Industrial parks in Ukraine: tax incentives

Press service of the State Tax Service of Ukraine, published 09 December 2022 at 17:30 Chapter: News

Creation of industrial parks is one of the forms of business support, economic development of territories and tax incentives in Ukraine.

Issue of supporting development of industrial parks in Ukraine is regulated by the Law of Ukraine № 5018-VI as of 21.06.2012 "On industrial parks" (as amended) (hereinafter – Law).

Law stipulates that national incentives for arrangement and operation of industrial parks can be carried out at the expense of state and local budgets and from other sources not legislatively prohibited, including in the form of tax incentives for the initiators of creation – business entities, management companies and the industrial parks participants (Part 6 Article 14, Paragraph 4 of Part 3 Article 34 of the Law).

Tax Code of Ukraine (hereinafter – Code) defines:

general incentives for business entities:

- local self-government bodies have a right to independently set tax rates and tax benefits for land and real estate tax, other than a land plot within limits set by the Code (up to 0%) annually;

- are not subject to tax on immovable property, other than land, industrial buildings used for their intended purpose and not rented, leased or loaned by their owners (Sub-paragraph "h" of Sub-paragraph 266.2.2 Paragraph 266.2 Article 266);

additional opportunities for participants and other subjects of industrial parks:

- residents of industrial parks can be residents of the legal regime of Diia City, including using income taxation peculiarities;

- residents of industrial parks located in designated settlements can use state support measures provided for coal regions according to Paragraph 68 Sub-section 10 Section XX of the Code;

- residents of industrial parks who carry out certain activities can have income tax benefits according to Paragraph 56 Sub-section 4 Section XX of the Code.

Due to amendments to the Code introduced by the Law of Ukraine № 2330-IX as of 21.06.2022 "On amendments to the Tax Code of Ukraine on creating favorable conditions for the activity of industrial parks in Ukraine", industrial parks received a number of investment incentives for development, in particular:

Corporate income tax (Article 142 of the Code).                 

Profit of industrial park participant from carrying out certain types of economic activities in the processing industry, in sphere of collection, processing and removal of waste, recovery of materials is exempted from taxation for ten years.

Code stipulates circle of industrial park participants – legal entities that do not have a right to apply such income taxation peculiarities.

Amount of funds exempted from taxation must be directed to development of activities of the industrial park participant within such industrial park, not later than December 31 of the year following the reporting year.

Procedure for the use of funds exempted from taxation by the industrial park participant for development of its activities within the industrial park was approved by Resolution of the Cabinet of Ministers of Ukraine № 1095 as of 30.09.2022.

Value added tax (Article 197 of the Code).

Import to the customs territory of Ukraine is exempted from taxation under the customs import regime of new equipment (machinery) and accessories to it, specified in Part 6 of Article 287 of the Customs Code of Ukraine, which are imported by the industrial parks participants exclusively for their own use for their activities in the processing industry, collection, processing and disposal of wastes, restoration of materials on the territory (within the boundaries) of industrial park (without a right to rent, lease or transfer for use to third parties under any other conditions), provided that from the date of manufacture of equipment (machinery) and components to it until the date they were imported to the customs territory of Ukraine not more than three years ago and they were not in use.

Procedure for import to the customs territory of Ukraine and intended use of new equipment (machinery) and accessories for it, which are imported by the industrial (manufacturing) park participant included in Register of industrial (manufacturing) parks, was approved by Resolution of the Cabinet of Ministers of Ukraine № 997 as of 07.09.2022.

Provision operations by residents of Diia City through access to public educational, scientific and informational resources on the Internet are exempted from the VAT payment.

Industrial parks participants can also apply other tax benefits from the VAT, for example, importing to the customs territory of Ukraine equipment that works on renewable energy sources (Paragraph 197.16 Article 197 of the Code); supply software products (Paragraph 261 Sub-section 2 Section XX of the Code), etc.

Local taxes (Articles 266 and 284 of the Code).

Local self-government bodies have simplified decision-making procedure regarding establishment of tax benefits for immovable property, other than land and land payment paid in relevant territory for taxation objects located on the territory of industrial park.

More detailed information is available on website of the State Tax Service of Ukraine in section "Legislation / Taxes, levies, payments":

in the sub-section "National taxes" in sections "Corporate income tax / Expert comments", "Value added tax / Expert comments";

in the subsection "Local taxes" in sections "Taxes on immovable property other than land / Expert comments", "Land payment / Expert comments".