Decree of the President of Ukraine

On Special Investment Activity regulations in the Territories of Priority Development
and the Special Economic Zone "Port Krim" in the Autonomous Republic of Crimea

 

With the aim of attracting investments in the spheres of public health, recreation and tourism, agriculture, manufacturing and other branches of industry, the preservation and the effective use of recreational resources, the reconstruction and the technical re-equipping of the means of production, increasing the production and delivery of high quality goods and services for domestic and foreign markets, the creation of modern production, transportation and marketing infrastructures, preserving existing jobs and the creation of new jobs, and in accordance with Item 4 Part XV "Transition Principles" of the Constitution of Ukraine, be it enacted that:

  1. To establish from the 1st of January 2000 for a period of 30 years special investment activity regulations in the territories of priority development of the Autonomous Republic of Crimea, determined in accordance with the present Decree.

  2. The special investment activity regulations are applied to those business activities which carry out business projects in accordance with the present Decree in the priority categories of economic activity in the territories of priority development (called hereafter "special investment activity regulations"). The list of priority categories of economic will be determined for each territory of priority development by the Council of Ministers of the Autonomous Republic of Crimea with the consent of the Cabinet of Ministers of Ukraine.

    The priority development territories include: "Greater Yalta", "Alushta", "Sudak", "Feodosia", "Sivash", "Kerch and "East Crimea" (called hereafter "territories of priority development").

  3. To create from the 1st of January 2000 for a period of 30 years in the Autonomous Republic of Crimea the special economic zone "Port Krim" on land with an area of 27 hectares in the city of Kerch.

  4. The borders of the territories of priority development and the special economic zone "Port Krim" are designated in accordance with maps which are an integral part of the present Decree (the originals of the maps are stored at the Verchovna Rada of the Autonomous Republic of Crimea (Parliament).

  5. The legislation of Ukraine remains in force in the territories of priority development and the special economic zone "Port Krim", taking into account the provisions of the present Decree. The bodies of State power and local self-government will manage the territories of priority development and the special economic zone "Port Krim" in accordance with the Constitution of Ukraine, the Constitution of the Autonomous Republic of Crimea, and other relevant laws, taking into account the provisions of the present Decree.

  6. The establishment of the special investment activity regulations regarding the business activities which are the subject of the North-Crimean experimental economic zone "Sivash" from the date of the present Decree until the end of the term of the economic experiment in the zone "Sivash" will be at the option of those business activities. Under these conditions, the taxation requirements and currency regulations provided in the Law of Ukraine "on some matters of currency regulation and taxation of subjects of the experimental economic zone ‘Sivash’" shall cease upon concluding an agreement (contract) regarding a business activity.

  7. The following are the governing bodies of the territories of priority development and the special economic zone "Port Krim":

    • The Council of territories of priority development and the special economic zone (hereafter called "Council");

    • The relevant local self-governments and local state administrations;

    • The body of economic development of the special economic zone "Port Krim".

  8. The Council is a special body that governs the special investment activity regulations and the special economic zone "Port Krim".

    The Council is established by the Council of Ministers of the Autonomous Republic of Crimea.

    The Statute of the Council is to be approved by the Council of Ministers of the Autonomous Republic of Crimea.

  9. The Council has the following authority:

    • Establishing the strategy and the current programs of development for the territories of priority development, which is to be confirmed by appropriate local councils, and developing and adopting the strategy and the current programs of development of the special economic zone "Port Krim", with the approval of the economic development body of this zone;

    • Approving investment projects in accordance with the order established by the Council of Ministers of the Autonomous Republic of Crimea with the consent of the Cabinet of Ministers of Ukraine;

    • Issuing permits for business activity in the special economic zone "Port Krim" as established by the Council of Administers of the Autonomous Republic of Crimea;

    • Coordinating decisions concerning the functioning of the special investment activity regulations in the territories of priority development and the special economic zone "Port Krim" on matters within the authority of the Council, the local state administrations and the local self-governments;

    • Submitting to the Council of Ministers of the Autonomous Republic of Crimea proposals for the list of priority economic activities in the territories of priority development, and amendments thereto;

