Text II. Ukraine’s business climate today

In the short time since Ukraine has become a sovereign state, much has been achieved in developing its economic legislation. Whilst this legislative evolution is yet to be completed, there already exists a comprehensive range of laws and acts which provide a solid legal foundation for emerging business and investment activity in the country. A fundamental principle of this legislation is the concept of national treatment, which means that any foreign company operating in Ukraine, regardless of its ownership, is now treated on an equal basis with local companies.

Existing legislation now guarantees a high level of stability for the Ukrainian business environment offering real incentives and opportunities to investors.

The Ukrainian foreign exchange system is regulated by a decree of the Cabinet of Ministers “On the System of Foreign Exchange Regulation and Foreign Exchange Control”. The Ukrainian hryvnia (UAH) is the only legal tender on the territory of Ukraine for transactions between residents, and foreign currency is to be used for trade turnover between residents and non-residents. Stability of the hryvnia is the assured by the currency corridor which limits the US dollar exchange rate variation. The National Bank of Ukraine together with the Cabinet of Ministers determines the range of the currency corridor and responsible for implementing foreign currency operations. The Cabinet of Ministers determines and submits the limits of the country’s external borrowing for parliamentary approval. Foreign currency operations by residents and non-residents are under the auspices of the State Tax Administration.

The law “On the Regime of Foreign Investments” guarantees the rights of foreign investors to freely and immediately transfer their profits in foreign currency abroad; all taxes due on that amount have been paid. The repatriation rights also apply to the actually invested amounts and property. No special license is needed for any such repatriation of capital from Ukraine.

Whilst welcoming foreign investment into the country, the Ukrainian government is also committed to maintaining its national sovereignty, and certain restrictions in this area are aimed at ensuring this. Foreign shares in the capital of banks are 35 percent and for audit firms – 30 percent, although figures vary in different business fields, these two are a good indicator of the general policy.

Ukraine is moving towards a free market economy. An Anti-Monopolies Committee exists, and is responsible for regulating issue of unfair competition, mergers and acquisitions, and ensuring impartiality from state executive bodies. Its brief is to ensure that a maximum number of businesses operate successfully in Ukraine. To give stability in the transition period to free market, the law on prices and state-regulated prices applying to all products, goods and services in Ukraine.