3.4. GENERAL INFO AND OPERATION RESULTS OF SEZ AND TPD

Operation results of special economic zones (SEZ) and territories of priority development (TPD)
with special investment treatment

According to operative data, as of January 01 2001, 369 investment projects, including 243 TPD projects and 126 SEZ projects, have been approved by SEZ and TED controlling bodies. In 2000, 226 investment projects were approved, including 154 TPD projects and 72 SEZ projects.

The total budget cost of the approved projects exceeds USD 1.5 billion, including TPD projects – USD 1.15 and SEZ projects - USD 381.1 million. Budget cost of the projects approved in the year 2000 made USD 733.9 million, TPD projects – USD 487.4 million, and SEZ projects – USD 246.5 million.

Within the frames of implementing investment projects business entities:

- attracted investment worth USD 429.5 million (or 27% from the budget cost of the projects), incl. foreign investment of USD 211.9 million. In the year 2000, USD 244.2 million were attracted, including foreign investments of USD 104.3 million;

- created 1.5 thousand of new workplaces and preserved 28.9 thousand current workplaces, including respectively 9.2 thousand and 15.9 thousand in 2000;

- in the year 2000, sales of commodities and services accounted for UAH 2.4 billion, including UAH 607.7 thousand export supplies;

- in 2000, investment projects yielded UAH 313.9 million of revenues, which were forwarded to the budgets of all levels (according to the data with local state administrations). Out of these: profit tax – 27.5 million UAH., the VAT – UAH 205.9 million, and surtax from citizens – UAH 22.2 million.

In 2000, UAH 310.2 mln. preferences were granted to business entities, including: profit tax – UAH 93.1 million, VAT – UAH 136.1 million, and import duty – UAH 80.3 million.

Review of results on implementation of a special investment treatment in the year 2000 by regions:

Starting from the moment special investment treatment was introduced, 116 projects worth USD 775.1 million were approved by the Council on the issues of special economic zones and special investment treatment in Donetsk region, including 2 projects worth USD 9.2 million in SEZ "Donetsk" and 1 project worth USD 1.5 million in SEZ "Azov". The projects ensure creation of 12 thousand new and preservation of 24.5 thousand existing workplaces. The approved projects comprised: 56 projects within the primary industries (USD 473.5), including 13 in metallurgy, 11 in coal industry, 20 in chemical industry, 9 in mechanical engineering, 3 in the building industry, 33 in the light and food-processing industry, 10 in agriculture, 12 in transport and communications, 4 in public utilities sector, and 1 project in health services.

From 2 to 14 projects were approved at 11 enterprises, in particular: OJSC Styrol Concern (14 projects), OJSC Krasnolimanskaya (4), State OJSC Krasnoarmeyskaya-Zapadnaya Mine No 1 (2), CJSC Novokramatorsk Machine-Building Plant (3), OJSC Istil -DMZ (2), OJSC Metkombinat Azovstal (2) and others. Out of the total projects approved, foreign investors from 22 countries worldwide partake in 63 projects. On the whole, it is planned to attract investments worth USD 331.4 million.

There are 81 projects in process. These attracted USD 318.1 million (63.5 % from the budget cost of projects in process), including USD 166.4 million of foreign investments (52 %).

During the year 2000, 58 investment projects worth USD 278.5 mln. were approved for realization, including 26 projects worth USD 86.8 million with the participation of fereign investments. As a result, it is provided to create 5.3 thousand new and to preserve 21.1 thousand of existing workplaces.

25 projects worth USD 170.4 mln. are implemented in the metallurgical, coal, chemical industry, the industry of building materials and mechanical engineering; 16 projects worth USD 32.9 mln. - in light and food-processing industry, 6 projects worth USD 13.0 mln. in agriculture; 6 projects worth USD 32.2 mln. in transport and communication; 4 projects worth USD 28.7 mln. in public utilities sector; and 1 project worth USD 1.2 mln. - in the establishments of health services and the social help. In total, 4 thousand new workplaces have been created and 7 thousand workplaces preserved (for 2000, accordingly 2.5 thousand 3.3 thousand).

In compliance with the investment project approved, the OJSC Nord started construction of a factory manufacturing home appliances for export in SEZ "Donetsk". Implementation of the project will enable manufacturing high-quality products worth over UAH 300 million annually.

Within the frames of its investment project wirth USD 2.2 mln., JV Vozrozhdenije constructs blocks for the meat processing enterprise. The project is 90 % backed by the Great Britain. The project capacity is up to 2,000 tonnes of end products monthly. In fact, 30% (USD 604 thousand) of foreign investments were already injected, erection works are conducted due tu own means (365 thousand UAH.).

Starting from the beginning of works on the south of SEZ "Azov" (UAH 1.6 million was injected), the following works are commmissioned: on construction of a moorage (UAH 72 thousand), construction of buildings of a customs check point (UAH 385 thousand), construction of garbage collector (UAH 300 thousand); lining of access railroads (UAH 194 thousand). East damb coastal strengthenings were amplified (UAH 50 thousand) and means of mechanization were made and acquired (UAH 81 thousand). The building for accommodation of services of the boundary quarantine control was repaired (UAH 500 thousand injected). The first investment project of development for the Subsidiary Company Azov Ship-Repair Plant was approved in SEZ "Azov", budget cost of USD 1.5 mln.

At regards the territory of priority development in Zakarpatje region, 49 contracts on implementation of investment projects were concluded with the total budget cost of USD 196.3 million, including foreign projects worth USD 157.2 million USD. In the year 2000, there were 18 investment projects with a budget cost USD 27.2 million, including foreign projects worth USD 14.3 million. In total, in the year 2000, USD 27.9 mln. of investments were attracted, including foreign investment of USD 15.2 million. The volume of sales added due to implementation of investment projects in 2000 has made UAH 110 million, including export sales of UAH 87.7 million.

Implementation of 18 investment projects foresee creation of 3.6 thousand of workplaces and preserving of 3.1 thousand of existing workplaces. In the year 2000, within the frames of investment projects, 2,561 workplaces were created and 5,317 were preserved.