    • Organizing the training and retraining of personnel within the territories of priority development and the special economic zone "Port Krim";

    • Soliciting international offers in order to select investment projects and their participants;

    • Preparation of proposals to relevant local self-governments on leasing rates, rates of payments to municipalities, and household, transportation and other services that are rendered by municipalities;

    • Reviewing disputes, before they are submitted to the courts, between local self-governments , the economic body of the special economic zone "Port Krim" and businesses carrying on projects in the territories of priority development the special economic zone "Port Krim";

    • Establishing regulations for attracting foreign specialists for work in the special economic zone "Port Krim" in accordance with the legislation;

    • Making decisions within their authority regarding the territories of priority development and the special economic zone "Port Krim";

    • Implementing other grants of authority in accordance with the present Decree.

  10. The local self-governments and the local state administrations of the territories in which the special investment activity regulations apply or on which the special economic zone "Port Krim" is situated shall exercise their authority in accordance with the legislation of Ukraine taking into account the provisions of the present Decree.

    Furthermore, the local self-governments have the following authorities:

    • Concluding an agreement (contracts) with businesses to realize investment projects approved by the Council;

    • Concluding agreements with the body of economic development of the special economic zone "Port Krim" regarding the transfer of plots of land, infrastructure and the use of local natural resources.

  11. The body of economic development of the special economic one "Port Krim is a legal entity that is authorized or specially created by the Council of Ministers of the Autonomous Republic of Crimea together with the Kerch City Council.

  12. The body of economic development of the special economic zone "Port Krim" has the following authority:

    • Effectuating programs of development of the special economic zone "Port Krim;

    • Developing the territory of the special economic zone "Port Krim";

    • Constructing production facilities and non-production infrastructure;

    • Developing means of communication;

    • Concluding agreements for improvements in the special economic zone "Port Krim", constructing and operating production facilities and non-production infrastructure, and the means of communication;

    • Concluding agreements with businesses authorized to conduct business in the special economic zone "Port Krim", within the authority granted it by the local self-governments, regarding the leasing of land and the use of natural resources and infrastructure;

    • Engaging in other activities as provided by statute and otherwise transferred to it by other organs of government.

  13. The special investment activity regulations provide by this Decree the establishment of taxes, customs and other exemptions for businesses that are registered in accordance with established procedures in the territories of priority development, and in accordance with the agreements (contracts) entered into with the applicable self-governments, which projects are valued at no less than:

    1. USD 100,000 — in the areas of preserving historical inheritance and nature, research and development of information technology, culture and sports, public service, clearing land, forestry, production of sportswear, and clothing goods, toys and souvenirs;

    2. USD 200,000 — in the areas of public health, agriculture, the fish industry, the food and textile industries, processing agricultural products, and the production of furniture and wood products.

      With the aim of stimulating employment and creating new jobs the minimum value of investment projects of activities set forth in (a) and (b) above is halved if the project is a new subject of business activity and if during the period of October 1 until April 1 of each year the monthly average of employees is not less than 10 persons and their wages are not less than the average wages in the Autonomous Republic of Crimea.

    3. USD 500,000 — in the areas of sanatoriums, and health institutions, hotels and restaurants, transportation and communication, construction, waste processing, and rendering tourist, recreation, and entertainment services;

    4. USD 1,000,000 — in extraction and processing industries and electricity, gas and water production.

    Special investment activity regulations are not implemented in the field of gambling business.

  14. The special investment activity regulations provide:

    1. Exemption for no longer than five years from commencement of operations for import duties on raw materials and goods, a list of which is provided in accordance with the order of the Council of Ministers of the Autonomous Republic of Crimea, machinery, equipment and their components (excluding goods liable for excise tax) and from value-added tax on equipment and their components (excluding goods taxable by excise tax) from the time of their importation into Ukraine when used to further investment projects.

      In the case of using the mentioned raw materials, goods, machinery, equipment and their components, the taxpayer is obligated to increase his tax liability in the resulting tax period in which such violation has taken place for the amount of value-added tax that would have been paid after importing (sending) those goods to the customs territory of Ukraine and also to pay a fine that is calculated on the sum of the value-added tax using 120% of the bank rate of the National Bank of Ukraine that was in force on the date of increasing the mentioned tax liability for the period from the date of importing the mentioned goods to the customs territory of Ukraine to the date of increasing the tax liability, and to pay import taxes in accordance with legislation in force at the time.

