RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/ACC/UKR/116/Rev.1 
25 July 2007 
 
 (07-3178) 
Working Party on the 
Accession of Ukraine Original:   English 
 
 
 
ACCESSION OF UKRAINE 
 
Draft Notification on Industrial Subsidies  
 
Revision  
  
 The following submission, dated 18 July 2007, is being circulated at the request of the Delegation of Ukraine. 
 
 
__________ 
 WT/ACC/UKR/116/Rev.1 
Page 2  
 
  The following description of measures  of support to industries is in tended solely for the purpose of 
information.  Ukraine wishes it to be noted that it does not consider that any of the measures listed 
constitutes a subsidy prohibited by Article 3 of the ASCM. It further notes that analogous 
notifications made by WTO Members under ASCM Ar ticle 25.2 are, in accordance with Article 25.7, 
without legal consequences and that, as indicated in G/SCM/6/Rev.1, such notifications do not 
prejudge the effects of the measure under the SCM Agre ement, or the nature of the measure itself.   
In preparing this notification, Ukraine has taken into account applicable "General Rules" listed in 
G/SCM/6/Rev.1  
(A) HORIZONTAL PROGRAMMES 
- Special Economic Zones and Priority Territories 
Policy objective and/or purpose:
 
Eleven "Special Economic Zones" (also described as "Free Economic Zones or FEZs) and nine 
"Priority Territories with Special Investment Regime s" have been established. They are intended to 
encourage investment, both domestic and foreign, in geographically defined depressed regions to 
offset:  
- Structural unemployment resulting from decommissioning of uneconomic coal mines 
(Donetsk, Lugansk, and Volyn Oblasts); and 
- Structural unemployment resulting from closur e of military production complexes (Kharkiv 
and Shostka). 
Economic and social impact of:  
- Accident at Chernobyl NPP (Slavutych and districts and cities in the Zhytomyr and Chernihiv 
oblasts); 
- Contamination by sulphur DGHP Mining and Chemical Mills (Yavoriv district of L'viv 
oblast); and 
- Flooding in Carpathian region. 
In addition, special investment regime has been  established in the Autonomous Republic of Crimea 
aimed at encouraging investments in public health protection, recreation and tourism sectors, 
preservation and efficient management of available recreation resources, also at industrial production 
development in the peninsula. 
Assistance programs available in a zone or special terr itory are particular to that zone or territory.  
Background and authority:  
The basic enabling authority for the establishment of Special Zones and Priority Territories is 
contained in: 
- Law of Ukraine "On General Principles of Cr eation and Functioning of Special (Free) 
Economic Zones" of 13 October 1992 (with changes and amendments) No.2673-XIII/921. 
                                                      
1 Referred to in document WT/ACC/UKR/79 page 9.  WT/ACC/UKR/116/Rev.1 
 Page 3 
 
 
  Each of eleven zones and nine Priority Territo ries is established under a particular statute: 
Zones  
Location Duration and date 
established Legislative basis 
Donetsk, Donetsk 
Oblast 
 60 years from 
21 July 1998 
 Law of Ukraine No. 356 dated 24 December 1998 "On the 
Special Economic Zone and Special Regime of investment 
activities in Donetsk Oblast". 
Mariupol, Donetsk 
Oblast 
 60 years  from 
21 July 1998 
 Law of Ukraine No. 356 dated 24 December 1998 "On the 
Special Economic Zone and Special Regime of investment 
activities in Donetsk Oblast". 
Uzhgorodskiy and Mukachevskiy 
raions, Zakarpatska 
Oblast 30 years from 
9 January 1999 Law of Ukraine No. 2322 dated 22 March 2001 "On the 
Special Economic Zone "Zakarpattia'" 
Yavorivskiy Raion, Lviv Oblast 20 years from 
17 February 1999 Law of Ukraine No. 402 dated 15 January 1999 "On the 
Special Economic Zone "Yavoriv'" 
Kovel, Volyn Oblast 
 20 years from 
1 January 2000 President of Ukraine Decree No. 702 dated 22 June 1999 "On 
the Special Economic z one "Interport-Kovel'" 
Mykolaiv (on the 
territory of ship-building enterprises) 30 years from 
1 January 2000  Law of Ukraine No.1909 dated 13 July 2000 "on the Special 
Economic Zone "Mykolaiv'", Decree of the Cabinet of Ministries of Ukraine No.1175 of 26 July 2000 approving the 
list of priority economic activities on the territories of priority 
development in Zhytomyr Oblast, Chernigiv Oblast, in the City of Shostka, Sumy Oblast and territory of special 
economic zone "Mykolayv'. 
Odesa (on the 
Territory of the 
Odesa Sea Trade 
Port) 25 years from 
1 January 2000 
 Law of Ukraine No.1607 dated 23 March 2000 "On the 
Special (Free) Economic Zone "Porto Franco" on the 
Territory of the Odesa Sea Trade Port" 
Reni, Odesa Oblast 
 30 years from 
17 May 2000 Law of Ukraine No.1605 dated 23 March 2000 "On the 
Special Economic Zone 'Reni'" 
Kerch, Autonomous 
Republic of Crimea 
 30 years from 
1 January 2000 
 Law of Ukraine No.2189-III of 21 December 2000 "On a 
Special Regime of Investment Activity at Territories of 
Priority Development and the Special Economic Zone "Port 
Krym" in the Autonomous Republic of Crimea" 
Slavutych, Kyiv 
Oblast 20 years from 
30 July 1998 Law of Ukraine No. 721 dated 3 June 1999 "On the Special 
Economic Zone "Slavutych'" 
Kurortopolis 
Truskavets, Lviv Oblast 20 years from 
1 January 2000  Law of Ukraine No. 514 dated 18 March 1999 "On the 
Special Economic Zone for Tourism and Recreation "Kurortopolis Truskavets"" 
  