4 investment projects are being implemented in "Zakarpatye" SEZ, with the budget cost of USD 9.1 mln. Implementation of these projects will enable creating 1,015 and preserving 1,480 workplaces. In fact, the during the year 2000 investment worth USD 1.8 million was attracted. 178 workplaces were preserved.

In 2000, business entities within the zone reported sales of products and transport and expeditionery services accounting for UAH 10.5 million.

Lvov region. 45 enterprises at the territory of SEZ "Yavorov" have received the status of the subject of a special economic zone, including 36 in the year 2000. Subjects of SEZ "Yavorov" injected investment worth UAH 106.4 million, including UAH 89.1 million during the year 2000, mainly, in the form of equipment – UAH 72 million. All subjects of SEZ "Yavorov" - the newly formed enterprises which have redeemed or rent the staying idle floor spaces. In the year 2000, the enterprises reported sales of UAH 13.1 million, including export supplies of UAH 3.8 million. 2000 persons worked at the the enterprises in the year 2000.

Investors develop new branches of industrial production: mechanical engineering, instrument making, light, and food-processing industry. 10 enterprises are involved in production of energy saving products, besides, 90% of the are aimed at production of export substitution products.

12 investment projects were registered at the territory of "SEZ Kurortopolis Truskavets", with the budget cost of USD 26.9 million. These are mainly aimed at enhancing commfort in existing rehabilitation centers via reconstruction and technical re-equipment, introduction of latest curing and recreation methods with use of up-to-date medical-diagnostic equipment, and energy and resourse saving technologies.

As a result of investment projects’ implementation, in the year 2000 investments of USD 2.8 million were attracted, including USD 1.2 million of foreign investment. Within the frames of implementation of investment projects it is planned to create 472 and to preserve 3,546 workplaces. Actually, 66 workplaces have been already created and 3,546 workplaces - preserved.

SEZ “Slavutych” administration registered 23 subjects of SEZ "Slavutych", which implement investment projects with the general budget cost of USD 30.5 million, including 13 projects with the budget cost of 25 million USD in the year 2000. 18 out of 23 enterprises 18 are neogenic. Implementation of projects provides for creation and preservation of 1.8 thousand workplaces.

In 2000, investment of USD 2.1 was injected under investment projects. Sales expanded by enterprises within the frames of investment projects, accounted for UAH 9.8 million. Budgets revenues from the projects in 2000 accounted for UAH 126 thousand and the preferences granted – UAH 1.6 million. In 2000, there were created 177 new workplaces.

The council on the issues of special investment treatment at the territory of Kharkov approved 22 investment projects with the total budget cost of USD 68.9 million, including USD 45.8 million USD of foreign investment.

The enterprises subject to special investment treatment at theterritory of Kharkov attracted investment worth USD 6.1 million, including USD 2.9 million of foreign investments. Business entities injected investment worth UAH 28.1 million. These included equipment (61%).

In 2000, within the frames of investment projects, business entities reported sales of UAH 8.6 million. As well, 1,409 workplaces were created and 166 workplaces were preserved.

The committee on the issues of territories of priority development in Lugansk region approved 16 investment projects with the budget cost of USD 40.4 million. Their implementation will allow creating 1.8 thousand of new and preserving 2.4 thousand of existingworkplaces.

Within a year, investments worth USD 12.4 million were attracted, including foreign investment of USD 1.1 million. In total, investments of UAH 63.4 million were injected.

The basic directions of investment are: coal industry - 6 projects worth USD 20.7 million, manufacturing industry - 3 projects (USD 11.8 million), light industry - 5 projects (USD 6.5 million), transport - 2 projects (USD 5.9 million), and food indusry - 1 project (USD 0.5 million).

In 2000, 454 new workplaces were created and 2,017 workplaces were pereserved at the territories of priority development in the year 2000

As regards the Autonomous Republic of Crimea, 20 investment projects were approved at the territories of priority development, with the budget cost of USD 43.1 million, including USD 18.9 million of foreign investment.

In 2000, investment worth USD 8.5 million was attracted, including foreign investment of USD 8.3 million. Sales reported accounted for UAH 11.6 million. 113 new workplaces were created and 634 workplaces were preserved.

5 investment projects with the general budget cost of USD 4.1 million were registered at the territory of Volyn region. Investment worth USD 963 thousand were attracted. 139 workplaces were created and preserved. Reported sales accounted for UAH 5.2 million, including export sales of UAH 2.5 million.

In 2000, 15 investment projects with the general budget cost of USD 24.7 million were approved in Zhitomir region. Implementation of these projects provides for creation of 1,272 and preservation of 405 workplaces. In the very 2000, 251 new workplaces were created and 146 workplaces were preserved. Investments worth USD 2.0 million were attracted. The total sales accounted for UAH 2.4 million.

2 investment projects were approved with the general budget cost of USD 4.2 million in Chernigov region in the year 2000. Foreign investments worth USD 37 thousand were attracted.

Yet, investment projects in Shostka (Sumy region), "SEZ Interport Kovel" (Volyn region), SEZ "Nikolaev" (Nikolaev region), "SEZ Reny" and SEZ "Porto-Franko" (Odessa region) are not started.

