Why Set Up Business in Ukraine?
An emerging investment hub
Ukraine is located in the heart of Eastern Europe and occupies a land area of 603,700 sq km. It is the second largest country in Europe after Russia and is bordered by Poland, Slovakia, Hungary, Moldova and Romania to the west, Russia to the north-east, Belarus to the north and the Black Sea and the Azov Sea to the south. Ukraine’s main export products are metals and agriculture products, together accounting for 40% of exports. The main items imported are mineral fuel, petroleum and petroleum distillation products, machines and equipment, and chemicals. Despite the difficult political and economic climate, Ukraine continues to offer opportunities in a broad range of sectors. It is an emerging market and provides expanding businesses with strategic positioning in the heart of Europe – with good connections to Russia and the Middle East.
The United Kingdom is the sixth largest investor in Ukraine with over 150 well-established UK companies in Ukraine, including BP, Shell, BAT, Imperial Tobacco and Marks and Spencer. However, starting a business or expanding operations into the country involves a certain amount of bureaucracy and is best handled by a professional with sound knowledge of the relevant procedures. Unlike legislation in other countries, Ukrainian law does not allow investors to set up a partnership in the country or convert a representative office into a company. This means a limited liability company is the most widely used method for foreign investors to start a business in Ukraine.
Other most common forms of businesses used by foreign investors in Ukraine are the joint stock company or share corporation and representative office. Other options are available under Ukrainian law, such as joint ventures, subsidiaries, partnership, limited partnership, additional liability company, and non-corporate joint activity, but they are rarely used. The main laws that govern the establishment and activity of legal entities in Ukraine are the Civil Code, the Commercial Code, the Law on Companies and the Law on Joint-Stock Companies.
The current political situation has created new opportunities for doing business in Ukraine because of its progressive approach to Europe and the implementation of important reforms aimed at turning the country into a free economy. In the last 20 years the World Bank Group has supported the Ukrainian budget with more than 4 billion dollars of programmatic loans that force the country to implement several reforms aimed at prosecuting corruption and improving the productivity of the country. In fact, 2016 marked the beginning of a long list of privatisations, which will allow the access of international stakeholders with more experience and higher standards concerning the operative results of their participated enterprises.
There are numerous advantages of setting up a business in Ukraine, among which include:
– The huge potential of human resources, especially in the technical areas
– Low level of competition
– Simplified system of taxation
– Minimal rates of taxation
– Easy reporting
With 1/3 of the world’s black-earth soil and favorable climate, the fastest growing industry in Ukraine is the production of food and beverages (mainly agricultural products: oils, fats, dairy products, animal feed, etc.), followed by manufacture of basic metals (iron, steel and ferroalloys, production of precious and nonferrous metals etc.), production of pharmaceutical products. Contrary to claims of a poor investment climate in the country, doing business in Ukraine is now getting much easier and becoming very profitable.