On 26 April 2024, the Cabinet of Ministers of Ukraine (“Government”) approved the Procedure for Using Funds from the State Budget to Provide State Support for the Implementation of Investment Projects Involving Significant Investments (“Budget Procedure”).
Background
The incentives for investment projects with significant investments (“Investment Project”) were initially introduced by the Law of Ukraine “On State Support for Investment Projects Involving Significant Investments in Ukraine” (“Law”) back in 2020.
The Law provided a range of benefits for the Investment Projects of over EUR12 million in the processing industry, production of biogas and biomethane, waste management, transport, warehousing, postal and courier services, logistics, scientific and technical activities, etc.
Now, the Government has finalised its by-laws governing the allocation of the incentives for the Investment Projects by adopting the Budget Procedure.
Budget Procedure’s key points
The Ministry of Economy of Ukraine (“MEU”) is entrusted with the role of a chief administrator of the budget funds for the Investment Projects.
The allocated budget funds can be used for:
- compensation (full or partial) for the cost of engineering and transport infrastructure facilities built by the applicant or an investor with significant investments that are necessary for the implementation of the Investment Project; and
- compensation (full or partial) for the costs of connecting to engineering and transport networks necessary for implementing the Investment Project.
UAH3 bln (EUR70 mln) has been budgeted for this programme for 2024.
In order to apply for compensation, an investor must submit an application to the MEU accompanied by documents confirming the respective spending.
Once the MEU decides on full or partial compensation, the budget funds are transferred from a special state account to an investor’s current account.
At the same time, the investor will be required to return the total amount of compensation within a month if:
- the investment has turned out to be less than EUR12 million; or
- the investor was not entitled to the compensation in the first place.
The Procedure came into force on 4 May 2024.
By Maksym Maksymenko, Partner, Avellum
