Draft Law of Ukraine

"On Amendment and Addition of the Law of Ukraine "On Measures of State Support to Ship-Building Industry in Ukraine"

The draft is an alternative to draft law N 4346 introduced by MP S.Hurenko.

The draft suggests introducing the following measures of state support to ship-building industry until January 1, 2011:

• amounts of advance payments and pre-payment obtained from ship customers under contracts of ship-building enterprises, as well as funds in the form of credits remitted to theses enterprises from banks in order to aim credit funds at financing ship building, reconstruction, etc, shall be included into separate accounts of these enterprises. Respective funds are not subject to indisputable write-off and are used only according to their purpose designation pursuant to contract liabilities of the above-mentioned enterprises;
• in order to determine profits subject to taxation with enterprise profit tax, amounts of advance payments and pre-payments are to be included into gross incomes of such enterprises in the tax period, when vessels, port constructions or hydro constructions are delivered to the customer. Expenditures of the above-mentioned ship-building enterprises, which were taken at the expense of advance payments and pre-payments according to their purpose designation, are to be included into gross expenditures during the tax period, on which the date of increasing gross incomes by the above-mentioned payments falls.

The draft also suggests exempting newly created ship-building enterprises from payment of enterprise profit tax for two years.

The draft also envisages amendments to the Land Code of Ukraine. Amendments stipulate that it will be possible to expand territories of the existing ship-building enterprises and to build new shipyards, ports, service centers for serving trade, fishing, work, small vessels and cruisers, yachts and motor boats, provided norms of ecological requirements are met.

The draft, if approved, will contribute to effective use and creation of industrial, scientific-technical and export potential of domestic ship-building industry. Apart from that, the draft aims at creating favorable conditions for attracting investment, reducing costs of ship-building and replenishing turnover funds of ship-building enterprises.