General characteristic of SEZ and TPD

SPECIAL ECONOMIC ZONE "DONETSK"

Location, area: the city of Donetsk, Donetsk region, the area of 466 ha.
Effective from: July 21, 1998
Legal basis: the Laws of Ukraine No. 356 of December 24, 1998 “On special economic zones and special investment treatment in Donesk Oblast” and No. 973 of 15 July, 1999 “On amendments to selected Laws of Ukraine on taxation in the light of introduction of special investment treatment in priority development areas in Donetsk region”.
Priority economic activities: machine-building, instrument-making industry, electrical engineering industry; innovatory projects on creation of new materials and production systems.
Preferences for investors:
-regime of special customs area;
-income tax rate - 20%;
-non-resident income taxation – in size of 2/3 of the current rate;
-cancellation of the fees to the State innovatory fund and to the Fund for realization of measures in regard to liquidation of Chornobyl disaster after-effects and social protection of the population;
-the sum of investments obtained according to investment project is exempted from taxation;
-earnings in foreign currency are exempted from compulsory sale;
-cancellation of land payment for the period of land lot development.
Preconditions to get preferences: Council's permit to perform entrepreneurial activity in the territory of a zone.
Expected results of activity:
-it is envisaged to attract USD 500 million;
-preservation of the former and creation of new work places – 10,000.
State of implementation: 2 investment projects were approved, estimated cost amounting to USD 9.2 million. Investment raised USD 715,000. Investment fields – production of domestic equipment, production of meat products.

SPECIAL ECONOMIC ZONE "AZOV"

Location, area: Mariupol, Donetsk region, area –315 ha
Term of action: 60 years
Effective from: July 21, 1998
Legal basis: Laws of Ukraine No. 356 of December 24, 1998 “On special economic zones and special investment treatment in Donesk region” and No. 973 of 15 July, 1999 “On amendments to some Laws of Ukraine on taxation in the light of introduction of priority development areas with special investment treatment in Donetsk region”.
Priority economic activities: development of forwarding-warehouse, transport-servicing and production spheres.
Preferences for investors:
-regime of special customs area;
-income tax rate - 20%;
-non-resident income tax – in size of 2/3 of the current rate;
-cancellation of fees to the State innovatory fund and to the Fund for realization of measures with regard to liquidation of Chornobyl disaster after-effects and social protection of the population;
-the sum of investments obtained according to investment project is exempted from taxation;
-earnings in foreign currency are exempted from compulsory sale;
-cancellation of land payment for the period of land lot.
Preconditions to get preferences: Council's permit to perform entrepreneurial activity in the territory of a zone; conducting of operations on servicing the transits, their storage, revision, grading and assortment work, packing, rendering transport-forwarding, agent's services as well as using advanced technologies aimed at production of goods for export and their deliveries to the domestic market.
Expected results of activity:
-it is envisaged to attract USD 400 million;
-preservation of the former and creation of new work places – 10,000.
State of implementation:1 investment project with a budget cost of USD 1.5 million is approved. Branch of investment - development of a transport and industrial infrastructure.

Preparatory works on development of the zone territory proceed, building and assembly jobs worth UAH 1.6 mln. are already completed, namely: construction of a moorage (UAH 72 thousand); buildings of a customs check point (UAH 385 thousand); construction of garbage collecting unit (UAH 300 thousand); and lining of access roads (UAH 194 thousand); East dam coastal strengthenings were amplified (UAH 50 thousand); mechanization means were made and purchased (UAH 81 thousand); the building for accommodation of services of the boundary quarantine control (UAH 500 thousand is repaired).

SPECIAL ECONOMIC ZONE "ZAKARPATTIA"

Location, area: Uzhhorod and Mukachevo districts of Zakarpattia Oblast, area – 737 ha
Term of action: 30 years
Effective from: January 09, 1999
Legal basis: The Decree of the President of Ukraine No. 1339 of December 09, 1998 “On special economic zone “Zakarpattia”.
Priority types of economic activity: Transport, forwarding activity, customs services, servicing and storage of transits, financial functions related to them.
Preferences granted to investors:
-regime of special customs area;
-income tax rate - 20%;
-non-resident income tax – in size of 2/3 of the current rate;
-cancellation of fees to the State innovatory funds;
-earnings in foreign currency are exempted from compulsory sale.
Preconditions for get preferences: entrepreneurial activity entity registration in the territory of the zone; realization of operations on servicing the transits, their storage, revision, grading and assortment work, packing rendering transport-forwarding, agent's and financial services related to them, trade as well as using advanced technologies aimed at production of goods for export and their deliveries tj the domestic market.
Expected results of activity:
-it is envisaged to attract – USD 1,300 million;
-preservation of former and creation of new work places– 10,000.
State of implementation: 4 investment projects were approved, estimated cost amounting to USD 9.0 million, investment raised USD 1.8 million, investment fields – processing of cargoes, rendering warehouse and forwarding services, 178 work places were created. The regime of special customs zone in the territory of CJSC “Zakarpatinterport” (5 ha) was introduced.

SPESIAL ECONOMIC ZONE "INTERPORT KOVEL"

Location, area: Kovel, Volyn Oblast, area – 57 ha
Term of action: 20 years
Effective from: January 01, 2000
Legal basis: The Decree of the President of Ukraine No. 702 of June 22, 1999 "On special economic zone “Interport Kovel”.
Priorities types of economic activity: transport, forwarding activity, customs services, servicing and storage of transits, financial functions related to them.
Preferences granted to investors:
-regime of special customs area;
-income tax rate - 20%;
-non-resident income tax – in size 2/3 established rate;
-cancellation of fees to the State innovatory fund;
-cancellation of land tax during the first 5 years;
-foreign currency earnings are exempted from compulsory sale.
Preconditions to get preferences: conclusion of contract on realization of investment project with zone administration, realization of operations on servicing the transit, their storage, revision, grading and assortment work, rendering transport-forwarding, agent's and financial services related to them, trade as well as using high technologies aimed at production of goods for export and their deliveries to the domestic market.
Expected results of activity:
-it is envisaged to attract – USD 18 million;
-preservation of the former and creation of new work places - 300.
State of implementation: preparatory works are being performed on settlement of zone territory.

