"Investment Nanny" Law Adopted By Ukraine's Parliament

• Published date: 05 January 2021
• Subject Matter: Government, Public Sector, Government Contracts, Procurement & PPP
• Law Firm: Kinstellar
• Author: Mr Oleg Matiusha

December 2020 - The Ukrainian parliament has recently adopted Law No. 3760 "On State Assistance to Investment Projects with the Significant Investments in Ukraine". The so-called "investment nanny" law shall become effective once it is signed by the President and published.

The law is aimed to stimulate large investments exceeding EUR 20 million into the following sectors:

• processing industry (except for the production and circulation of tobacco products, ethyl alcohol cognac and fruit alcoholic beverages);
• extraction for further processing and / or enrichment of minerals (except coal and lignite, crude oil and natural gas);
• waste management;
• transport;
• warehousing;
• postal and courier activities;
• logistics;
• education;
• scientific and technical activities;
• health;
• arts;
• culture;
• sports;
• tourism and resort and recreation.

Exclusion: The law does not apply to PPP (public-private partnerships) and concession projects, privatisations and projects implemented under a production sharing agreement.

State assistance to a qualifying investment project may amount to up to 30% of the planned investment value ¹ and, subject to execution of the special investment agreement with the Cabinet of Ministers of Ukraine, may include:

• exemption from taxes (VAT, CIT) ²;
• exemption from import customs duty for equipment imported for the purposes of the investment project;
• the preemptive right to lease and buy-out state or municipal land required for the project without a land auction;
• construction of the infrastructure required for the implementation of the project (roads communication lines, heat-, gas-, water- and electricity-supply networks, utilities, etc.) at the expense of the state or municipal budget;
• assistance connecting built objects to heat, gas, water and electricity supply networks, utilities etc.;
• assignment of an "investment nanny", a state body appointed by the Cabinet of Ministers of Ukraine to support an investor in the preparation and implementation of an investment project.

Such state assistance will be provided starting from 1 January 2022.

Basis for state assistance:

State assistance is provided on the basis of a special investment agreement, which shall be concluded by the investor, its Ukrainian SPV, the Cabinet of Ministers of Ukraine and the relevant municipality. The term of such an agreement shall not exceed 15 years.

Who may apply for state assistance?

Foreign and/or Ukrainian entities planning to invest more than EUR 20 million into one of the...