  WT/ACC/UKR/116/Rev.1 
Page 4 Priority Territories  
Special regime of 
investment activity on the 
territories of priority economic development in 
Donetsk Oblast 
 Cities of Artemivsk, Vehled ar, Horlivka, Dzerzhynsk, 
Dymytrov, Dobropillia, Donetsk, Yenakiyeve, 
Zhdanivka, Kirovske, Kostiantynivka, Kramatorsk, Krasnoarmiysk, Krasnyi Lyman, Makiyivka, 
Mariupol, Novohrodivka, Selidove, Sloviansk, 
Snizhne, Torez, Shakhtarsk, Druzhkivka, Khartcysk, Zugres, Illovaysk as well as the Amvroziyivskiy, 
Volnovaskiy, Kostyantynivsk, Marianskiy and 
Slovanskiy, Starobeshivskiy and Shahtarskiy raions 30 years from 
21 July 1998 
 Law of Ukraine No. 356 dated 24 December 1998 "On Special 
Economic Zones and Special Regime of Investment Activity in 
Donetsk Oblast"; Decree of the Cabinet of Ministries of Ukraine No. 1255 of 11 August 2000 approving the list of priority 
economic activities on the territories of priority development in 
Donetsk Oblast; Decree of the Cabinet of Ministries of Ukraine No. 1065 of 18 June 1999 approving the Procedure of 
consideration of investment proj ects that are being realized in 
priority economic activities on territo ries of priority development 
in Donetsk Oblast. 
Special regime of 
investment activity on the territories of priority 
economic development in 
Luhansk Oblast  Cities of Brianka, Krasnodon, Sverdlovsk, 
Pervomaisk, Stakhaniv, Krasniy Luch, as well as the Antrаtsytivskiy, Kreminskiy and Krasnodonskiy 
raions 30 years from 
2 February 1999  Law of Ukraine No. 970 dated 15 July 1999 "On the Special 
Regime of Investment Activity in Territories of Priority Development in Luhansk Oblast"; Decree of the Cabinet of 
Ministries of Ukraine No. 1968 of 25 October 1999 "On approving 
of the list of priority economic activities in the territory of priority economic development in Luhansk Oblast and of the Procedure of 
consideration of investment proj ects that are being realized in 
priority economic activities on territo ries of priority development 
in Luhansk Oblast". 
Special regime of 
investment activity in 
Zakarpatska Oblast  All of Zakarpatska Oblast 
 15 years from 
29 January 1999 Law of Ukraine No. 357 dated 24  December 1998 "On a Special 
Regime of Investment Activity in Zakarpatska Oblast", Decree of 
the Cabinet of Ministries of Ukraine No. 548 of 6 April 1999 "On approving of the list of priority economic activities in the territory 
of Zakarpatska Oblast to which the Special regime of investment 
activity is applied". 
Special regime of investment activity on 
territories of priority 
development in the 
autonomous Republic of 
Crimea  Cities of Yalta, Alushta, Sudak, Feodosia, Kerch, 
Krasnoperekopsk, Armiansk; Krasnoperekopskiy and 
Leninskiy raions 
 30 years from 
1 January 2000 
 Law of Ukraine No. 2189-III of 21 December 2000 "On a Special 
Regime of Investment Activity at Territories of Priority 
Development and the Special Economic Zone "Port Crimea" in the 
Autonomous Republic of Crimea"; Decree of the Cabinet of 
Ministries of Ukraine No. 212-r of 23 May 2001 "On approval of 
the Procedure of consideration of investment projects that are being realized in priority economic activities on territories of 
priority development and in the SEZ "Port Crimea" in the 
autonomous Republic of Crimea, and of the list of priority economic activities in the territory of the autonomous Republic of 
Crimea, to which the Special regime of investment activity is 
applied".  
   WT/ACC/UKR/116/Rev.1
 Page 5Special regime of 
investment activity in the 
City of Shostka, Sumy Oblast Shostka, Sumy Oblast 
 30 years from 
1 January 2000 Law of Ukraine No. 1251 of 18 November 2003 "On the Special 
Regime of Investment Activity in the City of Shostka of Sumy 
Oblast", Decree of the Cabinet of Ministries of Ukraine No1175 of 26 July 2000 approving the list of priority economic activities on 
the territories of priority development in Zhytomyr Oblast, 
Chernigiv Oblast, in the City of Shostka, Sumy Oblast and territory of special economic zone "Mykolayv'.; Decree of the 
Cabinet of Ministries of Ukraine No. 1552 of 12 October 2000 "On 
approval of the Procedure of consideration of investment projects which are being realized in the priority economic activities on the 
territory of the City of Shostka, Sumy Oblast". 
Special regime of 
investment activity on territories of priority 
development in Zhytomyr 
Oblast Korostenskiy, Novohrad-Volynskiy, Luhynskiy, 
Narodytskiy, Ovrutskiy, Olevskiy, Malynivskiy, Yemilchynskiy, Volodarsko-Volynskiy raions and the 
cities of Berdychiv, Korosten, Novohrad-Volynskiy 30 years from 
1 January 2000  Law of Ukraine No. 1276 dated 3 December 1999 "On the Special 
Regime of Investment Activity on Territories of Priority Development in Zhytomyr Oblast"; Decree of the Cabinet of 
Ministries of Ukraine No. 1205 of 3 August 2000 "On approval of 
the Procedure of consideration of investment projects that are being realized in priority economic activities on territories of 
priority development in Zhytomyr Oblast", Decree of the Cabinet 
of Ministries of Ukraine No. 1175 of 26 July 2000 approving the list of priority economic activities on the territories of priority 
development in Zhytomyr Oblast, Chernigiv Oblast, in the City of 
Shostka, Sumy Oblast and terr itory of special economic zone 
"Mykolayv'. 
Special regime of 
investment activity on the territory of the city of 
Kharkiv 
 Kharkiv 
 30 years from 
1 January 2000  Law of Ukraine No.1714 dated 11 May 2000 "On the Special 
Regime of Investment Activity on the Territory of the City of Kharkiv"; Decree of the Cabinet of Ministries of Ukraine No. 2076 
of 11 November 1999 On approving of the List of priority 
economic activities on territory of the city of Kharkiv to which special regime of investment activity is applied, and of the 
Procedure of consideration of investment projects that are being 
realized by the subjects of business activity on territory of the city of Kharkiv.  
  WT/ACC/UKR/116/Rev.1 
Page 6 Special regime of 
investment activity on 
territories of priority development in Chernihiv 
Oblast 
 Horodnianskiy, Koriukivskiy, Novhorod-Siverskiy, 
Semenivskiy, Ripkinskiy, Chernihivskiy, Shchorskiy 
raions  30 years from 
1 January 2000 
 Law of Ukraine No. 1250 of 18 November 2003 "On the Special 
Regime of Investment Activity in Territories of Priority 
Development in Chernihiv Oblast"; Decree of the Cabinet of Ministries of Ukraine No. 1206 of 3 August 2000 "On approving 
of the Procedure of consideration of investment projects that are 
realizing in priority economic activ ities on territories of priority 
development in Chernihiv Oblast"; Decree of the Cabinet of 
Ministries of Ukraine No. 1175 of 26 July 2000 approving the list 
of priority economic activities on  the territories of priority 
development in Zhytomyr Oblast, Chernigiv Oblast, in the City of 
Shostka, Sumy Oblast and terr itory of special economic zone 
"Mykolayv". 
Special regime of investment activity on 
territories of priority 
development in Volyn Oblast Novovolynsk, Volyn Oblast 
 30 years from 
1 January 2000 
 Law of Ukraine No. 2354 of 5 April 2001 "On the Special Regime 
of Investment Activity on Territori es of Priority Development in 
Volyn Oblast"; Decree of the Cabinet of Ministries of Ukraine 
No. 2210 of 6 December 1999 "O n approving of the List of 
priority economic activities on territo ries of priority development 
in Volyn Oblast and of the Pr ocedure of consideration of 
investment projects that are being  realized in priority economic 
activities on territories of priority development in Volyn Oblast". 
  WT/ACC/UKR/116/Rev.1 
 Page 7 
 
 
  Incentives offered in the form of import duty and inte rnal tax exemptions and deferrals are inscribed 
in the relevant tax laws:  
Corporate Income Tax:  
- Law of Ukraine "On Corporate Income Tax" as of 28 December 1994 No. 334/94-VR (with 
changes and amendments). 
Land Tax:  
- Law of Ukraine "On Land Tax" as of 3 July 1992 No. 2535-XII (with changes and 
amendments). 
Import duties:  
- Law of Ukraine "On Common Customs Tariff" 5 February 1992 No. 2097-XII (with changes 
and amendments); and 
- Law of Ukraine "On Customs Tariff of Uk raine" as of 5 April 2001 No. 2371-III (with 
changes and amendments). 
VAT:  
- Law of Ukraine "On Value Added Tax" as of  3 April 1997 No. 168/97 (with changes and 
amendments) 
On adoption of the Law of Ukraine as of 25 Ma rch 2005 No.2505 "On amendments to the Law of 
Ukraine "On the State Budget of Ukraine for 2005" and some other legislative acts of Ukraine" the tax 
privileges and special customs regime were cancelled. 
Currently the investment projects in SEZ and Prio rity Territories are implemented under regular tax 
regime. 
Form:  
The enterprises locating in zones or priority te rritories benefited from a number of assistance 
programs mainly in the form of exemptions, or reducti ons in direct and indirect taxes.  Programs vary 
as between individual zones and territories and are summarized below: 
Zones  
Name of FEZ/Form 
of Assistance Special 
Customs 
Zone Regime Exemption 
from income 
tax Exemption 
from taxation 
of investments Exemption 
from Import 
Duty and VAT Exemption from 
land tax 
Azov + rate-20% + - + (for duration 
of site 
preparation) 
Donetsk  + 
 rate-20% 
 + 
 - 
 + (for duration 
of site 
preparation) 
Zakarpattia + rate-20% - - - 
Yavoriv, including 
Krakovets Autoport + (only for 
Krakovets Autoport)  + (5 years), 
next -50%   - 
 + (5 years) 
 + (3 years), next 
-50% of existing rate WT/ACC/UKR/116/Rev.1 
Page 8  
 