SPECIAL ECONOMIC ZONE "PORTO-FRANKO"

Location, area: Odessa, area – 32 ha
Term of action: 25 years
Effective from: January 01, 2000
Legal basis: Laws of Ukraine No. 1607 of March 23, 2000 "On special (free) economic zone "Porto-Franko" in the territory of Odesa sea commercial port" and No. 1608 of March 23, 2000 "On amendments to some legislative acts of Ukraine on taxation in connection with creation of special (free) economic zone “Free Port” in the territory of Odesa sea commercial port”.
Priority types of economic activity: servicing of transits, their storage, grading and assortment work, packing, revision, rendering transport-forwarding and agent's services.
Preferences granted to investors:
-special customs regime;
-during the first 3 years the income tax rate – 0%, from the fourth to the sixth – 50% of the current rate;
-the investment sum obtained according to the investment project is exempted from taxation;
-earnings in foreign currency are exempted from compulsory sale.
Preconditions to get preferences: realization of investment projects at the estimated cost not less than USD 1 million created by the legal persons in the territory “Free Port” on the ground of the agreement (contract) with the body of economic development of the zone.
Expected results of the activity:
-it is envisaged to attract – USD 78 million;
-preservation of the former and creation of new work places - 250.
State of implementation: the resolution of the Oblstate administration was adopted on the approval of the investment project at the estimated cost of USD 4.4 million.

SPECIAL ECONOMIC ZONE "THE PORT OF CRIMEA"

Location, area: Kerch, the Autonomous Republic of Crimea, area – 27 ha
Term of action: 30 years
Effective from: January 01, 2000
Legal basis: The Decree of the President No. 740 of Ukraine of June 27, 1999 "On priority development areas with special investment regime and special economic zone “The Port of Crimea” in the Autonomous Republic of Crimea ".
Priority types of economic activity: servicing of transits, their storage, grading and assortment work, packing, revision, rendering transport-forwarding and agent's services.
Preferences granted to investors:
-regime of special customs rate;
-income tax rate - 20%;
-the investment sum received according to the investment project is exempted from compulsory sale;
-earnings in foreign currency are exempted from compulsory sale;
-exemption from payment for land for the period of development of land lots but no more than 5 years;
-fees to the State innovatory fund are exempted in size of 50% of the current fees.
Preconditions to get preferences: receiving of the permit to perform the entrepreneurial activity on the zone territory; realization of operations on servicing the transits, their storage, revision, grading and assortment work, packing, revision, rendering transport-forwarding and agent's services as well as using advanced technologies aimed at production of goods for export and their deliveries to the domestic market.
Expected results of the activity:
-it is envisaged to attract – USD 150 million;
-preservation of the former and creation of new work places – 1,500.
State of implementation: preparatory works are being performed on settlement of zone territory.

SPECIAL ECONOMIC ZONE "SLAVUTYCH"

Location, area: Slavutych, Kyiv Oblast, area – 2,000 ha
Term of action: up to January 01, 2020
Effective from: June 30, 1998
Legal basis: Laws of Ukraine of June 30, 1999 No 721 “On special economic zone “Slavutych” and of June 03, 1999 No 722 “On amendment to some legislative acts of Ukraine on taxation in connection with creation of special economic zone “Slavutych”.
Priority types of economic activity: introduction of new technologies, market methods of management and development of infrastructure of SEZ “Slavutych”, improvement of using the natural and labor resources and so on.
Preferences granted to investors:
-during the first 3 years the income tax rate – 0%, from the fourth to the sixth – 50% of the current rate;
-the investment sum received according to the investment project is exempted from taxation;
-value-added tax is not exempted in case of import from outside the limits of customs area of Ukraine of equipment, complete sets, transport means (except for excise goods) for realization of investment projects but no more than for realization of investment projects but no more than for 5 years;
-customs duty is not exempted in case of import from outside the limits of customs area of Ukraine of raw material, materials, equipment, complete sets, transport means (except for excise goods) for realization of investment projects but no more than for realization of investment projects but no more than for 5 years;
-fees to the State innovatory fund and fee for compulsory insurance against unemployment are not exempted;
-foreign currency earnings are exempted from compulsory sale;
-the land tax is not exempted during the first 3 years from the beginning of the development of land lot, the land tax is not exempted from the fourth to the sixth year at the rate of 50% of the current rate.
Preconditions to get preferences: realization of investment projects at the estimated cost of equivalent not less than USD 200,000 approved by the executive committee of the Slavutych town council and being implemented by the entities of entrepreneurial activity located in the territory of the zone.
Expected results of the activity:
-it is envisaged to attract – USD 118 million;
-preservation of the former and creation of new work places – 2,400;
State of implementation: 23 investment projects are being realized at the estimated cost of USD 30.5 million. Investment raised USD 2.8 million. Investment fields – laser instrument-making, light and food industry, production of building materials. Sales – UAH 11 million. 196 new work places were created and 54 work places were preserved.

SPECIAL ECONOMIC ZONE "RESORT CITY TRUSKAVETS"

Location, area: t. Truskavets, Lviv Oblast – 774 ha
Term of action: 20 years.
Effective from: January 01, 2000
Legal basis: Laws of Ukraine No. 514 of March 18, 1999 “On special economic zone of tourist-recreative type “Resort City Truskavets” and No. 515 of March 18, 1999 “On amendments to the laws of Ukraine on taxation in connection with creation of special economic zone of tourist-recreative type “Resort City Truskavets”.
Priority types of economic activity: medical-sanitary complexes; production of mineral waters, recreative tourism, sewage disposal, scientific research in the field of health protection.
Preferences granted to investors:
-during the first 3 years the income tax rate – 0%, from the fourth to the sixth – 50% of the current rate;
-investment amount received according to investment project is exempted from taxation;
-fee and value-added tax should not be exempted in case of import outside the limits of Ukraine's customs area of medical preparations, equipment, complete sets, software (except for excise goods) to implement the investment projects;
-earnings in foreign currency are exempted from compulsory sale;
-cancellation of land tax for the period of development of land lot, in the next 10 years it should be exempted at the rate of 50% of the current rate.
Preconditions to get preferences: realization by the entities of entrepreneurial activity located in the territory of zone of the investment projects in priority types of economic activity at the estimated cost which is equivalent not less than USD 500,000 approved by the executive committee of Truskavets town council, on the ground of the agreement with administrative body of SEZ “Health Resort Polis Truskavets”.
Expected results of activity of SEZ:
-it is envisaged to attract – USD 100 million;
-preservation of the former and creation of new work places – 14,500.
State of implementation: 10 investment projects are being realized at the estimated cost of USD 25.3 million, investments raised USD 2.3 million were attracted. The main field investment – tourist-recreative sphere. The volume of production realized and services rendered – UAH 944,000. 63 new work places were created and 3546 work places were preserved.

