The full-scale war started by the Russian Federation dealt a heavy blow to the Ukrainian economy and business. Russian troops choose a new goal and strategy of their terrorist actions – to plunge Ukraine into complete darkness, which in turn directly affects the Ukrainian economy. The amount of damages caused to Ukrainian business, directly to industrial enterprises as of November 2022 is 13 billion dollars, and these indicators continue to grow with each Russian strike. Ukrainian business currently operates in the mode of generators, starlinks and tons of fuel. And shelling, blockade of ports, blackouts, destruction of assets are the realities of Ukrainian business in 2022. According to the survey “The state and needs of business during the war: September, 2022” – 93% of businesses are involved in helping the state during the war, including 67.1% have joined volunteer activities. The business recovered quite quickly from the initial shock and began to resume operations.
According to business surveys conducted by business associations (in particular, the European Business Association and the American Chamber of Commerce), the share of enterprises that fully or partially resumed work gradually increased, reaching a peak in August and September. Data from the National Bank also indicated the growth of optimistic sentiments. Only the destruction of the energy infrastructure and power outages, which Russia used, were able to spoil them. However, even after the massive attack at the end of November, even giants with a continuous production cycle stopped.
The authorities work and quickly adapt the legislation in the conditions of war, especially in the context of tax policy and customs. In December, the Verkhovna Rada supported draft laws No. 8196 and No. 8197 in the second reading, which included my amendments. These bills are extremely important for business in the conditions of massive Russian missile strikes on energy infrastructure and power outages. From now on, businesses can import Starlink, generators and other equipment into Ukraine without paying customs duties and VAT. In addition, in order to support the operation of generators, business entities were allowed to store up to 2,000 liters of fuel without licenses. At the moment, two bills have been registered in the Verkhovna Rada – No. 8298 on amendments to the Tax Code and No. 8299 on amendments to the Customs Code, which propose to introduce tax and customs benefits for industry and business during martial law. Bill No. 8298, in the part of exemption from VAT, proposes to establish that temporarily, during the period of martial law, operations of importing into the customs territory of Ukraine equipment for own production (without the right of alienation, transfer to rent, leasing or other right of use to third parties) are exempt from VAT persons under any conditions earlier than 5 years from the date of their import into the territory of Ukraine). Also, in order to support institutions of professional and professional higher education, it is proposed to exempt from VAT the devices, equipment, mechanisms, spare parts, consumables and other materials imported into Ukraine by the specified institutions to ensure educational activities. In addition, the draft law envisages a rent allowance for iron ore, provided that it is used in Ukraine. In particular, it is proposed to exempt from taxation for the period from March 1, 2022 to December 31 of the year following the year in which the state of war or state of emergency was terminated or canceled, but for no more than 12 calendar months from the month, payers of the EP 4 group for land plots , which are located in territories where hostilities are being or have been conducted, or in territories temporarily occupied, as well as designated by regional military administrations as littered with explosive objects or on which there are fortifications. In addition, the proposals refer to the exemption from taxation for the period from July 1, 2022 to December 31, in which the state of war or emergency is suspended or canceled from rent payments for the special use of water. It is also about the extension of the terms of service of registered PROs, whose term expired during the legal regime of martial law, until the end of such a state. According to the draft law, the innovations include an electronic stamp and a digital postage stamp as non-taxable items.
Draft Law No. 8299 proposes that temporarily, during the legal regime of martial law, equipment and components imported into the customs territory of Ukraine under the customs import regime and classified under certain commodity codes are exempted from import duty taxation, provided that the specified equipment and components are imported into the customs territory of Ukraine by enterprises exclusively for their own production in the territory of Ukraine, i.e. without the right of alienation, transfer to rent, leasing or other right of use to third parties under any conditions earlier than five years from the date of their importation into the customs territory of Ukraine. And also, which do not originate from a country recognized by the occupying state in accordance with the law and/or as an aggressor state in relation to Ukraine in accordance with the legislation, and/or are not imported from the territory of the occupying state (aggressor) and/or from the occupied territory of Ukraine, defined as such in accordance with the law.
In order to save Ukrainian production, the CMU launched the Program for the temporary relocation of enterprises from war-affected regions (the so-called Enterprise Relocation Program). Any enterprise can join the Enterprise Relocation Program by submitting an application for relocation and determining the needs for the production premises. Each application is reviewed by authorized state authorities, giving priority to strategically important enterprises and enterprises that produce essential goods to meet the needs of the civilian population, the military and territorial defense fighters. In their turn, OVAs study the needs of the entrepreneur and, if they have the opportunity to satisfy them, respond. So, to date, 14 regions have already joined the business relocation program in Ukraine, namely: Zakarpattia, Ivano-Frankivsk, Lviv, Ternopil, Khmelnytskyi, Chernivtsi, Vinnytsia, Volyn, Rivne, Kyiv, Dnipropetrovsk, Cherkasy, Poltava and Kirovohrad regions.
Therefore, the adoption of draft laws will increase the effectiveness of tax legislation, which in turn will contribute to an efficient economy and the development of national industry under the conditions of the legal regime of martial law. Restarting the economy is now one of the most priority goals of the state and legislative activity. The restoration of the domestic market and export potential will contribute to the filling of state and local budgets, the preservation and creation of new jobs and, accordingly, the maintenance of the appropriate level of solvency of the population and the creation of conditions for the return of Ukrainian citizens from abroad. State support can also consist in the selection of a location for the company’s facilities, as well as help with transportation to a new location; support in restoring logistics, purchasing raw materials and finding sales markets. Among the measures that are important to implement in the context of business support is the development and implementation of a mechanism for compensation for losses caused to business as a result of the war. Without a doubt, the issue of effective judicial reform that will guarantee the rule of law and eradicate corruption remains critically important. Therefore, it is important to implement reforms now, to solve these issues, and not wait until the war is over. In addition, it is necessary to intensify the interaction of businesses with regional military administrations and territorial communities regarding the restoration and development of entrepreneurship. The continuation of government programs to help small, medium and large businesses remains urgent. In the context of European integration processes, cooperation with export credit agencies of foreign countries is essential, which can help attract financing for preparing Ukrainian businesses to work according to EU rules.
Hryhoriy Mamka, People’s Deputy of Ukraine.