  Name of FEZ/Form 
of Assistance Special 
Customs 
Zone Regime Exemption 
from income 
tax Exemption 
from taxation 
of investments Exemption 
from Import 
Duty and VAT Exemption from 
land tax 
Slavutych 
 - 
 + (3 years), 
from Year 4 to 
year 6  -50% 
of existing rate + 
 + (5 years) 
 + (3 years), 
Year 4 to Year 
6 -50% of 
existing rate 
Kurotopolis 
Truskavets  - 
 + (3 years), 
from Year 4 to Year 6 -50% 
of existing rate + 
 + 
 + (for duration 
of site preparation), 
next 10 years - 
50% of existing rate 
Porto-Franco 
 + 
 + (3 years), 
from Year 4 to 
Year 6 - 50% of existing rate + 
 - 
 - 
 
Reni + rate-20% + - - 
Port Krym + rate-20% + - + (5 years) 
Interport Kovel + rate-20% - - + (5 years) 
Mykolaiv  + (ship-
building 
dock territory only) + (3 years), 
from Year 4 to 
Year 6 - 50% of the existing 
rate, from 
Year 4 to 10 years -
reinvestment + 
 + (5 years) 
 + (5 years) 
 
 
Priority Territories  
Name of territory Exemption from income tax Exemption 
from taxation 
of investments Exemption 
from payment 
of import duty 
and VAT Exemption 
from payment 
for land 
Donetsk Oblast + (3 years) Year 4 to Year 6  - 
50% of existing rate + 
 + (5 years) 
 - 
 
Luhansk Oblast + (3 years) Year 4 to Year 6 - 
50% of existing rate + 
 + (5 years) 
 + (5 years) 
 
Zakarpatska Oblast + (2 years) Year 3 to Year 5 - 
50% of existing rate + 
 + (5 years) 
 - 
 
Autonomous Republic of Crimea + (3 years) Year 4 to Year 6  - 
50% of existing rate + 
 + (5 years) 
 + (5 years) 
 
City of Shostka, 
Sumy Oblast + (3 years) Year 4 to Year 6 - 
50% of existing rate + 
 + (5 years) 
 + (5 years) 
 
Zhytomyr Oblast + (3 years) Year 4 to Year 6  - 
50% of existing rate + 
 + (5 years) 
 + (5 years) 
 
Kharkiv City + (3 years) Year 4 to Year 6  - 
50% of existing rate + 
 + (5 years) 
 + (5 years) 
 
Chernihiv Oblast + (3 years) Year 4 to Year 6 - 
50% of existing rate + 
 + (5 years) 
 + (5 years) 
 
Volyn Oblast + (3 years) Year 4 to Year 6 - 
50% of existing rate + 
 + (5 years) 
 - 
 
Notes: + = benefit program applies for the full duration of the zone/territory as set out in the basic legislation. 
+ (number of years) = benefit program applies only to the initial period of the years shown.  
= enterprises in the zone/territory are not eligible for the benefit program shown.  WT/ACC/UKR/116/Rev.1 
 Page 9 
 
 
  Explanation of Benefits:  
There follows an explanation of the benefits wh at were available to enterprises investing in 
zones/priority territories as indi cated in the preceding tables. 
- Special Customs Zone Regime (Zones only) 
Enterprises investing in a zone where there was a Special Customs Zone Regime benefited from 
certain tax exemptions at the time of transactions (see the table below). 
Transaction VAT Excise Duty Custom Duty (Import 
or Export) 
Importation of goods (excluding 
excisable goods) outside customs 
territory of Ukraine on the territory of SCZ Not Applied  Not Applied 
Importation to the customs territory of 
Ukraine of goods from the territory of 
SCZ Applied Applied Applied 
Importation to the customs territory of 
Ukraine of goods from the territory of 
SCZ that were manufactured or 
processed in the SCZ Applied Applied Not 
Applied* Applied 
Exportation from the SCZ territory 
outside customs territory of Ukraine of 
goods that were manufactured or 
processed in the SCZ Zero Rate Not Applied Not Applied 
Exportation from the SCZ territory  
outside customs territory of Ukraine of 
goods that were imported to SCZ from  
outside customs territory of Ukraine Not Applied Not Applied Not Applied 
Exportation of goods (excluding 
excisable goods) from the custom 
territory of Ukraine to SCZ territory Zero Rate  Not Applied 
 
In case of transit the usual customs charges are app lied according to Ukrainian legislation.  And in all 
other cases import duties and taxes are  applied as usual according to Ukrainian legislation. 
Exemption from income tax:  
- Enterprises investing in a zone or territory enjo y a short-term tax holiday.  According to the 
regime applicable to the specific zone or te rritory (see tables), enterprises were exempted 
from it for an initial period and then were liabl e for the tax at a reduced (50 per cent) rate. 
Exemption from taxation of investments:  
- Sum of investments was excluded from the gr oss revenue of enterp rise for the aim of 
taxation. 
Exemption from payment of import duties:  
- Enterprises with the status of a zone/territory subject were entitled to import free of import 
duty foreign origin equipment as well as materials and parts used as inputs. In some zones and 
                                                      
* Only to SEZs "Azov", "Donetsk", "Zakarpattia" and "I nterport Kovel" WT/ACC/UKR/116/Rev.1 
Page 10  
 
  all territories this exemption is of limited dur ation (five years). State authorities had drawn up 
lists and defined amounts of imported equipment, materials and parts eligible for this special 
tax treatment (this list with amounts is integral  part of an investment project).  This 
preferential regime did not apply to excisable goods. 
- For some zones (see table above) products of a zone entering the customs territory of Ukraine 
were charged no duty and were exempted  from payment of import duties on imported 
material and other inputs provided the product is deemed a zone product in accordance with 
Ukraine's standard rules of origin. Gene rally, zone origin is established when: 
- products created by processing in the zone are classified differently (at the level of 
any first four digits of HS code) from the imported materials and parts used; and/or  
- value added in the zone is at least 50 pe r cent of the declared value of the final 
product. 
Exemption from payment of VAT:
 
Enterprises with the status of a zone/territory subject were exempted from payment of VAT on same 
products (and for the same periods) that customs du ties exemptions applied.  The SEZ enterprises 
were also exempted from payment of VAT (zero rate ) on the same products of domestic origin.  This 
preferential regime did not apply to excisable goods. 
Zone products entering the customs territory of Ukra ine, are liable to full payment of internal taxes 
(VAT and excise) on the full value of the final product.  
Exemption from land tax:  
Enterprises investing in a zone or priority territory  where the exemption applies were either exempted 
from the standard land tax or were liable to it at  a reduced rate in accordance with the regime 
indicated in the tables under "Form" above.  
Beneficiaries:  
Enterprises of any sector (excluding gambling business) may invest in a zone or priority territory. 
Individual zone management, in consultation with  the national Government , had drawn up lists of 
business activities eligible for zone status. A si milar process is undertaken by local authorities 
responsible for managing priority territories.  Su ch eligibility lists, which reflect local resource 
endowment and available labour skills, are then incor porated in the national legislation (see reference 
to relevant Decrees of the Cabinet of Minister s Of Ukraine in the "Background and Authorities" 
tables). 
In most zones and territories, investing enterprises are required to be legal persons. An enterprise's 
investment in a zone/territory is approved by a ma naging body established for the zone or the relevant 
local authority responsible for the priority territory in case after expertise it is accepted by the central 
government authorities.  Approval conditions include  compliance with the zone/territory's programs 
of development as well as programs of economic, t echnological and social development set by the 
state.   WT/ACC/UKR/116/Rev.1 
 Page 11 
 
