Lynette advises on investing in ukraine

Lynette contributes to the Q&A Section of PW Global in May 2008, responding to an investor’s question:

After years of investing in the UK, my business partner insists we should consider investing in Ukraine. What should we do?

Ukraine’s Annual GDP growth for 2008/09 is forecast to be 6.3% – higher than in many western European countries. The country covers 603,700 sq km and has a population of more than 46.8 million, rich agricultural resources and a well-developed industrial base, and is close to developing markets in Europe and Asia.

With rising middle-class wealth, the shortage of good-quality housing and retail sites could present an opportunity. However, inflation is still rising and there continues to be some political uncertainty.

As a foreign individual or legal entity you can own, use and sell certain types of non-agricultural lands, but you are explicitly prohibited from owning agricultural land.

There are various financial vehicles you can invest through, such as corporate or contractual arrangements these include joint activity agreements – and special investment vehicles for private investors.

As a foreign legal entity you will be taxed on profits from activities undertaken through any permanent establishment in Ukraine. Corporation tax is 25% and VAT is 20%.

Ukraine has strict labour laws and the labour code determines a regular working week of 40 hours.

Any time over this is regarded as overtime, is only allowed in extraordinary circumstances and is limited to 120 hours in any one year. This should be borne in mind for planning any construction deadlines.

You will need a good network of local people. My experience is that they can be very direct in negotiation. Be prepared to build on relationships, as it can take some time before the first stage ‘protocol of intent’ is reached.

Finally, some local advice given to me: ‘Keep your eyes and ears open.’ Of course, this applies to any investment anywhere.

[Source: propertyweek.com]