Ukraine is an agrarian state with ancient traditions of agriculture. Owning one third of the world’s most fertile black soil which makes it unique in terms of agricultural potential, it holds the leadership in world agricultural markets for the production of grain, sugar and honey.

Agribusiness is one of the most profitable sectors in Ukraine, and the country's largest export sector due to, among other things, extremely fertile soil and competitive labour costs. Over the past few years, the agro-industrial complex of Ukraine has played an even more important role in the economy.

Ukraine has a high potential for agricultural development and ranks first in the world in terms of exports of sunflower oil. Investors are eager to invest in this sub-branch of the agro-industrial complex, as these investments are quickly paid off. In second place - grain production. The grain terminal with a capacity of 2 million tons per year has been recently opened.

Larger share of agricultural products has been exported from Ukraine through seaports. Thirteen ports operate in the Azov and the Black Sea basins and the Danube River Delta, with a total cargo capacity exceeding 230 million tons per year. This infrastructural situation has developed gradually due to long-term modernization of both port infrastructure and access roads. Almost all seaports in Ukraine are equipped with grain terminals for temporary storage and transshipment of grain, which includes vessels loading.

Ukraine aims to preserve export opportunities and domestic food security by setting a limit on grain exports. In the current marketing year, exporting companies are allowed to supply abroad 17.5 million tons of wheat and a thousand tons of rye. At the same time, as the situation with coronavirus pandemic seems to be deteriorating, the Ministry for Development of Economy, Trade and Agriculture increased the volume of allowed grain export by 500 thousand tons.



Ukraine’s agricultural land may not be currently bought or sold. However, it is expected that the Ukrainian land market will be opened in the coming months, which would allow the sale and purchase of agricultural land. As a result, approximately 40 million hectares of land suitable for agricultural production will be available for purchase. It appears that initially foreign investors will be prohibited from acquiring agricultural land or stakes in companies owning agricultural land. However, such prohibition might be cancelled in the near future pursuant to a planned referendum.

Under the existing legislative framework (which will become fully effective starting from 1 July 2021), agricultural land plots can be purchased by:

  • Ukrainian nationals. Until 1 January 2024, Ukrainian nationals can purchase agricultural land plots with aggregate area not exceeding 100 ha;
  • Ukrainian companies whose shareholders/participants are Ukrainian nationals (starting from 1 January 2024); and
  • Ukrainian banks (following mortgage enforcement and subject to a mandatory further public sale within two years),

with a maximum aggregate area of agricultural land plots owned by a single person (including the shareholders of a company) should not to exceed 10,000 ha.



There are three common ways to establish legal presence of non-residents in Ukraine:

  • Limited Liability Company;
  • Joint Stock Company;
  • Representative office.

All have their relevant advantages and drawbacks, and preferences are driven by specific business purposes.

  1. Limited Liability Company (LLC)

Such type of company is most commonly used to conduct economic activity in Ukraine. It is a separate legal entity, which is liable for all its debts and liabilities (including fines) only with its own assets.

There are no statutory requirements as to the minimum amount of authorized capital of a limited liability company in Ukraine.


  • the debts of such a company do not extend to its owners;
  • simple and speedy establishment procedure, not difficult to operate, tax accounting and making changes are simple enough compared to other types of companies;
  • participatory interests in an LLC do not qualify as “securities” and, therefore, are not subject to registration with the Securities Commission (Ukrainian public institution, which carries out the supervision of capital markets).


  • offers lesser level of control to the parent company compared to a representative office.
  1. Joint-Stock Company

A joint-stock company is a commercial organization, the authorized capital of which is divided into a cer­tain number of shares, certifying the rights and obli­gations of the company’s shareholders.

In Ukraine, Joint-Stock Companies may be incorporated in two forms:

  1. Public JSC (shares of the company are circulated on public stock exchanges);
  2. Private JSC (only private placement of shares; shares cannot be traded on a stock exchange).


  • debts and liabilities of such a company do not extend to the shareholders of the company;
  • greater protection of corporate rights of share­holders;
  • prestige for investors;
  • convenient management of shares (the ability to easily sell, mortgage etc.);
  • easier to raise additional funds from a large cir­cle of potential investors.


  • more complex incorporation and operation procedure;
  • making changes is harder and more expensive compared to limited liability company.
  1. Representative office of a foreign company

Representative office is a place through which the activity of a non-resident in Ukraine is wholly or partly carried on. A representative office does not constitute a separate legal entity: it acts in the name and on behalf of the company it represents, as if it were a continuation thereof. If a representative office enters into an agreement with a Ukrainian company, then from a legal viewpoint it is deemed that a foreign company itself has entered into an agreement with a Ukrainian company.

