The Parliament will grant industrial parks a number of irrevocable investment and customs concessions as part of the draft Law “On amendments to the Law “On industrial parks”

The Verkhovna Rada committee on economic development has two law drafts aimed at increasing concessions for participants of industrial parks:

- “On making changes to the Law of Ukraine “On Industrial Parks” concerning simplification of creation and stimulation of the activity of industrial parks” (№4416)

- “On the introduction of changes to the Law of Ukraine “On Industrial Parks”, aimed at attracting investment in the industrial sector of the economy by introducing incentives in industrial parks” (№4416-1).

Due to more extensive and efficient mechanisms of industrial parks support, it was decided to take as a basis the bill “On industrial parks” on simplification of creation and stimulation of industrial parks” (№4416).

The Head of the Economic вevelopment сommittee, Dmitry Natalukh, informed of the adoption of the law draft, adding that instruments №4416, inter alia, do not contradict Ukraine’s international obligations. Among other things, the terms of the bill provide a framework for the development of international business relations and the attraction of foreign investment.

The main purpose of the bill is to introduce economic incentives into the work of industrial parks in order to attract direct investment to Ukraine. As confirmed by the experience of other countries, industrial parks will become the engine of the economy through a high concentration of export-oriented industries and the creation of space conducive to the creation of innovative products.

Prior to the adoption of the draft law “On amendments to the Law “On industrial parks”” as a basis for the development of industrial parks, the insufficient number of benefits were allocated, in the opinion of the Committee for the Development of the Economy of Ukraine:

• Earmarked funding from the State budget
• Zero credits for infrastructure development
• Elimination of compulsory participation in the share financing of the infrastructure of the population in which the industrial park is located

From now on, the system of benefits and exceptions will be streamlined.

1. A clear definition of the range of facilities that form part of the IP structure (article 11-1): offices, laboratories, financial institutions, business capsules, meeting rooms, production buildings, engineering sites, advertising sites, etc.
2. Granting the owner of the IP the right to include the land on which the IP locates. This can be achieved through a declaration. A natural or legal owner may transfer land and property on it to other IP participants, but such property may only be used within the IP.
3. The IP is created for a period of 30 years. The owner or lessee of the IP has the right to choose the managing company independently, and the legal entity becomes the managing company at the time of the creation of the IP.
4. The owner or lessee of the land is entitled to choose the management company.
5. A legal entity is granted the status of a management company from the day of the establishment of an industrial park.

The Cabinet of ministers has established the number of benefits for IP and the procedure for their reimbursement:

1. Compensation up to 50% of the cost of connection of the IP to the State electricity grid
2. Change in Article 36 of Law of Ukraine “On Industrial Parks”: in order to stimulate the production of export-oriented products IP, credit refunds will be provided depending on the volume of export:

• 15% to 30% export - 30% of loan interest refunds
• 30% to 50% export - 50% of loan interest refunds
• More than 50% of exports - 50% of loan interest refunds
• More than 70% of exports - 70% of loan interest refunds

3. The investments made by the participants in the first 3 years of operation are financed from the state budget. The amount of compensation depends on the share of the export of the production of own production in the capital volume of the income of economic activity:

• 15% to 30% of exports - 15% of total costs
• 30% to 50% of exports - 30% of total costs
• Over 50% of exports - 50% of total costs
• Over 70% of exports - 70% of total costs

According to the Register of Industrial Parks of Ukraine, 47 parks have been registered since 2013. The largest number of registrations occurred in 2014 and 2017. The largest number of ISPs is in Kyiv (9) and Lviv oblasts (7).