Legislative initiatives to compensate industrial investments through taxes (draft laws 13414 and 13415) will require a transparent mechanism for applying for and controlling the targeted use of funds, said Taras Onyshchenko, lawyer at Barristers Commercial.
“These draft laws promise to be a ”historic step” in stimulating investment, in particular, in the construction of new industrial facilities. The initiative envisages the introduction of a mechanism for partial compensation of investment costs through tax benefits, which is a common and successful practice in the European Union. At the same time, there are certain challenges and implementation risks that will require careful attention,” he toldInterfax-Ukraine.
Among the positive expectations from the adoption of the draft law, Onyshchenko mentioned, in particular, a significant stimulation of economic growth, “since the proposed investment compensation mechanisms can significantly reduce risks and increase the profitability of projects, encouraging investment in the manufacturing sector.”
“The successful experience of the EU shows the effectiveness of such instruments, which can help both attract new capital and return investments that have been withdrawn or relocated. In addition, new and modernized production facilities will inevitably lead to the creation of new jobs and employment growth. Compensation for equipment costs will stimulate the introduction of modern technologies and increase the competitiveness of Ukrainian products on the global market,” he said.
At the same time, Onishchenko emphasizes that for the effective implementation of the proposed mechanisms, “it will be important to carefully calculate the potential fiscal impact on state budget revenues, especially in the short term.”
“For successful implementation, it is necessary to develop the most transparent, efficient and non-bureaucratic mechanism for submitting applications, reviewing them, verifying expenditures and monitoring the targeted use of investments, as the complexity of the procedures may offset all the benefits of compensation. It is also crucial to have clear definitions, in particular, the definition of “processing industry” and “equipment according to the UKTZED” to avoid ambiguities and abuses,” he said.
In addition, the lawyer believes that it is necessary to “ensure synergy so that the new mechanism complements, rather than duplicates or conflicts with existing investment support instruments.” Onishchenko reminded that Ukraine already uses a number of instruments to support business and investment. These include the Affordable Loans 5-7-9% program, grants for processing up to UAH 8 million, benefits for participants in industrial parks, and state support for “projects with significant investments” (from EUR 12 million), which is provided under a separate law. In addition, there is a system of investment insurance against military and political risks.
“However, draft laws 13414/13415 are distinguished by their comprehensiveness and accessibility, which makes them unique among existing instruments. Unlike the aforementioned programs, they offer direct compensation through a wide range of taxes, significantly reduce the entry threshold for investors (starting from EUR 100 thousand) and, most importantly, apply to existing businesses. This approach creates a more flexible and comprehensive incentive tool compared to targeted programs or incentives that are mainly focused on very large investments or have specific conditions,” the lawyer said.
As reported, draft laws 13414 and 13415 are focused on supporting the processing industry, which is recognized as a key sector for value creation and economic growth in Ukraine. Investors are expected to be able to recover a significant portion of their investment costs. These costs cover a wide range of capital investments, including the construction of utility networks and related infrastructure, acquisition, construction, modernization and technical/technological re-equipment of buildings and structures, as well as the acquisition of equipment in accordance with the UKTZED and land plots.
The compensation mechanism will be implemented through a reduction in tax liabilities for major taxes. In particular, these include income tax, import VAT on equipment, import duty on equipment, property tax, and land tax. The amount of compensation will depend on the size of the investment project. The key innovation and significant advantage of this mechanism is that it will be available not only to brand new businesses, but also to existing ones that invest in the development and modernization of their production facilities.
The initiator and co-author of draft laws 13414 and 13415, Deputy Chairman of the Verkhovna Rada Committee on Economic Development Dmytro Kysylevskyi, said that the draft laws were registered jointly by 55 MPs from different factions and groups, including Danylo Hetmantsev, Andriy Motovylovets, and Dmytro Natalukha.
The draft laws No. 13414 and No. 13415 provide for amendments to the Tax and Customs Codes regarding compensation for investments through taxes.
Source: https://interfax.com.ua/news/general/1083281.html
The dissenting opinion of two judges of the Grand Chamber of the Supreme Court (GC SC), Oleh Kryvenda and Mykola Mazur, regarding the sanctions not supported by evidence gives grounds for appealing and canceling the decrees of the President of Ukraine on their imposition, said Oleksandr Shadrin, attorney at Barristers.
Shadrin said that Barristers‘ lawyers, who supported the case of one of the clients, received a decision of the Supreme Court, which determined the dissenting opinion of the judges on sanctions cases and the possibility of appealing the imposed sanctions. The text of the dissenting opinion has not yet been published in the Unified Register of Court Decisions.
“The bottom line is that the number of sanction cases has increased, which are actually substituted for criminal proceedings, and most of the materials are being kept secret. Therefore, the dissenting opinion of the judges is resonant in terms of a complete change in the practice of considering sanctions cases, it says that each body must act within its powers and cannot substitute criminal proceedings with sanctions cases,” Shadrin said.
The lawyer believes that “this high-profile decision of the Supreme Court to completely change the practice of considering sanctions cases in Ukraine will enable judicial appeal against presidential decrees on sanctions.
“In the context of war and widespread use of sanctions, this position forms a fundamentally new field for law enforcement and human rights protection, in particular, it reinforces the idea of the need to ensure transparency, validity and judicial control over government discretion, even in areas related to national security,” the lawyer said.
According to him, the dissenting opinion of the judges proves that even with the president’s broad discretion in sanctions policy, his actions must remain within the framework of the Constitution and the rule of law, and the courts are obliged to check whether decisions are arbitrary and sanctions are unjustified.
“In this particular case, the state did not provide adequate evidence of a threat from the person against whom the sanctions were imposed, and therefore the claim should have been satisfied. This is the first known case when the judges of the Supreme Court publicly declare the need to satisfy the appeal and lawsuit against the Presidential Sanctions Decree, questioning the unconditional nature of such a mechanism as sanctions,” Shadrin said.
According to the lawyer, the position of the two judges “may become the basis for legal discussion, public control over the activities of the authorities, a tool for protecting the rights of persons who consider sanctions against them to be groundless and unjustified, and may also be taken into account by the initiators of the sanctions to assess the prospects for their lifting.”
Source: https://interfax.com.ua/news/general/1083242.html