      The order of control of using raw materials, goods, machinery, and equipment that are imported for compliance with the provisions of the present Decree is established by the Council of Ministers of the Autonomous Republic of Crimea with the Ministry of Finance of Ukraine, the State Tax Administration of Ukraine and the State Custom Service of Ukraine;

    2. Exemptions, for a period of three years, from taxation on that part of profits from investment projects based on separate (book-keeping, tax) accountings of new businesses and existing businesses which have been restructured, re-equipped, reconstructed or where a change in production has been carried out.

      The profit on such enterprises obtained during the fourth through the sixth year is taxable at the rate of 50% of the tax rate in force.

      The method of calculating profits from business investments is established by the State Tax Administration of Ukraine.

      The mentioned exemptions are applied from the moment of obtaining the first profits from an investment project;

    3. Not including in the gross income of businesses investments in the form of:

      money;

      material values;

      non-material assets, whose value in convertible currency is confirmed in accordance with legislation (procedures) in the country of the investor or with international trade traditions and by expert’s estimates in Ukraine, including copyright, author’s and inventor’s rights, useful models, production prototypes, trademarks, know-how, etc. recognized in the territory of Ukraine.

      In the event that during the reporting (taxable) period, the mentioned investments were alienated in full or in part, the business that obtained the investment is obligated to pay tax from the profit obtained in that reporting (taxable) period;

    4. Exemption from the obligation to sell funds in foreign currency obtained from selling products, goods (works, services) produced or rendered by businesses involved in approved projects;

    5. Exemption for businesses that have investments in the fields of industry, electricity, gas and water production, public health, information technology and communications, and research and development from payment of duty to the State Innovations Fund for the period of the investment, but no more than five years;

    6. Exemption for businesses in real estate development for the period of developing their land (territory planning, developing the infrastructure, etc.) as stated in their investment project, but no more than five years.

    Exemptions provided by this Article are applied from the date of concluding an agreement (contract) regarding an investment project between a local self-government and the business and cannot be extended to include profits obtained by a business using funds from other sources, including the State Innovations Fund.
  15. In the territory of the special economic zone "Port Krim" business activities may be carried out by legal entities, registered in accordance with established procedures in the territory of Kerch city and having the permission of the Council for engaging in business activities in the special economic zone "Port Krim", in operations concerning the service of transit cargoes, their storage, completion, sorting, packing, rendering carrier services, commerce, and the use of new technologies for the production of goods for export and supplying the home market.

    In the territory of the special economic zone "Port Krim" it is prohibited to carry out gambling businesses, including casinos and other gambling houses (places).

  16. Permission of the Council for carrying out business activities in the special economic zone "Port Krim" shall be the basis for concluding agreements on the leasing of land, premises, etc. between the body of development of economic activity of the special economic zone "Port Krim" and the business. A fee will be established in the amount set by the Council with the consent of the Ministry of Finance of Ukraine. The amount of the mentioned fee shall be the same for all businesses carrying out the same kind of activity. The funds obtained from the mentioned fee shall be used for the development of infrastructure of the special economic zone in accordance with the order of the Council with the consent of the Ministry of Finance of Ukraine.

    Licensed business activities in the territory of the special economic zone "Port Krim" are carried out on the basis of appropriate permission (licenses) issued in accordance with the legislation of Ukraine.

