Ukrainian legislation provides state guarantees of safety of foreign investments with the goal to protect the rights of foreign investors.
These guarantees include:
- stability of specific legislation on foreign investments for 10 years after the investment;
- compensation of damages, which were caused by actions, omissions or improper performance of state bodies of Ukraine of their responsibilities in relation to foreign investors;
- the right of investor to return the investment without paying duty (in the case of termination investment activity - no later than 6 months after this termination);
- guarantee of transfer of profits, which were earned from foreign investments;
- guarantee of protection from compulsory withdrawal of investments and from illegal actions of the state authorities and their officials:
- other guarantees.
Earlier such a guarantees could be provided only after the state registration of investments. In its turn, the state registration of investments was carried out through the special procedure with the involvement of different government bodies and also included verification of investments inflow by tax authorities.
As of today, the state registration of foreign investments is cancelled1 and state guarantees are given to foreign investors without any registration procedure.
In connection with these changes it is necessary to stress the following:
- All foreign investments, which were made in the past (registered or not registered), and all investments, which will be made in the future, have an equal right to receive benefits and guarantees provided by the Law of Ukraine "On foreign investment.
- Documents, which were submitted to the state authorities for the state registration of foreign investments (foreign investments haven’t been registered yet), should be returned to foreign investors or their authorized persons without consideration and with notification of reasons for such return.
- Despite the fact that the state registration of foreign investments is cancelled, companies with foreign investments and banks are obliged to submit statistical reports about foreign investment in accordance with the law.
- In course of the procedure of obtaining of an immigration permit (for investors who made a foreign investment into the economy of Ukraine in the amount not less than one hundred thousand US dollars) a copy of the Company’s Bylaws and/or registered agreement about investment activity and certificate from bank about money transfer should be submitted (earlier it was required to submit a copy of document about state registration of foreign investment).
These changes are aimed to improve the investment climate in Ukraine and promote the flow of foreign investments.
1. Changes were made according to the Law of Ukraine "On amendments to some legislative acts of Ukraine concerning the abolition of mandatory state registration of foreign investments." (Art. 395 of Civil Code of Ukraine was excluded, amendments to the Law of Ukraine "On foreign investments", "The elimination of discrimination in the taxation of businesses created with property and money of domestic origin "" On immigration" were made).
By Roman Gumeniuk, Associate, GOLAW