 
  In some zones and all territories minimum leve ls of investment have been established: 
SEZ Investment Project Cost 
Reni At least US$200,000 
Porto-franco at Odessa Commercial sea Port At least US$1 million 
Slavutych At least US$200,000 
Port Crimea At least US$100,000 
Mykolayiv At least: 
 
US$500,000-in food-processing and agricultural produce 
processing industries;  US$700,000-in construction, energy and transport;  
US$1million-in machine building and instrument building;  
US$3 million-in shipbuilding industries.  
Yavoriv At least US$500,000 (excluding projects of technological 
park) 
Priority Territories in  
Chernihiv Oblast At least: 
 US$200,000-in agriculture, food -processing and agricultural 
produce processing industries, light industry, pulp and paper 
industry, wood processing, furniture production, health protection and education; 
US$300,000-in construction, tourist and recreation industry 
US$500,000-in extractive indu stry, machine and equipment 
building, non-metal mineral products, chemical production, 
transport. 
Volyn Oblast At least US$200,000-in all priority business activities 
The city of Kharkiv At least: 
 US$3 million-in metallurgy and metal working, machine 
and equipment building, buildi ng of electrical, electronic 
and transport equipment; US$1 million-in producing of electricity, gas, water, coke, 
other non-metal mineral products, in transport, 
communications, in metal waste and scrap working.  US$700,000-in construction, sanitation, scavenging and 
waste working, in chemical production, furniture, pulp and 
paper industry, printing industry; 
US$500,000-in food-processing and agricultural products 
processing industry, textile and clothing industry, tanning and shoe manufacturing industry, in health protection and 
education, in public assistance and in research and 
development in natural and technical sciences. 
Zhytomyr Oblast At least: 
 
US$200,000-in agriculture, food-processing industry, textile 
industry, pulp and paper industry, wood processing, furniture production, clothes and furs manufacturing, health 
protection and education; 
US$300,000-in construction US$500,000-in extractive indu stry, machine and equipment 
building, mineral material products, chemical production, 
transport. WT/ACC/UKR/116/Rev.1 
Page 12  
 
  SEZ Investment Project Cost 
The City of Shostka, Sumy Oblast At least: 
 US$200,000 - in food-processing industry and agricultural 
products processing, wood processing and wood working, 
health protection; 
US$500,000-in construction, waste working, producing 
electricity by thermoelect ric power station and in 
distribution of heat; 
US$1 million-in machine and equipment building, powder 
metallurgy and chemical production. 
Autonomous Republic of Crimea At least: 
 
US$100,000-in activity for protection of historical and 
natural resources, research and development of information infrastructure, culture and sport, consumer services, 
territory cleaning, forestry, production of sport and fancy 
goods, toys, souvenirs; US$200,000-in health protection and public assistance, in 
agriculture, fish industry, food-processing and agricultural 
produce processing industries, textile industry, wood working, furniture production; 
US$500,000-in activity of health and resort centres, hotel 
and restaurant business, transport and communications, in construction, waste working, tourism services, rest and 
entertainment services. 
US$1 million-in extractive industry, processing industry, 
electricity, gas and water production. 
Zakarpatska Oblast At least US$200,000-in all priority business activities 
Luhansk Oblast At least: 
 US$500,000-in agriculture, food -processing and agricultural 
produce processing industries, health protection; 
US$700,000-in construction and transport industry; US$1 million-in extractive indus try, electrical energy and 
coke production, chemical production and machine 
building. 
Donetsk Oblast At least: 
 
US$1 million (US$250,000-for small enterprises) - in all 
priority business activities 
 
Once approved, the investment is registered and th e investing enterprise enjoys the status of zone 
subject.  The enterprise enters into a contractua l agreement with the zone's/territory's managing 
authority in accordance with a Model Agreement given in Resolution No. 1199 of the Cabinet of 
Ministers of Ukraine of 5 July 1999 (with changes and amendments).   WT/ACC/UKR/116/Rev.1 
 Page 13 
 
 
  Amount:   Costs to state budget of special regimes in  place in zones and priority territories are: 
Exemption from income tax  
Year SEZ, thousand UAH Prior ity Territories, thousand UAH 
2003 16,179.5 391,753.9 
2004 21,836.0 520,272.4 
2005 1,183.6 2,824.2 
2006 0.0 0.0 
 
Exemption from import duties  
Year SEZ, thousand UAH Prior ity Territories, thousand UAH 
2003 220,602.3 915,931.2 
2004 593,534.5 2,977,334.7 
2005 294,122.5 1,321,416.6 
2006 0.0 0.0 
 
Exemption from VAT  
Year SEZ, thousand UAH Prior ity Territories, thousand UAH 
2003 160,601.5 162,322.0 
2004 356,881.4 170,329.7 
2005 146,910.3 67,286.9 
2006 0.0 0.0 
 
Exemption from Land Tax  
Year SEZ, thousand UAH Prior ity Territories, thousand UAH 
2003 8,293.3 1,329.5 
2004 11,913.5 287.0 
2005 5,104.3 85.7 
2006 0.0 0.0 
 
Duration:  
On adoption of the Law of Ukraine as of 25 Ma rch 2005 No. 2505 "On Amendments to the Law of 
Ukraine "On the State Budget of Ukraine for 2005" and some other legislative acts of Ukraine" tax 
privileges and special customs regime were cancelled. 
Currently the investment projects in SEZ and Prio rity Territories are implemented under regular tax 
regime. 
Also for the duration of the benefits in zones and priority territories, see the above Tables under 
"Background and Authorities" 
Trade effects:  
It is not possible to estimate what, if any, tr ade effects may result from the use of the programs 
described.  WT/ACC/UKR/116/Rev.1 
Page 14  
 
  B. TECHNOLOGICAL PARKS 
Policy objective and/or purpose:
 
Encourage investment, promotion of resear ch and development of new technologies. 
Background and authority:  
The basic enabling authority for the establishmen t and functioning of the technological parks is 
contained in: 
- Law of Ukraine "On Changes to the Law of Ukraine "On Special Regime of Innovation 
Activity of the Technological Parks" and othe r laws of Ukraine" of 12 January 2006 
No. 3333-IV (with changes and amendments); 
- Law of Ukraine "On priority directions of the science and technology development" of 
11 July 2001 No. 2623-III (with changes and amendments);  
- Law of Ukraine "On priorities of the Innovation Activity in Ukraine" of 16 January 2003 
No. 433-IV (with changes and amendments); 
- Decree of the Cabinet of Ministers of Ukraine of 17 December 1999 No. 2311 (with changes 
and amendments) approving the Procedure of C onsideration and Approval of the Priority 
Directions of Activity of the Technological  Park, the Procedure of Consideration, 
Examination and Registration of Technological Park's Projects; 
- Decree of the Cabinet of Ministers of Ukra ine of 23 November 2006 No. 1643 approving the 
procedure of accumulation of corporate income tax amounts on special account of technological park, use and control of such amounts; and 
- Decree of the Cabinet of Ministers of Uk raine of 21 March 2007 No. 517 approving the 
procedure of control and monitoring of th e technological parks projects implementation. 
Incentives offered in the form of import duty and intern al tax exemptions are reflected in the relevant 
tax laws. 
Corporate Income Tax:
 
- Law of Ukraine "On Corporate Income Tax" as of 28 December 1994, No. 334/94-VR (with 
changes and amendments). 
Import duties:  
- Law of Ukraine "On Common Customs Tariff"  of 5 February 1992, No. 2097-XII (with 
changes and amendments); and 
- Law of Ukraine "On Customs Tariff of Ukrain e" of 5 April 2001, No. 2371-III (with changes 
and amendments). 
VAT:  
- Law of Ukraine "On Value Added Tax" of 3 April 1997, No. 168/97 (with changes and 
amendments). 
Form:  
Tax exemptions/deferral and credits support.  WT/ACC/UKR/116/Rev.1 
 Page 15 
 