There are 2 types of them:

  1. Permanent Representative Office of a foreign company (fixed place of business, through which the business activity of a foreign company is wholly or partly carried on);
  2. Non-commercial representative office of a foreign company conducting activities of a prepa­ratory or ancillary nature. Non-commercial representative office does not constitute a taxable entity.

Non-commercial representative office of a non-resident that carries on business activity in Ukraine that goes beyond that of prepa­ratory or ancillary nature, will constitute a permanent establishment therein and be considered a taxable entity for the Ukrainian taxation purposes. That said, with a view to conducting profit-making activity in Ukraine, a permanent establishment option alone is to be considered.


  • represents a foreign company itself, which means that counterparties will conclude contracts directly with a foreign company (with its market standing and reputation);
  • no need to obtain work permits (and pay for them) for foreign workers;
  • more convenient for market-entering purposes; established as a temporary vehicle, it is more appropriate for marketing and promotional activities;
  • easier to transfer the earned profit to a foreign company;


  • relatively complex and time-consuming establishment procedure;
  • a foreign company is fully liable for the activities of a representative office;
  • complicated tax accounting;
  • there are difficulties in employing more than 3 foreigners, each foreign worker needs to obtain service card for visa etc.



The issue of raising financing for business development or working capital service remains important for almost every business operator and is particularly relevant among farming companies.

Considering wide range of risks in agricultural sector, it is vital to rely on availability of additional funds. That is why, raising additional capital as an instrument to fortify economic feasibility has become indispensable for financial sustainability of business.

Taking into account the diverse and unpredictable climate of Ukraine, entrepreneurs and managers pay high attention to the field of credit, finances and investments. Over the recent years there has been a moderate improvement in political and macroeconomic situation in Ukraine, yet issues of high debt burden and ability of lenders to service debt remain an important problem, both in production and financial sectors.

Agricultural producers have several options to raise capital, for example through such instruments as bank loans, investments, state support.


Bank loans

Bank lending is, perhaps, most widespread and affordable way to raise funds. There are dozens of banks lending to farmers, however, about five to ten appear to be more active than others, for which this stream of activity is top priority.

Leading Ukrainian banks in agricultural market are CREDIT AGRICOLE, UKRSIBBANK, AVAL, PIRAEUS, ALFA BANK, OTP BANK and AGROPROSPERIS BANK.

Apart from providing agricultural operators with large lending capacity, the mentioned banks cooperate with Ukrainian Government within the framework of financial support programs for Ukrainian agricultural producers.

By means of example, CREDIT AGRICOLE offers to agricultural producers the following support programs:

Financial support measures in agriculture through cheaper loans

The support results in partial compensation of the interest rate on bank loans attracted in the national currency and is targeted at business entities of any legal form engaged in agricultural activities.

Compensation amount is accrued and paid in the current year interest (for January-October) on (1) short-term loans to cover production costs, (2) medium- and long-term loans for the purchase of fixed assets, financing expenses related to the construction and reconstruction of production facilities in the amount of 1.5 National Bank of Ukraine discount rate (effective on the date of accrual) but not higher than the amount stipulated by the loan agreement, reduced by 5 percentage points.

25% compensation of the purchased machinery and equipment cost

A compensation is provided to legal entities and entrepreneurs whose main activity is the supply of agricultural goods, provided that the share of such agricultural goods in the total value of all goods supplied by such legal entities and individuals is not less than 75 % during the previous 12 reporting tax periods collectively (for newcomers - according to the results of each reporting period).

The bank compensates 25% of purchased (both with own and credit funds) machinery and equipment value (excluding VAT) included in the List of domestic machinery and equipment.


Government support

There are also several Ukrainian government support measures, providing for certain incentives for enterprises engaged in agricultural activities. For instance, 2020 budget provides for financing of agro-industrial complex as follows:

1. Reducing the cost of loans to farmers for the acquisition of agricultural lands – 3.9 billion UAH.

2. State program to support livestock, storage and processing of agricultural products – UAH 2.5 billion.

3. Direct financial support to agricultural producers – UAH 780 million.

4. State support for the development of horticulture and berries – 400 million UAH.

5. Financial support for the development of farms – UAH 250 million.

Please note, that each year types and scope of state support may differ. Eligibility requirements and application procedure are to be checked on case by case basis, to ascertain whether any option is available to your company.



Ukraine operates worldwide taxation system, that is its residents are taxable in Ukraine with respect to their overall income from sources all around the world.

Non-residents of Ukraine are taxed only with respect to income derived from the sources within the territory of Ukraine.