SPECIAL ECONOMIC ZONE "YAVORIV"

Location, area: Yavoriv district, Lviv Oblast, area – 116,000 ha
Term of action: up to January 01, 2020
Effective from: February 17, 1999
Legal basis: Law of Ukraine of January 15, 1999 No 402 “On special economic zone “Yavoriv”, Law of Ukraine of January 15, 1999 No 403 "On amendments to some laws of Ukraine on taxation in connection with creation of special economic zone “Yavoriv”.
Priority types of economic activity: introduction of innovatory projects, production of carbohydrates, food industry, light industry, wood processing and paper industry, production of machines and equipment, construction, transport.
Preferences granted to investors:
-during the first 3 years income tax rate –0%, the next years – 50% of the current rate;
-during the first 3 years land tax is not exempted, next years it is exempted at the rate of 50% of the current rate;
-cancellation of fees to the State innovatory fund and for compulsory social insurance against unemployment;
-customs duty and value-added tax are not exempted in case of import from outside the limits of Ukraine's customs area of equipment, complete sets (except for excise goods) for realization of investment projects but not more than for 5 years.
Preconditions to get preferences: realization of investment projects in priority types of economic activity of minimum cost of not less than USD 500,000 approved by Yavoriv district state administration by the entities of entrepreneurial activity located on this territory.
Expected results of activity:
-it is envisaged to attract – USD 277 million;
-preservation of the former and creation of new work places – 7,000.
State of implementation: 49 investment projects were approved totaling estimated cost of USD 213.3 million. Investment raised USD 20.2 million. Investment fields – servicing complex construction, transport, forwarding and customs services, chemical, wood processing and light industry, production of building materials. Products were realized at the cost of UAH 23.1 million. 1,585 new work places were created and 716 work places were preserved.

SPECIAL ECONOMIC ZONE "RENI"

Location, area: t. Reni, Odesa Oblast, area – 94 ha
Term of action: 30 years
Effective from: May 17, 2000
Legal basis: Laws of Ukraine No. 1605 of March 23, 2000 "On special economic zone “Reni” and No. 1606of March 23, 2000 "On amendments to some legislative acts of Ukraine on taxation in connection with creation of special economic zone “Reni”.
Priority types of economic activity: servicing of transits, their storage, grading and assortment work, packing, revision, rendering transport-forwarding and agent's services.
Preferences granted to investors:
-special customs regime;
-income tax rate obtained from investment project realization - 20%;
-exemption from fees to the State innovatory fund;
-the investment sum obtained according to investment project is exempted from taxation;
-foreign currency earnings are exempted from compulsory sale;
Preconditions to get preferences: realization of investment projects established on the territory of “Reni” SEZ by legal entities at the estimated cost of not less than USD 200,000 on the ground of the agreement (contract) with the executive committee of the Reni town council.
Expected results of activity:
-it is envisaged to attract – USD 58 million;
-preservation of the former and creation of new work places – 2,600.
State of implementation: preparatory works are being performed on settlement of zone territory.

PRIORITY DEVELOPMENT AREAS WITH SPECIAL INVESTMENT REGIME IN DONETSK OBLAST

Location, area: towns of Artemivsk, Vuhledar, Horlivka, Dzerzhynsk, Dymytrov, Dobropillia, Donetsk, Yenakiive, Zhdanivka, Kirovske, Kostiantynivka, Kramatorsk, Krasnoarmiisk, Krasnyi Lyman, Makiivka, Mariupol, Novohrondivka, Selidove, Sloviansk, Snizhne, Torez, Shakhtarsk as well as Amvrosiiv, Volnovakha, Kostantynivsk, Marinsk and Sloviansk districts, Donetsk Oblast, area – 714,000 ha.
Term of action: 30 years
Effective from: July 21, 1998
Legal basis: Law of Ukraine of December 24, 1998 No. 356 “On special economic zones and special investment regime in Donetsk Oblast” and No. 973 of June 15 1999 “On amendments to some laws of Ukraine on taxation in connection with introduction of special investment regime in Donetsk Oblast”.
Priority type of economic activity: agriculture; fishery; mining; food industry and processing of agricultural products; textile industry and sewing of clothes; production of wood and wooden products; wood-pulp and paper industry; chemical industry; metallurgy and metal working; machine-building and instrument-making; furniture production; production of electric power, gas and water; construction; hotel facilities; transport; research and development in the field of natural and technical sciences; geology and geological prospecting; education and health protection.
Preferences granted to investors:
-income tax rate for the first 3 years – 0%, from the fourth to the sixth year – 50% of the current rate;
-non-resident income tax – in size of 2/3 established rate;
-taxable dividends at the rate of 10 per cent;
-customs duty and value-added tax are not exempted in case of import from outside the limits of customs area of Ukraine of equipment (except for excise goods)for the period of investment project implementation;
-investment sum obtained under the investment project is exempted from taxation;
-fees to the State innovatory fund should not be exempted for the period of time up to 2009;
- exempted for the period of time up to 2009 the fees to the Fund for realization of measures with regard to liquidation of the consequences of Chornobyl accident and social protection of population should be exempted in size of 50%.
Preconditions to get preferences: if the investments are equivalent no less than USD 1 million, realization of investment projects approved by the Council in priority types of economic activities at newly established enterprises, operating enterprises and their structural subdivisions at which restructuring, reconstruction, modernization or change of production type took place.
Expected results of activity:
-it is envisaged to attract – USD 7.750 million;
-preservation of the former and creation of new work places – 100,000.
State of implementation: 113 investment projects were approved at the estimated cost of USD 764.4 million. Actually injected – USD 317.4 mln. Investment fields: metallurgy, coal, processing industry, chemical industry, machine-building, light and food industry, agroindustrial complex, transport and communications, communal facilities. Production realized at UAH 1.87 billion. 4,158 new work places were created and 7,153 work places were preserved.