 
  Explanation of Benefits:  
Exemption from income tax. Sums of income tax are accumulated on a special account and used for science, scientific and 
technical activity, development of the park's scien tific and technological and research and exploratory 
development basis only. 
VAT payment deferral:
 
The promissory note for 720 calendar days is used for tax obligations while importing new equipment 
and parts and for 180 calendar days while importing materials which are not produced in Ukraine (in 
both cases). The period is calculated from the day when the promissory note is given to the customs 
authority.  
Exemption from payment of import duties:  
New materials, equipment, component parts used as inputs in projects could be imported duty-free if 
they are not produced in Ukraine. 
Credit support:  
Each year The State Budget of Ukraine foresees certain budget for: 
- Full or partial (up to 50 per cent) credits with  zero interest (with inflation indexation) for 
park's projects; and 
- Full or partial compensation of interest paid by park's project implementation authority to 
commercial banks and other finance and credit in stitutions for credits for park's projects. 
Beneficiaries:  
Beneficiaries of the favourable regime are technological  parks, their participants and joint enterprises 
implementing  innovative projects in priority areas. 
Technological park-is a legal person or associatio n of legal persons which are implementing  
innovative projects, implication of high technology developments. 
Priority directions for each park are develope d according to the Law of Ukraine "On Priority 
Directions of Science and Technol ogy Development" of 11 July 2001, No. 2623-III, Law of Ukraine 
"On Priorities of Innovative Activity in Ukraine" of 16 January 2003, No. 4 33-IV, considered by the 
Presidium of the National Academy of Science an d approved by the central government authority 
responsible for science issues.  
Amount:  
 2003, million 
UAH 2004, million 
UAH 2005, million 
UAH 2006, million 
UAH 
Exemption from income tax 
(till 2005 also included VAT)  115.9 176.3 55.5 74.7 
Credit support (since 2006) Not applied Not applied Not applied 0 
Exemption from payment of 
import duties 19.8 19.5 3.2 3.3 
 WT/ACC/UKR/116/Rev.1 
Page 16  
 
  Duration:
 
The favourable regime for technological parks established for the period of 15 years.    Trade effects:
 
It is not possible to estimate what, if any, tr ade effects may result from the use of the programs 
described.  
(B)  SECTORAL PROGRAMMES - Introduction 
The legislative bases for Ukraine's sect oral assistance programs are found in: 
- Enabling legislation specific to the sector itsel f (shipbuilding, automotive etc.) cited below for 
each Sector; and 
- The law applying a particular tax measure unde r for which assistance is provided (exemptions 
or deferral for import duties, VAT etc.) 
The Sector specific enabling legislation is identif ied under each of the supported sectors listed below. 
The relevant tax laws providi ng benefits to enterprises in supported sectors are:  
Import duties:
 
- Law of Ukraine "On Common Customs Tariff" 5 February 1992, No. 2097-XII (with changes 
and amendments); and 
- Law of Ukraine "On Customs Tariff of Ukra ine" as of 5 April 2001, No. 2371-III (with 
changes and amendments). 
VAT:  
- Law of Ukraine "On Value Added Tax" as of 3 April 1997, No. 168/97 (with changes and 
amendments). 
Excise:  
- Decree of the Cabinet of Ministers of Ukra ine "On Excise Duty" as of 26 December 1992, 
No. 18-92 (with changes and amendments); and 
- Law of Ukraine "On Excise Duty and Import Duty Rates for Some of Vehicles" as of 
24 May 1996, No. 216/96-VR (with changes and amendments). 
Income Tax:  
- Law of Ukraine "On Corporate Income Tax" as of 28 December 1994, No. 334/94-VR (with 
changes and amendments). 
Land Tax:  
- Law of Ukraine "On Land Tax" as of 3 July 1992, No. 2535-XII (with changes and 
amendments).  WT/ACC/UKR/116/Rev.1 
 Page 17 
 
 
  - Shipbuilding 
Policy objective and/or purpose:  
The overall objectives for providing assistance to the shipbuilding industry are to:  - Promote better use of the industry's existi ng production and Research and Development 
facilities; and  
- Encourage new investment in the industry to ach ieve greater efficiency and competitiveness.  
Background and authority:
 
The subsidy measures for five years the period (since 1 January 2000 till 1 January 2005) were 
provided under the Law of Ukraine "On Measures of State Support for the Ship-Building Industry in 
Ukraine" of 18 November 1999, No. 1242-XIV (inc luding changes and amendments introduced in 
accordance with the Law of Ukraine of  13 December 2001, No. 2892-III).  
Most of the measures (except for exemption from pa yment of import duties, which remained in force 
during 2004 and deferral of corporate income tax) were suspended by the Law of Ukraine "On  State 
Budget of Ukraine for 2004" as of 27 November 2003, No. 1344-IV. 
Information about those measures was pr ovided in the document WT/ACC/UKR/116 of 
15 April 2004. 
Currently subsidy measures are provided under th e Law of Ukraine "On Measures of State Support 
for the Ship-Building Industry in Ukraine" as of 15 June 2004, No. 1766-IV. 
Form:  
Deferral of Corporate Income Tax:  
At option of an eligible shipbuilder, advance paym ents received from a customer and earmarked loans 
received for financing of seagoing crafts, river boats  and other floating means may be placed in a 
special account and be exempt from withholding tax. Funds in such accounts may only be used to meet costs associated with fulfilling the contract  under which the advance payments are made or 
earmarked loans are received. In the fiscal year in which the builder delivers the ship to the customer, 
payments to and from the special account are include d in gross revenue/expenditure for the purpose of 
calculating profit for corporate income tax.  
Exemption from land tax:
 
This measure had been  reduced by 50 per cent fo r the year 2004 by the Law of Ukraine "On State 
Budget of Ukraine for 2004" of 27 November 2003, No. 1344-IV. 
According to the Law of Ukraine "On State B udget of Ukraine for 2005" of 23 December 2004, 
No. 2285- IV in 2005 this measure was exercised exce ptionally by the decision of the respective local 
authorities in the portion aimed for local budget. 
Later on the exemption from land tax was changed by  the Law of Ukraine "On Amendments to the 
Law of Ukraine "On State Budget of Ukraine for 2005" and some other legislative acts of Ukraine" of 
25 March 2005, No. 2505-IV and was exercised in the following way: 
- since 1 April 2005 it came up to 75 per cent of th e rates effective on the respective territories; WT/ACC/UKR/116/Rev.1 
Page 18  
 
  - since 1 January 2006 it came up to 50 per cent of the rates effective on the respective 
territories; 
- since 1 January 2007 it came up to 25 per cent of the rates effective on the respective 
territories; and 
- since 1 January 2008 this measure should be withdrawn. 
Credit support:
 
Since 1 January 2005, the support of seagoing crafts , river boats and other floating means, building 
and reconstruction of basic production assets of shi pbuilding industry was by partial compensation of 
the interest paid to commercial banks for the provi ded credits. Every year a certain budget allocation  
is foreseen by the Law of Ukraine "On State Budget" for providing such support.  However, in 2005 
and 2006 no allocations were made. 
The procedure of use of such allocations from the State Budget is annually determined by the Cabinet 
of Ministers of Ukraine.  
Exemption from import duties:  
During 2004 it applied to imports by eligible sh ipbuilders of inputs (construction equipment, 
materials, parts, and sub-assemblies) not produced in Ukraine or, if produced, did not comply with 
international standards as to certification or terms of individual contracts.  The Cabinet of Ministers of 
Ukraine annually approves a list of inputs to be exempted. 
Since 2005 the Decree of the Cabinet of Minister s of Ukraine of 8 November 2000, No. 1678 (with 
changes and amendments) is not in force. 
Beneficiaries:  
The Cabinet of Ministers of Ukraine approves a list of  eligible ship building enterprises according to 
the order determined in the Decree of Cabinet of Ministers of Ukraine of 12 July 2005, No. 555.  The 
current approved list of enterprises appears in the Re solutions of the Cabinet of Ministers of Ukraine 
of 21 December 2005, No. 1256.     
Amount:   Subsides received by the industry during the recent (three) years through: 
 2004, million UAH 2005, million UAH 2006, million UAH 
Deferral of Corporate Income Tax 9.4 0.2 0.5 
Exemption from import duties 2.7 0.7 0 
Exemption from land tax 7.400 1.812 1.108 
Credit support Not applied n/a n/a 
 
