Odessa National economic university

Trends in the development of free economic zones in Ukraine

Speaker Mamontova I.V.Supervisor PhD, Prof. Baranova V.G.

Free economic zone - a part of the state territory with free regime for foreign

investment and favorable economic conditions (favorable exchange rate regime, tax benefits, low customs duties, a feature of employment

law, etc.)

Classification of free economic zones* 1. Foreign trade zone 2. Integrated production area 3. Scientific and technical areas 4. Recreational areas 5. Banking and insurance (offshore) zone 6. Border trade zone

*according to resolution of the Cabinet of Ministers of Ukraine of 14 March 1994 № 167 "On the Concept of creation of special (free)

economic zones in Ukraine"

Map of free economic zones in Ukraine

FEZ “Porto-ranco”FEZ “Porto-franco”

FEZ “Porto-Franco”Odessa region:

-SEZ “Porto-Franco”

-SEZ “Reni”

Mykolaiv region:

-SEZ “Mykolaiv”

Crimea region:

-SEZ “Syvash” -SEZ “Port Crimea”

c. Mykachivo:

-SEZ “Zakarpatya”

Mariypol region:

-SEZ “Azov”

Donetsk region:

-SEZ “Donetsk”

t. Truskavez:

-SEZ “Kurtopolis Truskavez”

v. Yavoriv:

-SEZ “Yavoriv”

t. Slavutich:

-SEZ “Slavutich”

t. Kovel:

-SEZ “Interport”

The actual steps of Ukrainian government in creating of Free

economic zonesTaxes policy

creation of a special tax regime for

businesses FEZ

The Law of Ukraine "On general

principles of creation and functioning of

special (free) economic zones" The creation of 12 free

economic zones on the territory of

Ukraineabolition of the current taxation

regime - the complete abolition of benefits

The Law of Ukraine "On Amendments to the Law of Ukraine" On State Budget of Ukraine for 2005 "

Legislativesteps

Foreign-economic

steps

Ratings of the effectiveness of Free economic zones in Ukraine on

01.01.2005(at the time of cancellation of privileges )

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

1,8

Regional efficiency

Budgetary efficiency

Investment efficiency

Reasons for cancellation of the preferential tax regime in Ukraine:

imperfect tax legislation

abuse of some concessionary clauses by some innovation and investment

businesses budgetary losses

absence of criteria for evaluating the expedience of FEZ creation on some

territory or a region

Kherson region

АР Крим

Mykolaiv region

Odessa region Advantages of the Black Sea region compared to other regions of

the country:

- A favorable climate coastal zone

- The presence of major sea and river ports

-Availability of mineral resources and deposits of raw building materials

- A variety of fish resources, fishing which put on an industrial basis

- A powerful industrial and agricultural production, leading industries: engineering, food and light industry

- Developed chemical industry

- Developed transport infrastructure: rail, water, road

Economic results of free economic zones operation on the territory of Odessa region

0,9% 0,8%

8,3%

0

2

4

6

8

10

Income from thesale of works,

services

The volume ofproducts,services

Productionoutput (overload)

% fulfiling

62,5%

58,0%

54

56

58

60

62

64

Number of jobs created Number of saved jobs

% fulfiling

Social results of free economic zones operation on the territory of Odessa region

1,7%

0,3%

0

0,5

1

1,5

2

Payments to all budgets Amount received taxbenefits

% fulfiling

Budgetary results of free economic zones operation on the territory of Odessa region

Disadvantages of the applied mechanism in creating and using FEZ in Ukraine:

- No functioning of FEZ mainly for the long term

- The absence of strict control over the targeted use of tax benefits by investors

- Premature termination of tax benefits in 2005

- No systematic usage of financial instruments

- Absence of legislative support for the special regime for SEZs (in Tax Code)

THANK YOU FOR ATTENTION!