At a glance

Main competitive advantages

  • Large emerging market: 46-million people country with untapped market potential in many sectors 
  • Strategic location: largest country in Central and Eastern Europe, on the crossroad with Russia, Central Asia and the Middle East 
  • Skilled and competitive labour force: one of the highly educated population in the world, with comparatively low salaries (around EUR 250 on average) 
  • Rich mineral and agricultural resources: 20,000 deposits of 200 different kinds of minerals and 30% of the world’s black soils 
  • Well-developed infrastructure: one of the highest transport index in Europe 
  • Growing economy with liberal trade regimes, improving investment climate and high innovation potential

Economic outline

Key figures

GDP: UAH 1,297 billion / EUR 116.9 billion (2011)          Population 45.2 million. Area: 603,628 km²


Second biggest economy after Russia under the Soviet Union, Ukraine has shown high growth over the past decade. Due to the financial crisis, a deep recession occurred in 2009 but economic growth resumed in 2010 and 2011. Agriculture accounts for 9.3% of GDP, industry for 34.7% and services for 56.1%. Ukraine is an open economy heavily relying on external trade: exports of goods and services accounted for 50% of GDP in 2010, while the ratio of imports to GDP was at 53%. Metallurgy and mechanical industries have always been key sectors for the country’s exports. Its main trade partners are CIS countries (36.9% of exports and 47.6% of imports in 2011) and the EU (28.8% of exports and 29% of imports).

Market access:

  • Free Trade Agreements with Armenia, Belarus, Georgia, Kazakhstan, Moldova, Russia, Tajikistan and the Kyrgyz Republic (235 million people) 
  • General System of Preferences (GSP+) trade regime with the EU: 6,400 products exported with 0 or reduced customs duties 
  • Generalized System of Preferences (GSP) with the USA: export of 3,400 products free of duty 
  • Membership in the WTO (2008): MFN (Most-favoured-nation) regime with all WTO member countries 
  • Deep and Comprehensive Free-Trade Area (DCFTA) with the EU to be signed very soon 
  • Customs union with Russia, Belarus and Kazakhstan under discussion

Foreign Investment

  • Direct access to the market and to the acquisition of businesses, real estate and other property 
  • Bilateral Investment Promotion and Protection Agreements with about 70 countries 
  • FDI distribution by sector (stock 2010): 67% services (including 34% in finance and 11% in trade), 28% manufacturing (metal and food industry mainly) 
  • Top 5 investor countries (stock 2010): 24% Cyprus, 15% Germany, 11% Netherlands, 7% Russia, 6% Austria

Business environment

Ease of doing business

Doing business 2012 rank for Ukraine: 152 / 183. Change in Rank: -3

Latest improvements in:

  • Starting a Business 6: elimination of the requirement to obtain approval for a new corporate seal; 
  • Paying Taxes: revision and unification of the tax legislation, reduction of corporate income tax rates and unification of social security contributions; 
  • Enforcing Contracts: legislative amendment streamlining commercial dispute resolution and increasing the efficiency of enforcement procedures; 
  • Resolving Insolvency 2: legislative amendment introducing more guarantees for secured creditors.

Global Competitiveness 2011/2012 rank for Ukraine: 82 / 142. Change in rank: 7

Investment climate

Investing Across Borders (IAB) assessment for Ukraine:

  • Investing Across Sectors: most of the primary and manufacturing sectors are fully open to foreign capital participation but some ownership restrictions remain in a number of service sectors (TV broadcasting, nationwide newspapers, publishing houses, air transportation); 
  • Starting a Foreign Business: establishing a foreign-owned limited liability company (LLC) in Ukraine (Kiev) is faster (28 days, 11 procedures) than the global average and inexpensive (companies are free to open, the minimum capital requirement is UAH 63,000 or approximately EUR 5,900); 
  • Accessing Industrial Land: leasing and buying non agricultural land from both private and public owners are possible. Most foreign companies prefer to buy private land; 
  • Arbitrating Commercial Disputes: enforcing arbitration awards takes around 7 weeks for domestic awards and 13 weeks for foreign awards. The International Commercial Arbitration Law limits the jurisdiction of international arbitration tribunals to civil law disputes arising from international economic operations, disputes between international organizations and enterprises with foreign investments in Ukraine, and intracompany disputes of these enterprises.

With a view to improving the investment climate, Ukraine adopted an ambitious programme of “Investment reform” in 2011, which provides for: the preparation and promotion of strategic investment proposals, the creation of aOne-stop-shop (launched in January 2012), the development of a practical mechanism for Public-private partnership (PPP), etc. A Council of National and International Investors was also established under the Ministry of Economic Development and Trade.

Tax system and incentives

Thanks to the adoption of a New Tax Code, Ukraine offers an increasingly attractive tax regime:

  • Corporate income tax: 21%, down from 25% on 1 January 2012, to be further reduced to 19% in 2013 and 16% in 2014;
  • Personal income tax: 15%, or 17% for monthly income exceeding 10 times the minimum monthly salary; 
  • Dividend tax: 5%, down from 15%; 
  • VAT: 20%, scheduled to be reduced to 17% as of 1 January 2014; 
  • Automatic VAT refund for exporters and introduction of delayed refund penalty; 
  • International Agreements for the Avoidance of Double Taxation signed with 63 countries.

Besides, the Ukrainian law provides for special regimes:

  • Sector-based incentives: total exemption from taxation until 1 January 2021 for aircraft manufacturers, shipbuilders, hotels, light industries and agricultural machinery producers; 
  • Simplified tax regime for SMEs (annual turnover below UAH 1 million, i.e. about EUR 93,000, and less than 50 employees): 6% on the sales revenue plus 20% VAT, or 10% rate including VAT. 
  • Advantageous customs regimes: exemption from import duties for in-kind contributions to the charter fund of an enterprise with foreign investment, exemption from import duties and taxes for goods imported and stored at bonded warehouses, no tariff for goods imported to or exported from special economic zones, etc. 
  • Industrial parks: co-financing of infrastructure development by the State

Additional incentives may be granted by city councils according to their strategic development plans.

Referent organisations and useful resources

  • Ukrainian Chamber of Commerce and Industry: non-government non-profit organisation with 24 regional branches and about 9,000 voluntary members, which provides entrepreneurs with a range of services: economic and legal information, practical assistance on foreign trade, certificates of origin, intellectual property rights, bar-code services, register of Ukrainian companies, international commercial arbitration court, sectoral business committees, international economic relations
  • State Agency for Investments and National Projects of Ukraine: State agency incorporating a department for the management of national projects and Invest Ukraine, the investment promotion department, which undertakes the following missions: one-stop-shop, development of a database of investment opportunities and active promotion of the most significant projects 
  • Union of Entrepreneurs of Small, Medium-Sized and Privatized Enterprises of Ukraine: non-profit organisation representing the interests of the business community (about 1,800 members) and providing entrepreneurs with information, training and networking services  
  • European Business Association: non-profit organisation founded in 1999 with the support of the European Commission, which brings together about 900 European, Ukrainian and multinational companies and implements the following activities: lobbying, networking, promotion, information

This publication has been produced with the financial assistance of the European Union. The contents of this publication are the sole responsibility of EUROCHAMBRES and can in no way be taken to reflect the views of the European Union.

© 2011 East Invest Support Office
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