PRIORITY DEVELOPMENT AREAS WITH SPECIAL INVESTMENT REGIME IN THE AUTONOMOUS REPUBLIC OF CRIMEA

Location, area: towns of Yalta, Alushta, Sudak, Feodosia, Krasnoperekopsk, Armiansk, Krasnoperekopsk and Lenin districts of the Autonomous Republic of Crimea, area– 611,000 ha
Term of action : 30 years
Effective from: January 01, 2000
Legal basis: The Decree of the President of Ukraine of June 27, 1999 No. 740 "On priority development areas with special investment regime and special economic zone “The Port of Crimea” in the Autonomous Republic of Crimea ".
Priority type of economic activity: health protection, sanatorium and health resort services, hotel economy, forestry economy, fish economy, agriculture, mining industry, food industry, and processing of agricultural production, textile industry and sewing of clothes, chemical production, machine-building and instrument-making, research and development in the field of natural and technical sciences, production of electric power, gas and water, construction, transport.
Preferences granted to investors:
-during the first 3 years income tax rate – 0%, from the fourth to the sixth year – 50% of the current rate;
-value-added tax is not exempted in case of import from the outside limits of Ukraine's customs area of equipment;
-customs duty is not exempted in case of import from the outside limits of Ukraine's customs area of raw material, materials, equipment, complete sets (except for excise goods) for realization of investment projects but no more than for 5 years;
-investment sum obtained according to the investment project is exempted from taxation;
-foreign currency earnings are exempted from compulsory sale;
-cancellation of land payment for the period of development of land lots but no more than for 5 years;
-cancellation of fee to the State innovatory fund for the period of for realization of investment projects but no more than for 5 years.
Preconditions to get preferences: realization by the entities of entrepreneurial activity registered on priority development areas, according to the agreement (contract) concluded with local self-government body, of investment projects in priority types of economic activity at the estimated rate of not less than:
USD 100,000 – in activity preservation of historical and natural heritage, on research and development in the sphere of informatization, in the sphere of culture and sports, in sphere of services for population, on cleaning of territories, in forestry economy, in production of spots and fancy goods, toys, souvenirs;
USD 200,000 – in activity on health protection, agriculture and fish economy, food, textile industry and agricultural production processing industry, production of furniture, wood and products of wood (marginal estimated cost of these investment projects is reduced in two times if investment project envisages creation of anew entity of business activity and in the period of time from October 1 to April 1 of each year monthly average list number of workers is not less than 10 persons and a size of their wages paid – is not less than average size in the Autonomous Republic of Crimea;
USD 500,000 – in activity of sanatorium and health resort establishments, hotels and restaurants, transport and communications, in construction, waste products processing, rendering services in the sphere of tourism, rest and entertainments;
USD 1million – in mining, processing industry, in production of electric power, gas and water.
Expected results of activity:
-it is envisaged to attract – USD 850 million;
-preservation of the former and creation of new work places – 28,000.
State of implementation: 20 investment projects of totaling estimated cost of USD 43.1 million were approved. Investments raised USD 8.5. Investment fields: construction, hotels and restaurants, collective public and personal services, transport, agriculture, hunting and forestry, fishing, food industry. Products were realized for a sum of UAH 11.6 million. 113 new work places were created and 634 work places were preserved.

PRIORITY DEVELOPMENT OF SPECIAL INVESTMENT REGIME AREAS IN LUHANSK OBLAST

Location, area: towns of Brianka, Krasnodon, Sverdlovsk, Pervomaisk, Stakhaniv, Krasnyi Luch as well as Antratsyt, Kreminne and Krasnodon districts' Lugansk Oblast, area – 519,000 ha
Term of action: 30 years
Effective from: February 04, 1999
Legal basis: Laws of Ukraine No. 970 of July 15,1999 “On priority development of special investment regime areas in Lugansk Oblast”, No. 971 of July 15, 1999 “On amendments to some laws of Ukraine on taxation in connection with introduction of priority development of special investment regime areas in Lugansk Oblast ”.
Priority type of economic activity: agriculture, mining, food industry and processing of agricultural products, textile industry and sewing of clothes, production of wood and wooden products, wood-pulp and paper industry, chemical production, metal working and machine-building, production of electric power and coke, construction, transport.
Preferences granted to investors:
-income tax rate for the first 3 years – 0%, from the fourth to the sixth year – 50%;
-investment sum obtained under the investment project is exempted from taxation;
-customs duty is not exempted in case of import from outside the limits of customs area of Ukraine of raw material, materials, equipment (except for excise goods) for investment project implementation but no more than for 5 years;
-value-added tax is not exempted in case of import from outside the limits of customs area of Ukraine of equipment (except for excise goods) for investment project implementation but no more than for 5 years;
-exemption from fees to the State innovatory fund for population employment promotion for the period of time up to 2009;
-exemption from payment for land in the period of development of land lot but no more than for 5 years.
Preconditions to get preferences: realization by the entities of entrepreneurial activity registered on priority development areas, on the ground of the agreement with local self-government body, of investment projects at the estimated cost of not less than:
USD 500,000 – investment project implementation in the fields of agriculture, processing industry and health protection;
USD 700,000 – investment project implementation in the fields of construction and transport;
USD 1 million – investment project implementation in the fields of mining industry, production of electric power and coke, chemical production and machine-building.
Expected results of activity:
-it is envisaged to attract – USD 1269 million;
-preservation of the former and creation of the new work places – 17,000;
State of implementation: 17 investment projects were approved at the estimated cost of USD 45.6 million. Investment raised: USD 12.4 million. Fields of investments – coal, processing, light, food industries, transport. Production realized to the amount of UAH 29.2 million. 654 new work places were created and 2017 were preserved.

