Draft Laws No. 13414 and No. 13414 Under Review in the Verkhovna Rada
Ukraine's parliament is preparing for the second reading of draft laws No. 13414 and No. 13415, which aim to introduce tax and customs incentives for industrial investments. However, the current versions fail to account for the unique needs of large-scale mining projects, raising concerns among lawmakers. Musa Magomedov, a people's deputy and head of the subcommittee on industrial policy, stressed the need to revise the documents, including extending project implementation timelines, removing the upper cost limit, and expanding the list of eligible equipment for preferential treatment.
These bills have already passed their first reading. They propose a range of incentives, such as:
- a corporate income tax exemption of up to 10 years,
- duty-free and VAT-free import of equipment,
- and the option for local communities to reduce land tax rates.
The current draft sets a maximum project implementation period of three years. Yet, Magomedov highlighted that for capital-intensive mining ventures, the actual cycle takes at least five years.
“A three-year limit under current conditions is not an incentive but a barrier,” he stated.
Proposed Amendments to the Draft Laws
Among the suggested changes is a differentiated approach to implementation timelines: up to three years for projects costing up to €20 million, and up to five years for larger investments. Currently, the project cost ceiling is set at €50 million, which raises issues—given that a single walking excavator costs around €55 million. This means even one basic piece of equipment exceeds the threshold, disqualifying the entire project from benefits.
Another key proposal includes:
- completely abolishing the project cost cap,
- broadening the list of equipment eligible for duty-free and VAT-free import,
- and lowering the threshold for revenue from core activities required to qualify for tax breaks from 90% to 80%.
Additionally, there is a push to remove the rule that allows a single taxpayer to undertake only one investment project.
“Large industrial groups can and should be able to run multiple projects simultaneously. The criterion should be compliance with requirements, not the number of projects,” Magomedov emphasized.
In summary, the proposed updates to draft laws No. 13414 and No. 13415 aim to align tax and customs incentives with the realities of the industrial sector, particularly mining. This could significantly improve Ukraine's investment climate. Tailoring these rules to large-scale projects may attract more capital, boosting economic growth and job creation across the country.
As the discussion around tax incentives unfolds, the parliament is also contemplating the potential limitations on support for fully integrated projects. This could significantly impact the processing industry and alter existing support frameworks. For a deeper understanding of how these proposed changes might reshape investment strategies, read more about the ongoing deliberations regarding integrated projects.