Evaluation of effects for trade  
Amount of products 2004, million UA H 2005, million UAH 2006, million UAH 
Seagoing crafts, river boats, other 
floating means 1,542 2,080 2,224 
  WT/ACC/UKR/116/Rev.1 
 Page 19 
 
 
  - Automotive Sector 
Policy objective and/or purpose:  
Promote investment and development in the prod uction of cars, trucks, buses and their parts. 
Background and authority:  
Preferential tax treatment for production of cars, trucks, buses and manufacture of parts was initially 
introduced by the Law of Ukraine "On Stimulati on of Production of Motor Cars in Ukraine" 
No. 535/97-VR of 19 September 1997 (with changes and amendments).  
At present the subsidies are provided under the La w of Ukraine "On Development of the Motor-Car 
Industry in Ukraine" of 18 March 2004, No. 1624-IV (with changes and amendments).  
Form:  
Exemptions from corporate income tax:  
Exemption applied to that part of income, which is re-invested and used for the loan re-payment 
within investment project.  
This measure was withdrawn by the Law of Ukraine "On State Budget of Ukraine for 2004" of 
27 November 2003, No. 1344-IV excluding those ente rprises which had already approved investment 
programs and made investments. 
By the Law of Ukraine "On Development of the Motor-Car Industry in Ukraine" of 18 March 2004, 
No. 1624-IV in 2004 this me asure applied to enterprises defined in this Law.  
In 2005 this measure was withdrawn by the Law of Ukraine "On Amendments to the Law of Ukraine 
"On State Budget of Ukraine For 2005" and some other legislative acts of Ukraine" of 25 March 2005, No. 2505-IV. 
Exemption from import duties:
 
Exemption covers goods and compone nt parts, which are imported by the enterprises according to the 
Law of Ukraine "On Development of the Motor-Car  Industry in Ukraine" and are used by these 
enterprises for production of cars, buses, component pa rts and spare parts originated in Ukraine as 
well as for construction, re-construction, tec hnical equipment and re-equipment of production 
facilities, building and/or modernizing of works.  The list of such enterprises, procedure and volume 
of import as well as criteria of their proper use and control procedure are determined by the Cabinet of 
Ministers of Ukraine.  Improper use of the mentioned goods would cause payment of import duties plus fine according to the legislation. 
According to the Decrees of the Cabinet of Mini sters of Ukraine of 20 August 2005, No. 788 and of 
23 May 2007, No. 755, the Decree of the Cabinet of Ministers of Ukraine of 1 June 2002, No. 737 
"On the list, procedure and volume of exempt fro m import duty imported goods that are used for 
construction and for production ac tivity of enterprises producing automobiles and spare parts for 
them" has lost its force with the exception of executing  court rulings on custom clearance of goods at 
tariff preference, provided by the Law of Ukrain e "On Development of the Motor-Car Industry in 
Ukraine" of 18 March 2004, No. 1624-IV. WT/ACC/UKR/116/Rev.1 
Page 20  
 
  Exemption from VAT on imports of equipment and inputs:
 
As for import duties - this measure was suspende d by the Law of Ukraine "On State Budget of 
Ukraine For 2004" of 27 November 2003, No. 1 344-IV excluding enterprises that had already 
approved investment programs and done investments. 
Later on this measure was withdrawn by the Law of Ukraine "On amendments to the Law of Ukraine 
"On the State Budget of Ukraine for 2005" and some other legislative acts of Ukraine" of 
25 March 2005, No. 2505. 
Zero rates of VAT on domestic sales:  
Sales of manufactured cars, trucks, buses by qualifie d enterprises on the domestic market are charged 
VAT at a zero rate. 
This measure was suspended by the Law of Uk raine "On State Budget of Ukraine For 2004" of 
27 November 2003, No. 1344-IV excluding enterp rises that had already approved investment 
programs and done investments. 
Later on this measure has withdrawn by the Law of  Ukraine "On Amendments to the Law of Ukraine 
"On State Budget of Ukraine For 2005" and some other legislative acts of Ukraine" of 
25 March 2005, No. 2505. 
Exemption from excise tax:  
Sales of passenger cars, trucks and motorcycles ma nufactured in Ukraine were exempted from excise 
taxes when sold on the domestic market.  The ex emption applied to companies, which produce a 
minimum of 1,000 automobiles or 1,000 motorcycl es per year. Later on this measure was withdrawn 
by the Law of Ukraine "On amendments to the La w of Ukraine "On  State Budget of Ukraine For 
2005" and some other legislative acts of Ukraine" of 25 March 2005, No. 2505. 
Exemption from land tax:  
The land area exempt from land tax is proportional to the investment made.  One hectare of land is 
exempted for each US$400,000 of investment at the rate of exchange, as determined by the National 
Bank of Ukraine, on the day of the investment. 
This measure has been 50 per cent reduced for the year 2004 by the Law of Ukraine "On the State 
Budget of Ukraine for 2004" of 27 November 2003, No. 1344-IV. 
According to the Law of Ukraine "On State Budget of Ukraine For 2005" of 23 December 2004, 
No. 2285- IV in 2005 this measure was exercised exce ptionally by the decision of the respective local 
authorities in the portion aimed for local budget. 
Later on the exemption from land tax has been cha nged by the Law of Ukraine "On amendments to 
the Law of Ukraine "On the State Budget of Ukra ine for 2005" and some other legislative acts of 
Ukraine" of 25 March 2005, No. 2505-IV and was exercised in the following way: 
- since 1 April 2005 it came up to 75 per cent of th e rates effective on the respective territories; 
- since 1 January 2006 it came up to 50 per cent of the rates effective on the respective 
territories; 
- since 1 January 2007 it came up to 25 per cent of the rates effective on the respective 
territories; and  WT/ACC/UKR/116/Rev.1 
 Page 21 
 
 
  - since 1 January 2008 this measure should be withdrawn. 
Beneficiaries:  
Enterprises, which according to the Law of Ukraine "On Stimulation of Production of Motor Cars in 
Ukraine" No. 535/97-VR of 19 September 1997 (w ith changes and amendments) invest in the 
assembly of cars, trucks and buses and in the ma nufacture of parts for automotive sector, have 
investment programmes approved by the Cabinet of Ministers of Ukraine by 1 January 2004 and have 
(including foreign) exclusively in monetary form.  
To qualify enterprises must meet minimum leve ls of investment (in monetary form): 
- for manufacturing cars-not less than US$150 million; 
- for manufacturing trucks and buses - not less than US$30 million; and 
- for manufacturing parts for cars and buses - not less than US$10 million. 
Amount:  
 2004, million 
UAH 2005, million 
UAH 2006, million 
UAH 
Exemption from Corporate Income Tax 146.7 0 0 
Exemption from import duties 329.4 157.5 0 
Exemption from VAT on imports  651.9 239.1 0 
Zero rates of VAT on domestic sales 495.0 94.1 0 
Exemption from land tax 3.0 2.4 1.2 
Exemption from Excise taxes on domestic 
sales 424.4 136.3 0 
 
