UKRAINE SEZS OFFER ADVANTAGES

 

by Yuriy Prykhodko

 

In the last year, Ukraine has been actively setting up special (free) economic zones (SEZs) in areas of the country with the greatest industrial or other potential, as well as the greatest economic need.  The zones provide investors with favorable tax, customs, and economic treatment and each has its own set of specific privileges and conditions for investors, depending on the features of the region. Currently, eight zones have been created: Syvash in northern Crimea, Azov in Donetsk Oblast, Donetsk in eastern Ukraine, Zakarpattya in western Ukraine, Slavutych in Chernihiv Oblast, Truskavets in Lviv Oblast, and Yavoriv rayon in Lviv Oblast. The decree for the latest zone, the Interport Kovel Free Economic Zone, to start operation on January 1, 2000, was signed on June 23, 1999.          

 

The law on the Yavoriv special economic area (YSEA) was signed in mid-January 1999 and established the zone for 20 years. The rayon (district) administration acts as the managing and regulatory authority for the YSEA, approving and registering all investment projects worth at least $500,000.

 

The YSEA legislation stipulates the following privileges for investors and project implementers:

$                A 5-year corporate profit tax exemption for investment projects.

$                Imported equipment, spare parts, and other nonexcise items required for implementation of investment projects are exempt from import duties for up to 5 years and from value-added tax (VAT);

$                The import of goods for use within the territory of the YSEA, as well as the export of goods completely or partially manufactured/processed within the territory of the YSEA, are not subject to licensing and quotas;

$                Owners and users of land within the territory of the YSEA are exempt from land tax during the first 3 years of implementation of a project.

 

In addition, the government of Ukraine guarantees full compensation of losses in case of the liquidation of the YSEA.  These stipulations and privileges are similar to those for the other zones.

 

A concise description of 14 priority investment projects for the area as determined by the Yavoriv district administration can be found on BISNIS Online at www.bisnis.doc.gov/bisnis/country/9906yav.htm. The listed projects offer opportunities in the areas of electric power generation, production of agricultural chemicals, construction and operation of an oil enterprise, construction of a petroleum extraction and processing enterprise, production of concrete and building lime, poultry processing, construction and operation of a milk processing plant, construction and operation of a donor plasma processing plant, reconstruction and operation of a textile factory, production of PET plastic bottles at an existing plastics factory, construction and operation of a customs post and service plaza, and the construction of a toll road.

 

Yuriy Prykhodko is a commercial specialist with the U.S. Commercial Service of the American Embassy in Kyiv.

 

For more detailed information on the YSEA, interested U.S. companies are encouraged to contact:

 

Mr. Stepan Lukashyk

Head, Yavoriv Regional Administration

8 Ivana Franko St., Yavoriv

Lvivska Oblast, Ukraine  292160

Tel: +380 (322) 798‑246

Tel/fax: +380 (3259) 213‑69, 210‑90

 

Ms. Zoryslava Romovska

Member of Parliament (represents Yavoriv)

Verkhovna Rada of Ukraine

2 Shovkovychna St., Office 417

Tel: +380 (44) 291-7372, 291‑7097

Fax: +380 (44) 293‑0427

 

Dr. Ihor Yukhnovskiy

Member of Parliament

Verkhovna Rada of Ukraine

3 Sadova St., Office 319

Tel: +380 (44) 293‑3361, 226-2900

Fax: +380 (44) 293-0414, 226‑2420

 

Ms. Kristina Marlow

U.S. Embassy Kyiv, Economic Officer

Tel: +380 (44) 246‑9750; Fax: +380 (44) 244‑7350

 

Mr.  Yuriy Prykhodko

U.S. Commercial Service, Kyiv

Tel: +380 (44) 417‑2669; Fax: +380 (44) 417‑1419

Email: Yuriy.prikhodko@mail.doc.gov