Corporate income tax

This tax is levied on the profits of an enterprise. Tax­ation base is the financial result (profit or loss) calculated under the accounting rules, adjusted to factor cer­tain differences prescribed by the Tax Code of Ukraine (derived from depreciation of fixed assets, thin capitalization, conducting fi­nancial transactions etc.). Companies with annual income not exceeding UAH 40 million (approximately USD 1,400,000) may opt not to apply such differences.

Taxation rate is 18%.

The following entities are considered to be corporate income taxpayers in Ukraine:

  • resident companies that receive profits from sources within Ukraine and abroad;
  • foreign companies that receive passive-type profits from Ukrainian sources;
  • representative offices of non-resi­dent companies conducting business activity within the territory of Ukraine.

Financial statements are prepared either under IFRS, or local GAAP which are generally in line with IFRS.

Business-related expenses are allowed as deductible.


Permanent establishment

A non-resident company conducting business activity within the territory of Ukraine is deemed to have a permanent establishment (PE) established therein. This in major part is the case with a non-commercial representative office of a non-resident entity, the activities of which go beyond those of auxiliary and preparatory character.

In general terms, the Ukrainian definition and meaning of a permanent establishment is consistent with the definition and meaning of this term in OECD Model Tax Convention. Based on the definition of a PE, a PE should be deemed to exist where a non-resident company maintains a geographically fixed, relatively permanent place through which its business is wholly or partly carried on in Ukraine.

A permanent establishment also arises when an agent acting on behalf of a foreign enterprise habitually exercises authority to conclude contracts in the name of the enterprise, unless such agent is of independent status acting in the ordinary course of its business.

This is particularly relevant for agricultural-commodity traders that have purchasing agents operating within the territory of a foreign state and performing suppliers evaluating and contract negotiating functions.

In recent past, companies engaged in trading of agricultural goods heavily employed permanent establishment-avoiding techniques, that were brought to an end with the introduction of BEPS initiatives (particularly Plan 7 (Artificial avoidance of permanent establishment status).

Given the above, proper care should be taken in structuring business presence in Ukraine to ascertain permanent establishment risk is not triggered.


Simplified Taxation Regime

The Ukrainian tax legislation provides for a special beneficial tax regime for agricultural producers. This tax allows eligible entities to pay a flat rate unified tax in lieu of corporate income tax and land tax. Fixed amount of tax constitutes a percentage (from 0.19 to 6.33, depending on the type of land) of monetary assessment of land plots operated by a taxpayer.

There are certain requirements to be met by Ukrainian enterprise in order for it be considered an agricultural producer and qualify for the unified tax.

  • Agriculture producers (legal entities) with the share of agricultural commodity production in the previous tax year of at least 75%;
  • Agricultural producers (individual entrepreneurs) operating exclusively as farm enterprises, provided that they meet the requirements of the Law of Ukraine On Farm Enterprises.


Transfer Pricing

Certain types of business transactions carried out by Ukrainian taxpayers are considered to be controlled, and fall within the ambit of Ukrainian transfer pricing (TP) rules. These are:

  • transactions with related non-resident parties;
  • foreign economic operations for the sale of goods through non-resident commission agents, transactions with non-residents (both with related and unrelated entities) registered in blacklisted jurisdictions;
  • transactions with non-residents that are treated as tax transparent in their jurisdictions of incorporation;
  • dealings between non-resident and its permanent establishment in Ukraine.

Such transactions are subject to Ukrainian TP rules if the following conditions are simultaneously met:

  • taxpayer’s annual income from all activities (based on the accounting records) exceeds UAH 150 million (approximately USD 5,300,000) for the reporting year; AND
  • annual volume of transactions with a specific counterparty exceeds UAH 10 million (approximately USD 350,000).

In such event, a Ukrainian company should file and submit to the tax authorities the report on controlled transactions, reflecting operations with each counterparty concerned. It is also required to prepare transfer pricing documentation, substantiating that the reported transactions were carried out at arm’s length. A taxpayer should have such documentation in place and submit it at the request of the tax authorities.

Ukraine is not a member of OECD, but its TP legislation is in general compliant with OECD TP Guidelines.



VAT is an indirect tax levied on supplies of goods and services with the place of such supply within the territory of Ukraine.

Taxation base constitutes the contractual value of the goods (services) supplied, and the customs value while importing the goods.

VAT is a consumption tax, the burden of which is ultimately borne by the final consumer, however, business entities act as intermediaries and are liable to account and remit the tax to the budget at each stage within the supply chain.

While supplying goods/ services a company should accrue VAT on top of the contractual value (Output VAT). Output VAT constitutes tax liability of a taxpayer. When purchasing goods/ services a company pays VAT accrued on top of the contractual price by a supplier (Input VAT).

