**UKRAINE SEZS OFFERADVANTAGES**

 

by Yuriy Prykhodko

 

In the last year,Ukraine has been actively setting up special (free) economic zones (SEZs) inareas of the country with the greatest industrial or other potential, as wellas the greatest economic need.  Thezones provide investors with favorable tax, customs, and economic treatment andeach has its own set of specific privileges and conditions for investors,depending on the features of the region. Currently, eight zones have beencreated: Syvash in northern Crimea, Azov in Donetsk Oblast, Donetsk in easternUkraine, Zakarpattya in western Ukraine, Slavutych in Chernihiv Oblast,Truskavets in Lviv Oblast, and Yavoriv rayon in Lviv Oblast. The decree for thelatest zone, the Interport Kovel Free Economic Zone, to start operation onJanuary 1, 2000, was signed on June 23, 1999.           

 

The law on theYavoriv special economic area (YSEA) was signed in mid-January 1999 andestablished the zone for 20 years. The rayon (district) administration acts asthe managing and regulatory authority for the YSEA, approving and registeringall investment projects worth at least $500,000. 

 

The YSEA legislationstipulates the following privileges for investors and project implementers:

$               A 5-yearcorporate profit tax exemption for investment projects.

$               Importedequipment, spare parts, and other nonexcise items required for implementationof investment projects are exempt from import duties for up to 5 years and fromvalue-added tax (VAT);

$               The import ofgoods for use within the territory of the YSEA, as well as the export of goodscompletely or partially manufactured/processed within the territory of theYSEA, are not subject to licensing and quotas;

$               Owners andusers of land within the territory of the YSEA are exempt from land tax duringthe first 3 years of implementation of a project.

 

In addition, thegovernment of Ukraine guarantees full compensation of losses in case of theliquidation of the YSEA.  Thesestipulations and privileges are similar to those for the other zones.

 

A concisedescription of 14 priority investment projects for the area as determined bythe Yavoriv district administration can be found on **BISNIS Online** at*****www.bisnis.doc.gov/bisnis/country/9906yav.htm*.The listed projects offer opportunities in the areas of electric powergeneration, production of agricultural chemicals, construction and operation ofan oil enterprise, construction of a petroleum extraction and processingenterprise, production of concrete and building lime, poultry processing,construction and operation of a milk processing plant, construction andoperation of a donor plasma processing plant, reconstruction and operation of atextile factory, production of PET plastic bottles at an existing plasticsfactory, construction and operation of a customs post and service plaza, andthe construction of a toll road.

 

*Yuriy Prykhodko is a commercial specialist with the U.S. CommercialService of the American Embassy in Kyiv.*

 

For more detailed information on the YSEA,interested U.S. companies are encouraged to contact:

 

Mr. Stepan Lukashyk

Head, Yavoriv Regional Administration

8 Ivana Franko St., Yavoriv

Lvivska Oblast, Ukraine  292160

Tel: +380 (322) 798‑246

Tel/fax: +380 (3259) 213‑69, 210‑90

 

Ms. Zoryslava Romovska

Member of Parliament (represents Yavoriv)

Verkhovna Rada of Ukraine

2 Shovkovychna St., Office 417

Tel: +380 (44) 291-7372, 291‑7097

Fax: +380 (44) 293‑0427

 

Dr. Ihor Yukhnovskiy

Member of Parliament

Verkhovna Rada of Ukraine

3 Sadova St., Office 319

Tel: +380 (44) 293‑3361, 226-2900

Fax: +380 (44) 293-0414, 226‑2420

 

Ms. Kristina Marlow

U.S. Embassy Kyiv, Economic Officer

Tel: +380 (44) 246‑9750; Fax: +380 (44) 244‑7350

 

Mr. Yuriy Prykhodko 

U.S. Commercial Service, Kyiv

Tel: +380 (44) 417‑2669; Fax: +380 (44) 417‑1419

Email: [email protected]