Duration:  
Until 31 December 2008. Estimation trade effects statistics:
 
Production (of enterprises-
beneficiaries) 2004, million UAH 2005, million UAH 2006, million UAH 
Cars, Trucks, Buses, Parts thereof 4,684.988 6,839.557 8,885.756 
 
- Aircraft 
Policy objective and/or purpose:  
The overall objective for providing subsidies to the ai rcraft construction industry is to promote an 
efficient use of existing production, research and de velopment facilities and to encourage investment 
to provide for modernization and great er competitiveness of the industry.  
Background and authority:  
Preferential tax treatment in aircraft construction is provided for in the Law of Ukraine "On State 
Support of Aircraft Construction Industry in  Ukraine" No. 2660-III of 12 July 2001.   
Form:  
Deferral of Income Tax. WT/ACC/UKR/116/Rev.1 
Page 22  
 
  At option of an eligible aircraft producer, advan ce and interim payments received from a customer 
may be placed in a special account and be exempt ed from withholding tax. Funds in such accounts 
may only be used to meet costs as sociated with fulfilling the contra ct under which the advance/interim 
payment is made.  In the fiscal year in which th e producer delivers the aircraft to the customer, 
payments into and from the special account are in cluded in gross revenue/expe nditure for the  purpose 
of calculating profit for corporate income tax."  
Exemption from import duties:
 
It applies to imports by eligible aircraft pr oducers of inputs (equipment, materials, and sub-
assemblies) not produced in Ukraine or, if produced, do not comply with international requirements as 
to classification or terms of individual contracts.  The Cabinet of Ministers approves annually the list 
and volumes of inputs for exemption. 
Products that could be imported duty free by the e ligible enterprises are listed in the Resolution of the 
Cabinet of Ministers of Ukraine as of 12 April 2002 No. 519 (with amendments). 
Since 16 May 2005 this measure had been withdrawn by the Law of Ukraine "On amendments to the 
Law of Ukraine "On the State Budget of Ukraine for 2005" and some other legislative acts of 
Ukraine" of 25 March, 2005 No 2505-IV. 
Exemption from VAT on imports:  
Exemption subject to the same conditions and approval process as for import duties. 
This measure was suspended by the Law of Uk raine "On State Budget of Ukraine For 2004" of 
27 November 2003, No. 1344-IV excluding enterp rises, which had signed contracts before Law 
No. 1344-IV entered into force, and under these cont racts had received advanced payments of more 
than 20 per cent of the contract value. 
Later this measure was withdrawn by the Law of Ukraine "On Amendments to the Law of Ukraine 
"On State Budget of Ukraine For 2005" and some ot her legislative acts of Ukraine" of 25 March 2005 
No. 2505. 
Zero rates of VAT on domestic sales:  
Sales of aviation products manufactured at the expe nse of State Budget by qualified enterprises on the 
domestic market are charged VAT at a zero rate. 
This measure has been suspended by the Law of Ukraine "On State Budget of Ukraine For 2004" of 
27 November 2003, No. 1344-IV excluding enterp rises which had signed contracts before Law 
No. 1344-IV entered into force, and under these cont racts had received advanced payments of more 
than 20 per cent of the contract value.  
Later this measure was withdrawn by the Law of Ukraine "On amendments to the Law of Ukraine 
"On State Budget of Ukraine For 2005" and some other legislative acts of Ukraine" of 25 March 2005, No. 2505 
Exemption from land tax:
 
This measure was reduced by 50 per cent for 2004 by the Law of Ukraine "On State Budget of 
Ukraine For 2004" of 27 November 2003, No. 1344-IV.  WT/ACC/UKR/116/Rev.1 
 Page 23 
 
 
  According to the Law of Ukraine "On  State Budget of Ukraine For 2005" of 23 December 2004 
No. 2285- IV in 2005 this measure was exercised exce ptionally by the decision of the respective local 
authorities in the portion aimed for local budget. 
Later on the exemption from land tax has been cha nged by the Law of Ukraine "On amendments to 
the Law of Ukraine "On State Budget of Ukraine For 2005" and some other legislative acts of 
Ukraine" of 25 March 2005, No. 2505-IV and was exercised in the following way: 
- since 1 April 2005 it came up to 75 per cent of the rates effective on the respective territories; 
and 
- since 1 January 2006 it came up to 50 per cent of the rates effective on the respective 
territories. 
Beneficiaries:  
The list of eligible enterprises pr esented in Article 2 of the Law of Ukraine "On State Support of 
Aircraft Construction Industry in Uk raine" No. 2660-III of 12 July 2001. 
Amount:  
 2004, million UAH 2005, million UAH 2006, million UAH 
Deferral of Corporate Income Tax 0.07 0 0 
Exemption from import duties 1.39 0.03 0 
Exemption from VAT on imports 3.8 0.2 0 
Zero rates of VAT on domestic sales 0.07 0.02 0 
Exemption from land tax  19.2 19.0 14.5 
 
Duration:  
Since 1 January 2002 until 1 January 2007.  
Statistics for estimation of trade effects:  
 2004, million UAH 2005, million UAH 2006, million UAH 
Production 1,920.0 2,203.0 2,684.0 
 
- Space Industry 
Policy objective and/or purpose:  
Assistance is intended to preserve and effectivel y employ the existing scientific, research, and 
production potential of Ukraine's space industry as a priority component of the high technology sector 
and to encourage investment as to ensure  the future viability of the industry. 
Background and authority:  
Preferential tax treatment for eligible enterprises in  the space industry is provided for in the Law of 
Ukraine "On State Support of Space Activity" No. 1559-III of 16 March 2000.  
Form:  
Accelerated amortization of key assets:  
The 20 per cent annual accelerated amortization is determined for key assets of group 3. WT/ACC/UKR/116/Rev.1 
Page 24  
 
  Group 3 includes key assets except for buildings, c onstructions, their structures and transmitting 
devices, motor transport and components for it, furniture, household, electronic, optical and electro-mechanical devices and instruments, other office equipment and devices, electronic computers, other information processing machines, information read ing and printing devices, other information 
systems, computer programs, telephones (including cell phones), microphones and portable radio 
transmitters, cost of which is higher than  those goods (things) of little value.  
At this the amortization of key assets of group 3 is being realized until the book cost makes zero.    Exemption from import duties:
 
Exemption applies to imports by eligible ente rprises of products used for production of space 
machinery (including units, systems and their compone nts for space complexes, space carrier rockets, 
space vehicles and land segments of space systems).  The Cabinet of Ministers approves the relevant 
list and volumes of goods to be exempted.  
The list and volumes to be exempted, as well as the list of qualified enterprises approved by the 
Resolution of the Cabinet of Ministers of Ukraine as of 22 February 1999, No. 276 (with changes and amendments). 
This measure was withdrawn by the Law of Ukrain e "On amendments to the Law of Ukraine "On  
State Budget of Ukraine For 2005" and some other legislative acts of Ukraine" of 25 March 2005, 
No. 2505-IV. 
Exemption of imports from VAT:
 
As to import duties. This measure was withdrawn by the Law of Ukrain e "On amendments to the Law of Ukraine "On  
State Budget of Ukraine For 2005" and some other legislative acts of Ukraine" of 25 March 2005, 
No. 2505-IV. 
Zero rate VAT on sales in the domestic market:
 
Sales of space complexes, space carrier rockets, space vehicles, land segments of space systems and 
their units, systems and components, by eligible enterprises on the domestic market are charged VAT 
at a zero rate. 
This measure was withdrawn by the Law of Ukrain e "On amendments to the Law of Ukraine "On  
State Budget of Ukraine For 2005" and some other legislative acts of Ukraine" of 25 March 2005, 
No. 2505-IV. 
Exemption from land tax:  
The list of enterprises exempted from land tax is annually approved by the Cabinet of Ministries of 
Ukraine. 
The latest list (for 2004) approved by the Resoluti on of the Cabinet of Ministries of Ukraine of 
31 March 2004, No. 412.  
This measure was withdrawn by the Law of Ukrain e "On amendments to the Law of Ukraine "On  
State Budget of Ukraine For 2005" and some other legislative acts of Ukraine" of 25 March 2005, 
No. 2505-IV.  WT/ACC/UKR/116/Rev.1 
 Page 25 
 