A taxpayer has the right to reduce (offset) the amount of its tax liabilities (output VAT) by the amount of accumulated input VAT credits. Depending on whether the difference between the amount of output VAT and input VAT for the reporting period becomes positive or nega­tive, a taxpayer either should remit the amount of outstanding output VAT to the state budget, or can claim the budgetary refund in case the amount of input VAT is higher than the amount of output VAT.

There is currently a draft law awaiting parliamentary hearing, which provides for the reduction of the VAT rate from 20% to 14% on supplies of certain types of agricultural commodities (wheat, rye, barley, oats, corn etc.)

Such a reduction will reduce the tax burden on producers, which in turn will reduce the cost of raw materials by the amount of VAT reduction for processors of such products.

As commented the Minister for Development of Economy, Trade and Agriculture of Ukraine, Igor Petrashko, “Reducing the VAT rate for the agricultural sector is one of the tools to support farmers. Further support for this bill and its implementation will reduce the tax burden on agricultural producers, which in turn will reduce the cost of raw materials for processors of such products. This will help increase the competitiveness of Ukrainian agricultural products, eliminate tax evasion schemes, as well as de-shadow a significant part of the economy.

VAT refund - reimbursement of a negative value of VAT (Input VAT – Output VAT) to a taxpayer from the state budget.

The standard VAT rate is 20%. 0% applies to export of goods.

Because exports are subject to 0% VAT, ex­porters are often entitled to a VAT refund on the results of their activities.

VAT reimbursement in Ukraine has been one of the most painful issues for many years, but in 2017 a system of automatic VAT reimburse­ment launched and this almost completely solved the problem of VAT reimbursement to exporters.



Passive-type incomes paid by companies that are tax residents in Ukraine, in favour of non-residents are generally subject to 15% Ukrainian withholding tax (WHT).

Having said that, this tax may be mitigated or eliminated by the provisions of a double tax treaty in force between Ukraine and state of residence of an entity receiving such income.

A tax relief under a double tax treaty shall be available to a non-resident receiving income from Ukraine provided that the latter:

  • furnishes to a Ukrainian company making payment, on an annual basis, a tax residency certificate confirming its tax residency status (such tax residency certificate should usually be apostilled in a state of issuance, and then be translated into Ukrainian language and notarized by a Ukrainian notary);
  • is the beneficial owner of received income.

The WHT applies to the following payments:

  • Dividends
  • Interest
  • Royalties
  • Capital gains

The Ukrainian entity making payments to non-residents acts as a tax agent with respect to such tax and is liable to withhold the tax due from the payment amount and remit it to the state budget.


Employment Taxes

Income from employment in Ukraine is subject to 18% personal income tax and 1,5% temporarily introduced military tax.

Please note that an employer acts as a tax agent in respect of the personal income tax and military tax and is obligated to withhold the amount of tax from the employee’s salary and remit it to the state the budget.

Apart from that, employers are also subject to 22% social security contribution, which is a mandatory payment to the system of state social insurance. Taxable base is employees’ gross income (including salary, bonuses, other benefits), capped at UAH 75,000 for each employee (approximately USD 2,700).



Ukraine has concluded free trade agreements with 20 countries, and is currently negotiating the creation of free trade zones with the Republic of Turkey. These agreements grant, on a reciprocal basis, most favored nation (MFN) treatment and reduce barriers for export and import among the signatory states.

Ukraine has quite broad network of Conventions on the avoidance of double taxation (double tax treaties), having concluded 66 agreements.

Such agreements are aimed at eliminating double taxation likely to arise in the process of cross-border trade and investment activities, while at the same time preventing cases of double non-taxation.

Ukraine is actively broadening its network of double tax treaties and is amending the texts of existing ones; in 2019, it finalized the procedure for ratification of the double tax treaty with Qatar and the Protocols to the double tax treaty with the United Kingdom and Cyprus.

Ukraine is not an OECD member, but all of its double tax treaties are based on the OECD Model, which provides for consistency in application and interpretation of international tax rules.

Also, starting from 1 January 2020, a number of double tax treaties between Ukraine and other countries are modified by the so-called ‘principle purpose test’ stipulating that the tax authorities may deny treaty benefits (e.g. reduced WHT rates), if there are sufficient ground to claim that the main (or one of the main) purpose of the particular transaction / arrangement was to obtain such treaty benefits. This was introduced by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, that was signed by Ukraine on 23 July 2018.

Ukraine is also a member of World Customs Organization, and a party to two cornerstone treaties in this field: Customs Convention on the A.T.A. Carnet for the Temporary Admission of Goods and Istanbul Convention on temporary Admission