Law of Ukraine "On Protection of Foreign Investments in Ukraine" 1991
At the same time, the volume of foreign direct investment increased in trade (from 22.2 to 34.8%), the non-manufacturing sector as a whole (from 7.1 to 20%), including health care – in more than 50 cases.
Legislative regulation of foreign investment in the national economy is carried out by several laws of Ukraine adopted during 1991-1996 by the Verkhovna Rada and a decree of the Cabinet of Ministers of Ukraine.
The Law of Ukraine "On Protection of Foreign Investments in Ukraine" of 1991 stipulates that:
a) investments, profits, legal rights and interests of foreign investors are protected by the laws of Ukraine; b) the state cannot requisition foreign investments except in cases of natural disaster; c) foreign investors are guaranteed the opportunity to transfer abroad their profits and other amounts legally received.
The national regime of investment and other economic activity in relation to foreign investments is established by the Law of Ukraine "On Foreign Investments" (1992). This law stipulates that:
foreign investments in Ukraine are not subject to nationalization; foreign investors have guarantees for 10 years in case of changes in the legislation of Ukraine on foreign investments; a number of tax benefits are established for enterprises with foreign investment.
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3. TO Primak "Business Economics" Textbook, Kyiv 1999.
Attracting foreign capital to invest. Abstract
There are many ways to attract foreign capital to invest in the country’s economy
The most important ways to attract foreign capital:
direct investment through the creation of enterprises with foreign capital, including joint ventures; portfolio investments through the sale of securities to foreign residents and non-residents; credits, loans and grants of international financial institutions, countries, government agencies, international funds, export agencies, banks, etc.
The state policy on attracting foreign capital is carried out by the Cabinet of Ministers of Ukraine together with the NBU and is regulated by the Verkhovna Rada of Ukraine. The Presidential Administration plays an important role in this process. Decrees of the President of Ukraine have established a number of state institutions that are directly involved in attracting foreign investment to Ukraine:
Ukrainian State Credit and Investment Company; National Agency of Ukraine for Reconstruction and Development; State Investment and Clearing Committee; Chamber of Independent Investment Experts; Advisory Council on Foreign Investment in Ukraine; Currency and Credit Council of the Cabinet of Ministers; Coordination Council for Investment and Clearing Cooperation.
In July 1996, the Presidential Decree established the National Agency of Ukraine for Reconstruction and Development, whose task is to participate in the formation of state policy in cooperation with international financial organizations and institutions to attract loans, grants, international humanitarian and technical assistance, foreign investment. According to the Regulations on the Agency, it has the status of a ministry and must monitor the effectiveness of the use of funds coming from abroad.
The State Investment and Clearing Committee and the Coordinating Council for Investment and Clearing Cooperation consider issues related to the attraction of financial and investment resources within the framework of investment and clearing relations.
The Chamber of Independent Experts on Foreign Investment operates in accordance with the Regulations and is a permanent advisory body to the President of Ukraine, the purpose of which is to prevent conflicts between foreign investors and the executive branch.
The Advisory Council on Foreign Investment was established under the President to develop and implement a state policy on attracting and using foreign investment.
The decision to provide state guarantees when attracting foreign loans is made by the Currency and Credit Council of the Cabinet of Ministers of mylab reportwriter.net reviews Ukraine.
The first joint ventures in Ukraine began to be established in 1991. This process is regulated by regulations of various legal force which stipulate the procedure for registration of foreign investments, granting or canceling benefits to joint ventures, conditions of distribution and reinvestment of profits, taxation and more. The total amount of foreign direct investment received in Ukraine as of 1.01. 1998, is about $ 2.1 billion. USA. At the same time, it is impossible to determine how much money went directly to the production assets, and how much – for office equipment and other needs of enterprises and their managers.
The United States and Germany account for more than a third of direct investment in Ukraine, and about 10% of Ukraine’s total turnover is accounted for by these countries.
Foreign investments are made in 5,263 enterprises of Ukraine, 4,117 of which are joint ventures. JVs own two-thirds of the total investment. The main form of investment is – movable and immovable property (65%), – about 20% – directly – cash contributions.
