CONDUCTING BUSINESS 2021 IN UKRAINE Conducting Business in Ukraine Contents 1. Ukraine — an overview................................................................................................................................................ 2 1.1 Geography, Topography and Population........................................................................................................... 2 1.2 Government and Political and Legal Systems ................................................................................................... 2 1.3 Regional Structure................................................................................................................................................ 4 1.4 Economy ............................................................................................................................................................... 5 1.5 Foreign Relations.................................................................................................................................................. 6 2. Foreign investment in Ukraine................................................................................................................................... 8 2.1 Foreign investment .............................................................................................................................................. 8 2.2 Privileges and guarantees for foreign investors ............................................................................................... 8 2.3 Restrictions to investment activity .................................................................................................................... 9 2.4 Making an investment........................................................................................................................................10 2.5 Dispute resolution ...............................................................................................................................................10 2.6 Investment treaties.............................................................................................................................................10 3. Establishing a legal presence ....................................................................................................................................13 3.1 Introduction ......................................................................................................................................................... 13 3.2 Limited liability companies ................................................................................................................................14 3.3 Joint stock companies ........................................................................................................................................ 17 3.4 Representative offices/branches ....................................................................................................................... 21 3.5 Joint venture/cooperation agreements ........................................................................................................... 22 3.6 Investment funds ............................................................................................................................................... 23 4. Compliance with anti-corruption legislation of Ukraine................................................................................... 26 4.1 General ................................................................................................................................................................ 26 4.2 Ukrainian anti-corruption legislation ............................................................................................................... 26 4.3 Elements to ensure compliance ........................................................................................................................ 29 5. Taxation ..........................................................................................................................................................................31 5.1 General ................................................................................................................................................................. 31 5.2 Corporate income tax ......................................................................................................................................... 31 5.3 Taxation of foreign entities .............................................................................................................................. 32 5.4 Double taxation treaties.................................................................................................................................... 32 5.5 Taxation of permanent establishments ........................................................................................................... 45 5.6 Value-added tax .................................................................................................................................................46 5.7 Personal income tax........................................................................................................................................... 47 5.8 Payroll taxes .......................................................................................................................................................49 5.9 Land tax...............................................................................................................................................................49 5.10 Excise duty.......................................................................................................................................................... 50 5.11 Tax controversies ............................................................................................................................................... 50 6. Customs regulations ................................................................................................................................................... 54 6.1 Introduction ........................................................................................................................................................ 54 6.2 Declarant (importer of record).......................................................................................................................... 55 6.3 Customs broker .................................................................................................................................................. 55 6.4 Registration procedure ...................................................................................................................................... 56 6.5 Customs clearance.............................................................................................................................................. 56 6.6 Customs regimes ................................................................................................................................................ 58 6.7 Certification and control....................................................................................................................................64 i Baker McKenzie Conducting Business in Ukraine 6.8 Customs valuation rules .................................................................................................................................... 65 6.9 In-kind contribution ...........................................................................................................................................66 6.10 Customs control .................................................................................................................................................66 7. Property rights to real estate ..................................................................................................................................70 7.1 General ................................................................................................................................................................ 70 7.2 Lease of non-land real estate ............................................................................................................................ 71 7.3 Land ownership ................................................................................................................................................... 71 7.4 Land leases...........................................................................................................................................................73 7.5 T hird-party rights................................................................................................................................................75 8. Privatization ................................................................................................................................................................. 77 8.1 Introduction ......................................................................................................................................................... 77 8.2 Assets and buyers ............................................................................................................................................... 77 8.3 Sale of LPAs........................................................................................................................................................