment stimulation tools that have long been in place in European Union countries.

This is reported by AgroReview

Compensation Mechanism and List of Expenses

According to the draft law, enterprises will be able to receive partial compensation for expenses related to the construction or expansion of factories, as well as the creation of industrial infrastructure. The following types of expenses will be eligible for compensation:

• construction of engineering networks, structures, and infrastructure facilities;
• acquisition or construction, modernization, technical or technological re-equipment of buildings and structures;
• purchase of production equipment;
• acquisition of land plots.

Compensation will be provided through a number of taxes, including income tax, import VAT and duties on equipment, property tax, and land tax.

Amount of Compensation Depending on Investment Volume

The share of investments that can be compensated through tax mechanisms will be determined by the amount of the investment project:

• from 100 thousand to 1 million euros — 70%;
• from 1 million to 20 million euros — 50%;
• from 20 to 50 million euros — 30%.

“Ukrainian industrialists are one step closer to a very effective tool for stimulating investments, which their colleagues in the European Union have long been using. This concerns the possibility of reclaiming 30% to 70% of funds invested in the construction of new or expansion of existing factories and the creation of industrial infrastructure. The war-torn Ukrainian economy needs new impulses. This initiative should be one of them,” he explained.

A distinctive feature of this legislative initiative is that it will be available not only for new but also for existing enterprises that invest in production development. Ahead lies the refinement of the draft laws for the second reading.