  17. Special preferential taxation is established for the special economic zone "Port Krim" as follows:

    1. The profits of a taxpayer derived from income received in the territory of the special economic zone is subject to taxation at the rate of 20% on the object of taxation;

    2. Dues to the State Innovations Fund will be paid at the rate of 50% of the established rate for this payment. Taxes received will be directed to the special balance account of the budget of the Autonomous Republic of Crimea. The manager of these financial resources shall use these monies exclusively for business projects territory of the special economic zone "Port Krim";

    3. Businesses are exempted from land taxes for the period of the development of their land (territory planning, developing infrastructure in the special economic zone, etc.), but for not more than five years;

    4. Exemption from the obligatory selling of foreign currency obtained from selling products or goods (works, services) produced or rendered by businesses in the special economic zone;

    5. Not including in the gross income of businesses investments in the form of:

      money;

      material values;

      non-material assets, whose value in convertible currency is confirmed in accordance with legislation (procedures) in the country of the investor or with international trade traditions and by expert’s estimates in Ukraine, including copyright, author’s and inventor’s rights, useful models, production prototypes, trademarks, know-how, etc. recognized in the territory of Ukraine.

      In the event that during the reporting (taxable) period, the mentioned investments were alienated in full or in part, the business that obtained the investment is obligated to pay tax for the profit obtained in that reporting (taxable) period;

  18. The regulations of a special customs zone are established in the special economic zone "Port Krim".

  19. The following order for the importation and exportation of goods and other articles is established in the special economic zone "Port Krim":

    1. In the case of importing goods and other articles (excluding goods liable for excise tax) from within the borders of the customs territory of Ukraine into to the territory of the special economic zone "Port Krim" when the aim is to use them within this zone, they are exempted from customs duty and value-added tax;

    2. In the case of importing goods and other articles to the customs territory of Ukraine from the territory of the special economic zone "Port Krim" where they were previously imported from abroad to the customs territory of Ukraine and the territory of the special economic zone "Port Krim", taxes are paid in the order established by the legislation of Ukraine for imported goods;

    3. In the case of importing goods and other articles to the customs territory of Ukraine from the territory of the special economic zone "Port Krim" that were completely made or processed sufficiently, or worked on in the special economic zone "Port Krim", the value-added tax and the excise tax are paid in the order established for goods intended for consumption in Ukraine;

    4. In the case of exporting goods that were completely made or processed sufficiently, or worked on in the special economic zone "Port Krim" to the customs territory of Ukraine from the territory of the special economic zone "Port Krim", they are exempted from export duty and excise tax and the value-added tax on such goods is at the rate of 0%;

    5. In the case of exporting goods and other articles that were previously imported from within the borders of the customs territory of Ukraine to the territory of the special economic zone "Port Krim" or to the customs territory of Ukraine from the territory of the special economic zone "Port Krim", they are exempted from export duty, excise tax and value-added tax;

    6. In the case of exporting goods and other articles (excluding goods liable for excise tax) from the customs territory of Ukraine to the territory of the special economic zone "Port Krim", they are exempted from export duty and the value-added tax on them is at the rate of 0%;

    7. In the case of importing goods and other articles to the territory of the special economic zone "Port Krim" with the intent of transit through the territory of this zone, taxation will be effected in accordance with the legislation of Ukraine;

    8. In other cases taxation is effected in accordance with the legislation of Ukraine. Goods are considered completely made, or processed sufficiently, or worked up in the special economic Zone "Port Krim" if they are in conformity with the requirements of Article 18 of the Law of Ukraine "On unified Customs Control".

      The duration of the presence of goods and other articles in the territory of the special economic zone "Port Krim" is not limited, except for goods with a limited term of storage.

      The customs costs of the goods specified in item (b) of this Decree does not include the cost of the services for storage, completion, sorting, packing, etc. that are carried out in the territory of the special economic zone "Port Krim". These services are exempted from value-added tax. The provisions of this Decree are not applied to goods of exchange (barter) operations.

  20. The customs control for the transfer of goods and other items through the borders of the special economic zone "Port Krim" should provide for observation by state bodies, enterprises, establishments, organizations and their officials and citizens, the order of transferring goods and other articles in accordance with the legislation of Ukraine, taking into account the provisions of the present Decree For the customs registration of goods and other articles, and their presence under the customs control in the special economic zone "Port Krim", customs duties are paid in accordance with the legislation of Ukraine.

  21. In order to prevent the non-authorized and uncontrolled penetration by persons, vehicles and import and export goods and other articles from or into the special customs zone, the territory of the special economic zone "Port Krim" should be fenced along its perimeter and equipped according to the requirements of the state customs service of Ukraine. Areas for cust