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Ukraine Country Profile 2012

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Ukraine Country Profile 2012 Contents EURO 2012 ............................................................................................................................................... 5 What does Ukraine Expect from EURO 2012? ........................................................................ 5 OVERVIEW BY SECTORS ..................................................................................................................... 7 1. Agriculture ...................................................................................................................................... 8 Agriculture Sector Overview ...................................................................................................... 8 2. Banking & Financial Services...................................................................................................... 12 The Banking Sector. The Currency Control Regime. The Anti-Money Laundering Set-Up ....................................................................................... 12 3. Customs Regulation ...................................................................................................................... 24 Customs Duty Planning: Practical Aspects ............................................................................. 24 4. FMCG Market .................................................................................................................................. 30 Retail Sector Overview ................................................................................................................. 30 Beer & Kvas Market Overview .................................................................................................... 39 5. Fuel and Energy .............................................................................................................................. 45 Electricity Sector of Ukraine ....................................................................................................... 45 Securing the Land Rights and Implementation of the Alternative Energy Projects ............................................................................................ 47 6. Healthcare ....................................................................................................................................... 52 Healthcare Policy Insights ........................................................................................................... 52 7. Human Resources, Labor and Employment ............................................................................ 55 Ukrainian Labor Market Overview: The Latest Trends ........................................................ 55 Main Novelties in the Draft Labor Code of Ukraine .............................................................. 57 8. Information & Communication Technologies ........................................................................ 61 Information and Communication Technologies Sector Overview .................................... 61 9. Intellectual Property Rights ........................................................................................................ 64 Personal Data Protection in Ukraine: Legislative Innovations ........................................... 64 10. Investment Policy .......................................................................................................................... 67 The Most Promising Sectors for Investing in Ukraine ......................................................... 67 11. Leasing .............................................................................................................................................. 72 Leasing Market: Overview and Trends ..................................................................................... 72 12. Legal System Overview ................................................................................................................ 74 The Role of Courts in Protection of Investors' Rights in Ukraine ..................................... 74 New Anti-Corruption Laws in Ukraine: a Beautiful Fa ade with Window Dressing? .................................................................................................. 76 Ukrainian Competition Policy: a Glance over the Curtains ................................................ 79 13. Logistics and Transportation ...................................................................................................... 83 2011 Air Code of Ukraine: What it Means for Business? ..................................................... 83 14. Media ................................................................................................................................................ 89 Ukrainian Media Overview .......................................................................................................... 89 15. Real Estate ....................................................................................................................................... 91 Office Market .................................................................................................................................. 91 Warehouse Market ........................................................................................................................ 95 16. Taxation ............................................................................................................................................ 98 Intergovernmental Exchange of Tax Information Mechanism as a New Source of Additional Tax Revenues ......................................................................... 98 Taxation of Transactions with Non-resident Legal Entities: CPT and VAT Aspects ................................................................................................................... 102 Ukraine 2013: Transfer Pricing .................................................................................................. 107 Ukrainian Tax Authorities are Ready to Challenge Double Tax Treaty Benefits .......... 113 17. Travel and Tourism ....................................................................................................................... 115 Travel and Tourism Sector Overview ....................................................................................... 115 Prepared by: EURO 2012 EURO 2012 What does Ukraine expect from EURO 2012? EURO 2012 is generating lots of expectations, Many experts, however, are more pessimistic hopes, and concerns for the whole country. about the effect this sporting event will have. Preparations for the championship have had In their view, EURO 2012’s effect on the econ- a major influence on the economic situation omy will have a local character. Impact on GDP in Ukraine since 2010. growth is expected to be no more than 4.5 per- cent. Private investors are already reluctant to According to a report on macroeconomic trends invest, and the total amount of public invest- prepared by UMG International, there is an op- ment in EURO 2012 preparation is 70–80 per- timistic outlook in such sectors as tourism, the cent of the required amount. Additionally, the hotel business, services, and infrastructure. issue of the overvaluation and non-transpar- Governmental spending on EURO 2012 prep- ency of championship expenditures is creating arations has had a positive impact on the con- public indignation and raising doubts about struction industry. Enterprises specializing Ukraine’s ability to host EURO 2012. in building bridges, overpasses, tunnels, and Economic growth, the country’s positive image underground facilities have seen their busi- abroad, and a positive attitude in society at large ness grow 3.7 times; enterprises specializing are three key elements that are interesting ex- in roads, air facilities, and sports surfaces perts when it comes to hosting EURO 2012. have seen their business grow 1.6 times. So what are social attitudes in Ukraine to- In general, approximately 83 percent of all wards the football tournament? work in the construction sector is concen- trated on new construction, reconstruction, According to research conducted by UMG In- and technical re-equipment for the event. ternational during August — September 2011, based on a sample of 1,751 respondents, 80.9 In addition, EURO 2012 will have a positive percent of Ukrainians think that EURO 2012 effect on the country's image and will attract will have a positive impact on Ukraine in gen- more foreign investment. In the previous year, eral, while 19.1 percent have the opposite Ukraine’s reputation among the “Big 8” (USA, opinion. 43.5 percent of respondents claim Japan, Germany, Britain, France, Italy, Canada, that EURO 2012 will influence the economic and Russia) increased by 6.7 percent (accord- situation in Ukraine positively, 10.9 percent ing to a Reputation Institute study). expect a negative impact, and 45.6 percent According to the forecasts of the Cabinet think that the situation will not change at all. of Ministers of Ukraine, holding EURO 2012 Asked about politics, 16.2 percent answered should accelerate GDP growth by 1.5 percent that EURO 2012 will improve the political points, while holding inflation and the hry- situation in Ukraine, while 6.9 percent expect vnia stable. In 2012 nominal GDP will reach deterioration and 76.9 percent think that the 1.475 trillion UAH. If government predictions situation won’t change. 77 percent of those come true, by the end of 2012 the Ukrainian surveyed think that EURO 2012 will have a economy will
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