SPECIAL INVESTMENT REGIME AREA IN ZAKARPATTIA OBLAST

Location, area: Zakarpattia Oblast, area –1,280,000 ha
Term of action: 15 years.
Effective from: January 29, 1999
Legal basis: Law of Ukraine No. 357 of December 24, 1998 “On special investment regime in Zakarpattia Oblast”.
Priority types of economic activity: plant-growing, mining industry, food industry and processing of agricultural products, textile industry and sewing of clothes, production of wood and wooden products, electric power production, construction, hotels, transport, health protection, operation of sports structures.
Preferences granted to investors:
-during the first 2 years income tax rate – 0%, from the third to the fifth year – 50% of the current rate;
-exemption from taxation of the investments sum obtained under the investment project;
-cancellation of customs duty and value-added tax in case of import from outside the limits of the customs area of Ukraine of equipment (except for excise goods) for investment project implementation, but no more than for 5 years;
-cancellation of fees to the State innovatory fund for 2 years.
Preconditions to get preferences: implementation by the entities of entrepreneurial activity, on the ground of the agreement with local state administration, of investment projects in priority types of economic activity if investment is equivalent not less than USD 250,000.
Expected results of SEZ activity:
-it is envisaged to attract – USD 550 million;
-preservation of the former and creation of new work places – 50,000.
State of implementation: 49 investment projects were approved at the estimated cost of USD 196,3 million investments raised USD 37.8 million. Investment fields – construction, power engineering, instrument-making, woodworking industry, furniture production, health protection. Production realized to the amount of UAH 130.7 million. 2,678 new work places were created and 5,317 work places were preserved.

PRIORITY DEVELOPMENT AREAS WITH SPECIAL INVESTMENT REGIME IN SHOSTKA TOWN, SUMY OBLAST

Location, area: Shostka town, Sumy region, area – 3,500 ha
Term of action: 30 years
Effective from: January 01, 2000
Legal basis: The Decree of the President of Ukraine No. 726 of July 27, 1999 “On special investment regime in Shostka town, Sumy Oblast ".
Priority types of economic activity: chemical industry, metallurgy and metal working, machine-building, waste processing, electric power production, construction.
Preferences granted to investors:
-for the first 3 years income tax rate – 0%, from the fourth to the sixth year – 50% of the current rate;
-exemption from taxation of investment sum obtained under the investment project;
-exemption from customs duty incase of import from outside the limits of Ukraine's customs area of raw material, materials, equipment and complete sets( except for excise goods) for investment project implementation but no more than for 5 years;
-exemption from value-added tax in case of import from outside the limits of Ukraine's customs area of equipment and complete sets( except for excise goods) for investment project implementation but no more than for 5 years;
-exemption from payment for land during the period of land lot development but 5 years maximum.
Preconditions to get preferences: realization by the entities of business activity registered in Shostka town area, of investment projects in priority types of economic activity at the estimated cost of minimum:
USD 200,000 – in food industry and agricultural production processing industry, production of timber and wooden products, health protection sphere;
USD 500,000 – construction, waste processing, production of electric power at the thermal electric power stations, heat production and distribution;
USD 1 million – production of machinery and equipment, power metallurgy and chemical production, oil-processing.
Expected results of activity:
-it is envisaged to attract – USD 95 million;
-preservation of the former and creation of new work places – 2,500.
State of implementation: preliminary negotiations with investors are being conducted.

PRIORITY DEVELOPMENT AREAS WITH SPECIAL INVESTMENT REGIME IN ZHYTOMYR OBLAST

Location, area: Berdichiv, Korosten, Novohrad-Volynskyi towns as well as Luhyn, Narodychi, Ovruch, Olevsk, Malyn, Yemilchynsk, Volodarsk-Volyn districts of Zhytomyr region, area – 1,554,000 ha
Term of action: 30 years
Effective from: January 01, 2000
Legal basis: Laws of Ukraine No. 127 of December 03, 1999 “On special investment regime on priority development areas in Zhytomyr Oblast” and No. 1278 of December 03, 1999 “On amendments to some laws of Ukraine on taxation in connection with introduction of special investment regime on priority development areas in Zhytomyr Oblast ”.
Priority types of economic activity: agriculture, mining, food industry, production of timber and wooden products, cellulose and paper industry, production of other nonmetal mineral products, machine-building, construction.
Preferences granted to investors:
-during the first 3 years income tax rate – 0%, from the fourth to the sixth year – 50% of the current rate;
-exemption from taxation of investment sum obtained under the investment project;
-exemption from customs duty incase of import from outside the limits of Ukraine's customs area of raw material, materials, equipment and complete sets( except for excise goods) for investment project implementation but no more than for 5 years;
-exemption from value-added tax in case of import from outside the limits of Ukraine's customs area of equipment and complete sets( except for excise goods) for investment project implementation but no more than for 5 years;
-exemption from payment for land during the period of land lot development but 5 years maximum.
Preconditions to get preferences: realization by the entities of business activity registered in the area according to the agreement with local body of self-government, of investment projects in priority types of economic activity at the estimated cost of minimum:
USD 200,000 in agriculture, food industry, textile industry, woodworking and production of wooden products, cellulose -paper industry, production of furniture, sewing of clothes and furs, health protection, education;
USD 300,000 – in construction;
USD 500,000 – in mining industry, chemical production, production of goods of minerals, production of machinery and equipment, transport.
Expected results of activity:
-it is envisaged to attract – USD 140 million;
-preservation of the former and creation of new work places – 28,000.
State of implementation: 15 investment projects at the estimated cost of USD 24.7 million were approved, investments raised USD 2 million. Investment fields – production of other non-metal mineral products, food industry. Production realized to the amount of UAH 2.4 million. 251 work places were created and 146 preserved.