In general, the activity of foreign investors in Ukraine is regulated by about 70 regulations of various levels, which are quite difficult for a foreign investor to be guided by due to the ambiguity of the provisions. In addition, the current legislation is constantly amended, which often significantly worsens the existing provisions and conditions of foreign investors. In order to eliminate these shortcomings, it would be appropriate, on the one hand, the adoption of new legislation or changes and additions to existing ones, and on the other hand – the elimination of contradictions and ambiguous provisions in existing laws and regulations.
The Law on Foreign Investments, adopted in 1992, was the most favorable for foreign investors.
The Law provided for the following provisions:
foreign investors were guaranteed the deterioration of their financial condition from changes in legislation for 10 years; enterprises with foreign investments were exempted from paying income tax in the manufacturing sector for 5 years, in trade – for 3 years, in intermediary activities – for 2 years; foreign investments in Ukraine were not subject to nationalization; in case of termination of investment activity, the foreign investor had the right to repatriate his property and income within 6 months; concession agreements for the development of minerals for a period of 99 years could be concluded with foreign investors.
The activity of foreign investors on the territory of Ukraine has long been regulated by the Decree of the Cabinet of Ministers "On Foreign Investment Regime" and the Law of Ukraine "On State Program to Encourage Foreign Investment in Ukraine". benefits.
Most state guarantees are preserved in the current legislation, in particular, state guarantees regarding:
forced seizures, as well as illegal actions of state bodies and their officials; compensation of losses and compensation of losses to foreign investors; return on investment in the event of termination of investment activities; transfer of a share of profits abroad after taxes.
These guarantees are enshrined in Article 8 of the Law of Ukraine "On the regime of foreign investment", they protect the property rights of foreign investors for 10 years from the date of changes in the legislation.
The new version of Article 7 of the Law "On Taxation of Profits of Enterprises" establishes a tax on profits of enterprises with foreign investment on a general basis.
The Law "On Amendments to the Law of Ukraine" On Taxation of Profits of Enterprises "" defines the permanent establishment of a non-resident in Ukraine and the procedure for taxation of his profits. According to Article 13 of this Law, all income of non-residents originating from Ukraine: from the main activity, portfolio investments in securities, including corporate rights are taxed at a rate of 30%.
Income from the main (economic) activity in case of repatriation is additionally subject to taxation in the amount of 15%.
Amounts of income of non-residents received in the form of insurance premiums, insurance payments or insurance premiums from reinsurance of risks, as well as risks of residents outside Ukraine, are taxed at a rate of 15% at the source of their payment through such payments.
Income received by non-residents in the form of interest or income (discount) on government securities sold (placed) by non-residents outside the territory of Ukraine through authorized non-resident agents, or interest paid to non-residents for loans received by Ukraine (loans or government external borrowings) is not subject to taxation. ), which are reflected in the state budget of Ukraine or the budget of the National Bank of Ukraine.
As for the provision of benefits to foreign investors and other business entities, according to current legislation – this is the prerogative of the Verkhovna Rada. The Cabinet of Ministers has the authority to establish the nomenclature of critical imports, the import of which into the customs territory of Ukraine is exempt from VAT.
On July 1, 1997, the Verkhovna Rada of Ukraine abolished the preferential tax regime for enterprises with foreign investment by amending the Laws "On Corporate Income Tax" and "On the Foreign Investment Regime".
The Law "On Corporate Income Tax" provided for exemption from corporate income tax, which were registered before January 1, 1995 and have a foreign investment in Ukraine of at least 100 thousand dollars. USA. Such enterprises in Ukraine are about 30% (11 thousand) and the abolition of benefits for them should bring the budget of Ukraine in 1997 615 million UAH.
According to the Law "On the Foreign Investment Regime", enterprises with foreign investments were exempted from imposing import duties on property imported as a contribution to the statutory fund. In 1996, the amount of funds due to this benefit to 1 billion 190 million UAH.
In my opinion, the abolition of benefits for foreign investors will worsen the investment climate in Ukraine, especially since for most joint ventures preferential taxation ends in the current (1997) year.