Ukraine country report

Economic overview

Ukraine is an open economy, with a portion of unfamiliar exchange the country’s GDP of 90% in 2019 (World Bank). Ukraine is the world’s fifth biggest exporter of grains and one of the fundamental exporters of iron and steel. 

As per WTO information, in 2019 Ukraine sent out USD 50.1 billion worth of products and imported USD 60.6 billion worth, recording an import/export imbalance of around USD 10.6 billion. Fares of administrations arrived at USD 17 billion, while imports added up to USD 14.4 billion. Notwithstanding the COVID-19 pandemic, policy driven issues contrarily sway exchange. 

Generally speaking, unfamiliar exchange has been not really hit by the contention with Russia, which has customarily been a significant provider of oil and gas, representing very nearly a fourth of the nation’s absolute imports. Ukraine is trying to foster its exchange relations with the part conditions of the European Union, so as to free from Russia. The EU and Ukraine have temporarily applied their Deep and Comprehensive Free Trade Agreement (CCFTA) since January 2016. 

The portion of the EU in Ukraine’s product trades expanded from 34.1% in 2015 to 41.4% in 2018 (WTO). China has now become Ukraine’s fundamental exchanging accomplice, before Russia. In 2019, China represented 15.2% of Ukraine’s imports, trailed by Russia (11.5%), Germany (9.9%), Poland (6.8%), Belarus (6.2%) and the United States (5.4%). Ukraine’s principle clients are China (7.2% of fares), Poland (6.6%), Russia (6.5%), Turkey (5.2%), Italy (4.9%), Germany (4.8%), Egypt (4.5%) and India (4.1%) (International Trade Center).

Main sectors of economy

The agricultural sector assumes a significant part in Ukrainian economy. In 2019, it added to 9% of the GDP and utilized 14% of the functioning populace in 2020 (World Bank). The fundamental yields are oats, sugar, meat and milk. Ukraine is the world’s fifth biggest exporter of grain. The European Union has decreased its traditions obligations on the agrarian spaces of Ukraine, which could be a shelter for this area. The nation is plentiful in mineral assets, mostly iron and magnesium, just as in energy assets (coal and gas). 

The auxiliary area utilizes a fourth of the dynamic populace and records for 22.6% of the GDP, a rate which has declined impressively lately. The Ukrainian assembling area is overwhelmed by weighty businesses like iron (Ukraine is the world’s 6th biggest maker of iron) and steel. These two areas alone record for around 30% of the modern creation. Be that as it may, steel creation is currently underneath its pre-2008 level. Coal mining, synthetic compounds, mechanical items (airplane, turbines, trains and farm trucks) and shipbuilding are likewise significant areas. 

The assistance area utilizes 61% of the labor force and adds to 54.4% of the GDP. Ukraine is a nation of energy travel, generally moving Russian and Caspian oil and gas to Western Europe and the Balkans, through its region. In any case, with regards to strains with Russia, Ukraine’s part as the fundamental travel passage has decreased, with Russia looking for elective courses (toward the south by means of Turkey and toward the north through Germany). The travel contract among Gazprom and Naftogaz Ukrainy, which terminated on December 31, 2019, has been stretched out for a time of five years.

Taxation for businesses

Corporate income tax (CIT) applies to taxable profits procured by resident companies in Ukraine and abroad and non-residents with a PE in Ukraine. Inhabitant elements are burdened on their overall pay. Non-occupant substances are burdened on their Ukrainian-sourced pay. 

Ukraine’s standard CIT rate is 18%. 

WHT at a rate of 15% applies to most of passive revenue income to non-residents, except if an exclusion or decreased rate is given under a twofold duty settlement (DTT). Ukraine has 75 successful DTTs set up. Simultaneously, Ukraine has additionally marked and confirmed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). Along these lines, if Ukraine and another nation decide to apply the MLI to their DTT, the arrangements of the MLI ought to alter the arrangements of the DTT. 

Notwithstanding the overall CIT at the 18% rate, insurance agencies likewise pay extraordinary CIT of 0% and 3% on their pay. Long haul life coverage charges, protection expenses under willful annuity projects, and intentional clinical protection charges are dependent upon the 0% rate; the 3% rate applies to any remaining protection expenses (barring reinsurance commitments, expenses, and installments) got by the insurance agency. Such measures of CIT due at 0% or 3% lessen the CIT base of an insurance agency, which is dependent upon the standard 18% rate. 

Organisation of lotteries is liable to an extra CIT at 28% rate in 2020 and 30% rate for the period beginning from 1 January 2021; working of betting machines is dependent upon a 10% rate; and a 18% rate applies to bookmakers and other betting exercises (counting gambling clubs). In opposition to CIT for insurance agencies, measures of CIT of 10% or 18% paid from betting pay don’t diminish available benefit of an organization occupied with betting exercises (standard 18% rate is applied to everything of the available benefit).

Investing in Ukraine

Notwithstanding the troublesome monetary circumstance, the speculation environment in Ukraine is excellent. Ukrainian governments have done a ton since 2014 to improve it and to be appealing for unfamiliar venture. 

The enactment has been adjusted to the EU norms. Setting up an organization is straightforward and just requires a couple of working days. The duty rates have stayed unaltered for quite a long time, yet the spreader enactment has been changed each year. The assessment specialists work all the more straightforwardly and quicker. The entirety of this has brought about financial backer trust in Ukraine improving from one year to another since 2014. 

Moreover the accompanying ventures have incredible potential: 

  • food industry, 
  • agribusiness, 
  • light industry, 
  • car supply industry, 
  • IT area.