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Ukraine Introduces Tax Incentives for Industrial Park Residents — Orbitax Tax News & Alerts

The State Tax Service (STS) of Ukraine has issued a release on tax preferences (benefits) for industrial parks as introduced by Law No. 2330-IX, which entered into force on 19 July 2022. The main tax benefit is a 10-year income tax exemption for registered industrial park participants carrying out economic activities in the following areas:

  • Industrial processing, except for the production of excise goods, with the exception of the production of passenger cars, their bodies, trailers and semi-trailers, motorcycles, vehicles intended for the transportation of 10 people or more, and vehicles for the transportation of goods;
  • Waste collection, processing, and disposal, and recovery of materials; and
  • Research and development activities.

The 10-year exemption applies from the first month of the calendar quarter in which the taxpayer applies for the exemption, but not earlier than the date of submission of the application. The exemption is not available, however, for companies that are directly or indirectly held by legal entities that carry out gambling activities, legal entities registered in jurisdictions classified as offshore zones, or legal entities that do not cooperate in combating money laundering according to the Financial Action Task Force (FATF). Further, the amount of funds (profits) exempted from tax must be reinvested in the activities of the taxpayer within the industrial park for the exemption to apply.

Another tax benefit is a VAT exemption on imports of new equipment to be used exclusively in processing or R&D activities in a registered industrial park. Lastly, local authorities are granted the right to reduce property and land tax rates for eligible companies or provide an exemption.