 
  Beneficiaries:  
The agents of the space industry which realize th eir activity according to the Law of Ukraine "On 
Space Activities" (with changes and ame ndments)of 15 November 1996, No. 502/96 
Amount:   Revenue foregone in most recent (three) years with respect to:  
 2004, million UAH 2005, million UAH 2006, million UAH 
Accelerated amortizati on 2.080 0. 637 1.433 
Exemption from import duties 0.213 0.234 0 
Exemption from VAT on imports  55.998 2.692 0 
Exemption from land tax 29.955 0 0 
Zero rates of VAT on domestic sales 6.285 0.802 0 
 
Duration:  
Until 1 January 2009. 
Trade effects estimation statistics:  
Amount of products 2004, million UA H 2005, million UAH 2006, million UAH 
Amount of products in established prices 1,278.205 1,427.181 1,821.250 
 
- Coal Mining  
Policy objective and/or purpose:  
To assist in restructuring and modernization in the coal mining sector, raising industrial safety, labour 
safety improvement. 
Background and authority:  
Since September 2003 State Support to Coal Mining Enterprises had been provided in accordance 
with new "Procedure of provision and identification of the state support to coal producers for partial refund of expenses from the production price, as well  as construction and technical re-equipment of 
black coal, brown coal and peat producers" that  was approved by the Resolution the Cabinet of 
Ministers of Ukraine of 21 August 2003, No. 1311 (with changes and amendments).   
The Resolution of the Cabinet of Ministers of Ukraine of 21 August 2003, No. 1311 was cancelled by 
the Resolution of the Cabinet of Ministers of Ukraine of 6 March 2007 "On the procedure of application of the funds from the state budget ai med at support of the enterprises producing coal, 
brown coal and peat, by construction and technical  re-equipment and overhaul of mining equipment". 
State support to construction and technical re-equipm ent of coal enterprises is provided according to 
the Resolution of the Cabinet of Ministers of Ukraine No. 1764 of 27 December 2001 "On approval of 
the Procedure for State Financing of Capital Construction". 
The scope of the program is determined annually under the Law on State Budget of Ukraine for the 
corresponding year. WT/ACC/UKR/116/Rev.1 
Page 26  
 
  Form:
 
Grants to coal mining enterprises to partially cove r production cost.  Grants are made annually in 
advance in accordance with the estimated produc tion costs and anticipated sales of eligible 
enterprises.  
Conditions for obtaining support:  
- Coal production of this enterprise should be demanded in Ukraine; 
- This enterprise commits itself to increase the e fficiency of production, particularly cut down 
cost price; and 
- Volume of the commercial coal output being e xpressed in forecast price of sales do not cover 
production expenses. 
Main economic indexes for determ ination of the state support are:  
- Volume of the commercial coal output; 
- Production expenses; and 
- State support to construction and technical re-e quipment of coal enterprises is provided in 
form of grants (to state or public ownership enterprises) or credits (to enterprises of other 
ownership). 
Beneficiaries:  
The program applies to black coal, brown coal and peat producers irrespectively to enterprise 
ownership. 
The program does not apply to enterprises subject to liquidation. List of eligible enterprises is drawn up by the Ministry of Mining on the basis of economic indicators 
of enterprises activity and th eir plans for respective year. 
Amount:
 
 2004, million UAH 2005, million UAH 2006, million UAH 
Partial refund of expenses from the 
production price 880.412 1,035.804 1,953.553 
Support of construction and technical 
re-equipment 2,224.284 1,175.225 1,186.695 
 
Duration:  
Since September 2003-Indefinite. Trade effects estimation statistics:
 
Amount of production 2004, million tons 2005, million tons 2006, million tons 
Black coal  50.5110 46.1435 46.3855 
Brown coal 0.243 n/a n/a 
Peat n/a 0.613 0,520 
 
  WT/ACC/UKR/116/Rev.1 
 Page 27 
 
 
  - Book-Publishing 
Policy objective and/or purpose:  
Overcoming of the crisis in this sector and provid ing for development of Uk rainian book- publishing. 
Background and authority:  
Support is provided by the Law of Ukraine "On St ate Support of Book-publishing in Ukraine" of 
6 March 2003, No. 601-IV (with changes and amendments).  
In the year 2003 support was not provided.  In 2004 the Law of Ukraine of 6 March 2003, No. 601-IV 
was suspended by the Law of Ukraine "On the State Budget of Ukraine for 2004" of 27 November 2003, No. 1344-IV with exemption for production of copy-books, textbooks and 
school-books. 
Later by the Law of Ukraine of 17 June 2004, No .1801-IV "On changes to the Law of Ukraine "On 
the State Budget of Ukraine for 2004" the Law of Ukraine No. 601-IV was resumed. 
Form:
 
Exemption from import duties:  
Exemption applies to imports of products used fo r book-publishing (paper, cardboard, cellulose, other 
polygraphic materials, equipment, computer-based equipment including units) that are not produced 
in Ukraine.  The list of inputs to be exempted  presented in the Law of Ukraine "On the Common 
Custom Tariff" No. 2097-XII of 5 February  1992 (with changes and amendments).  
Exemption from VAT on imports:  
The same as for import duties. This privilege was suspended by the Law of Ukra ine "On the State Budget of Ukraine for 2004" of 
27 November 2003, No. 1344-IV with exemption for production of copy-books, textbooks and 
school-books. 
Later that privilege was resumed by the Law of Ukraine of 17 June 2004, No.1801-IV "On changes to 
the Law of Ukraine "On the State Budget of Ukraine for 2004". 
Exemption from VAT on domestic sales:
 
Exemption applies to supply of services in books-p ublishing, activity of production and distribution 
by publishing-houses and organisations, polygra phic enterprises of books-publishing production 
produced in Ukraine. Also applies to production a nd/or supply of paper, cardboard produced in 
Ukraine for books production, and to supply of books production produced in Ukraine exempt advertising services and published materials of erotic nature. 
Exemption from Corporate Income Tax:
 
Exempted income of publishing-houses and organisa tions, polygraphic enterprises and distributors of 
books-publishing production, produced in Ukraine. WT/ACC/UKR/116/Rev.1 
Page 28  
 
  This privilege was withdrawn by the Law of Ukra ine "On the State Budget of Ukraine for 2004" of 
27 November 2003, No. 1344-IV. 
Later that privilege was resumed by the Law of Ukraine of 17 June 2004, No.1801-IV "On changes to 
the Law of Ukraine "On the State Budget of Ukraine for 2004". 
Beneficiaries:
 
Publishing-houses and organisations, polygraphic en terprises and distributors of books-publishing 
production which conducting their activity in accord ance with the Law of Ukraine "On publishing" 
No. 318/97-VR of 5 June 1997 (with changes and amendments). 
Amount:  
 2004 р., million UAH 2005 р., million UAH 2006 р., million UAH 
Exemption from Corporate Income 
Tax 19.8 22.2 31.1 
Exemption from import duties 6.11 8.84 14.80 
Exemption from VAT on imports 28.2 48.9 75.6 
Exemption from VAT on domestic 
sales  252.8 411.6 504.1 
 
Duration:  
From 1 January 2004 till 1 January 2009. Statistic for estimation of trade effects:
 
Production 2004 2005 2006 
Number of titles of books and 
brochures, published items 14,790 15,720 15,867 
Annual Edition, thousands items 52,804.7 54,059.8 54,209.6 
 
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