Decree on Investment Activity in the City of Kharkiv
June 27, 1999, No 731/99

By this Decree the special investment conditions, starting January 1, 2000 for a period of 30 years are proposed to put into force on the territory of the Kharkiv city concerning realization of investment projects in priority economic activities, whose list shall be determined by the Cabinet of Ministry of Ukraine.

According to this Decree, the special regime of investment activity provides for the granting of tax and customs privileges for the use of entrepreneurial entities, who shall be registered on the territory of the Kharkiv city, and who, under agreement (contract) concluded with the Executive Committee of the Kharkiv City Council, shall realize the investment projects in priority economic activities on the territory of the Kharkiv city with cost of no less than:

$500 000 - food industry, food processing industry, textile industry, tailoring industry, production of ready clothes, fur, leather, and leather footwear, pharmaceutical industry, education, medical care, social sphere.

$700 000 - building industry, production of building materials, transport, sewage and waste treatment.

$1,000,000 - investigations and researches in physical and technical sciences, production of electric power, gas, and water.

$3,000,000 - metallurgy and metal-fabricating industry, machinery production, electric, electronic, and transport machinery.

The special investment conditions allow:
a) To exempt raw materials, materials (the list shall be determined by the Cabinet of Ministers of Ukraine), machines, equipment, and its components (except articles to be subject to excise duty) from import duty for the period, but not more than  for 5 years, until investment project will be put into operation, as well as to exempt from value-added tax the machines, equipment, and its components (except articles to be subject to excise duty) while importing them into Ukraine for the purpose to use them exclusively for realization of investment projects on the territory of the Kharkiv city;

b) To exempt for three years the newly organized enterprises from income tax, gained from realization of investment projects on the territory of the Kharkiv city, as well as the running enterprises, where restructuring, reconstruction, and re-orientation had been done, in part gained from realization of investment projects, on the basis of documents of the separate (book-keeping, tax) accounting.  This income gained from realization of investment projects within 4-6 -year period will be taxed at the rate of 50% of the current tax rate;

c) To exclude from the enterprise's gross income, in view of taxation, the investment capital received for realization of investment project as assets, material assets, and intangible assets, whose convertible currency value shall be justified in compliance with the laws (procedures) of investing country or international customs in trade, as well as in compliance with expert judgement in Ukraine, including copyrights, invention rights, useful models, industrial patterns, signs for products and services, "know-how", etc., legalized in Ukraine;

d) Not to pay for land for the period while developing plot of land (territory planning, infrastructure building, etc.), defined by the investment project, but not more than for five years.