As reported on the website of the Verkhovna Rada of Ukraine, Bill #5385 "On the introduction of amendments to the Land code of Ukraine and other legislative acts on abolishing the institution of permanent use of land plots" was registered on 19 April 2020. The obsolete right of permanent use no longer corresponds to the modern needs of economic units, which has led to the need to create a more adaptable right to use land resources in a more rational way.
The Land code of Ukraine obliges the permanent user of the land to manage his land independently. Among other things, the economic entity does not have the right to transfer the land for use by third parties, sell it or use it as collateral on a loan.
This poses two problems:
- Land not used for the purpose
- Pseudo-contracts for joint ventures, which are, in fact, disguised leases
"The amount of land owned by such invest.com/investing-in-ukraine/starting-business-in-ukraine/build-an-enterprise/" rel="dofollow">enterprises on a permanent right is very large. At the same time, these enterprises' material and technical base leaves much to be desired, and often the only real asset is land. However, all of these contracts are concluded and executed "in the shadows", funds from "rent" are often paid in cash to the management of the enterprises, and budgets do not receive tax funds for these transactions", — comment parliamentarians the decision to amend the Land code.
The members of the Verkhovna Rada are convinced that the introduction of amendments to the Land code and other legislative acts abolishing the institution of permanent use of land will transform the entire land branch of rights and create new opportunities for more purposeful and effective use of land resources of Ukraine. The reform will also attract domestic and foreign investment in Ukraine’s land sector.
Today, the question of eliminating the possibility of circumventing land tenders because legal entities acquire land on a private right of permanent use remains open, and Bill #5385 will become the basis for its closure.