PRIORITY DEVELOPMENT AREA WITH SPECIAL INVESTMENT REGIME IN KHARKIV CITY

Location, area: Kharkiv City, area – 31,000 ha
Term of action: 30 years
Effective from: January 01, 2000
Legal basis: Laws of Ukraine No.1714 of May 11, 2000 “On special investment regime in Kharkiv City area".
Priority types of investment activity: food industry and processing of agricultural products; textile and light industry; production of leather and leather footwear; cellulose-paper industry, polygraphic activity; chemical production, machine-building, production of electric power, water; construction, transport, communications, research and development in the field in natural and technical sciences, sewage disposal and waste processing.
Preferences granted to investors:
-for the first 3 years income rate – 0%, from the fourth to the sixth year – 50% of the current rate;
-exemption from taxation of investment sum obtained under the investment project;
-exemption from customs duty incase of import from outside the limits of Ukraine's customs area of raw material, materials, equipment and complete sets( except for excise goods) for investment project implementation but no more than for 5 years;
-exemption from value-added tax in case of import from outside the limits of Ukraine's customs area of equipment and complete sets( except for excise goods) for investment project implementation but no more than for 5 years;
- exemption from payment for land during the period of land lot development but 5 years maximum.
Preconditions to get preferences: implementation according to the executive committee of the Kharkiv municipal council by entities of business activity registered in the Kharkiv City area, of investment projects in priority types of economic activity at the estimated cost of minimum:
USD 500,000 in food industry and processing of agricultural products, textile industry and sewing of clothes, production ready-made clothes, furs, leather and leather footwear, pharmaceutical production, sphere of education, health protection and social aid;
USD 700,000 – in construction, production of building materials, transport, sphere of sewage disposal and waste processing;
USD 1 million – in the sphere of research and developments in the field of natural and technical sciences, production of electric power, gas and water;
USD 3 million – in metallurgy and metal working, production of machinery and equipment, electrical, electronic and transport equipment.
Expected results of activity:
-it is envisaged to attract – USD 1,539;
-preservation of the former and creation of new work places – 52,000;
State of implementation: 22 investment projects were approved, of total estimated cost of USD 68.8 million. Actially injected – USD 6.1 mln. Investment fields – food, pharmaceutical, perfumery, polygraphic industries, construction, transport. Production realized to the amount of UAH 8.6 million. 1.409 new work places were created and 166 work places were preserved.

PRIORITY DEVELOPMENT AREAS WITH SPECIAL INVESTMENT REGIME IN CHERNIHIV OBLAST

Location, area: Horodnianskyi, Korukivskyi, Novhorod-Siverskyi, Rypkinskyi, Semenyvskyi, Chernihivskyi, Schorskyi districts of Chernihiv region, area – 1.218,000 ha
Term of action: 30 years
Effective from: January 01, 2000
Legal basis: The Decree of the President of Ukraine No.729 of June 27, 1999 “On special investment regime on priority development areas in Chernihiv Oblast".
Priority types of economic activity: agriculture; mining industry; food and processing industry; textile industry; wood processing; cellulose-paper industry; production of other non-metal mineral products.
Preferences granted to investors:
-for the first 3 years income tax rate – 0%, from the fourth to the sixth year – 50% of the current rate;
-exemption from taxation of investment sum obtained under the investment project;
-exemption from customs duty incase of import from outside the limits of Ukraine's customs area of raw material, materials, equipment and complete sets( except for excise goods) for investment project implementation but no more than for 5 years;
-exemption from value-added tax in case of import from outside the limits of Ukraine's customs area of equipment and complete sets( except for excise goods) for investment project implementation but no more than for 5 years;
-exemption from payment for land during the period of land lot development but 5 years maximum.
Preconditions to get preferences: realization by the entities of business activity registered in the area according to the agreement with local body of self-government, of investment projects in priority types of economic activity at the estimated cost of minimum:
USD 200,000 – in agriculture, food, processing, light, cellulose-paper industry, wood processing, production of wood products and furniture, in the sphere of health protection, education and culture;
USD 300,000 – in construction, tourist-recreational sphere;
USD 500,000 – in mining industry, production of machinery and equipment, production of non-metal mineral products, chemical production, transport.
Expected results of activity:
-it is envisaged to attract – USD 1,200 million;
-Preservation of the former and creation of new work places – 15,000.
State of implementation: 2 investment projects were approved of total estimated cost of USD 4.2 million. USD 37,000 were practically attracted. Investment fields – agriculture, cellulose-paper industry.

PRIORITY DEVELOPMENT AREAS WITH SPECIAL INVESTMENT REGIME IN VOLYN OBLAST

Location, area: Novovolynsk and settlement Zhovtneve, Volyn region, area – 1,700 ha
Term of action: 30 years
Effective from: January 01, 2000
Legal basis: The Decree of the President of Ukraine No. 730 of June 27, 1999 “On special regime of investment activity on the territories of priority development in Volyn Oblast.
Priority types of economic activity: mining industry, food and processing industry, textile and light industry, wood processing and production of wooden good, chemical industry, machine-building, production of electric power, gas and water, construction, communications.
Preferences granted to investors:
-during the first 3 years income tax rate – 0%, from the fourth to the sixth year – 50% of the current rate;
-investment sum obtained according to investment project is exempted from taxation;
-the fee to the State innovatory fund is not exempted for the first 2 years from the beginning of the investment project realization;
-customs duty and value–added tax are not exempted in case of import from outside the limits of Ukraine's customs area of equipment and complete sets except for excise goods) for realization of investment project but no more than for 5 years.
Preconditions to get preferences: realization of the investment projects at the estimated cost of not less than USD 250,000 registered on the territory by the entities of entrepreneurial activity on the ground of the agreement concluded with Novovolynsk town council.
Expected results of the activity:
-it is envisaged to attract – USD 47 million;
-preservation of the former and creation of new work places – 3,600.
State of implementation: 5 investment projects at the estimated cost of USD 4.1 million were approved. Field direction – food and processing industry, wood-working industry. Production realized volume – UAH 5.2 million. 131 new work places were created and 8 work places were preserved.

[12.12.2000]

Official date the site was started

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