Ukraine as an Advantageous Destination for Doing Business

Ukraine has become one of those countries whose IT industry joined the leading European IT markets as a strong and competitive one. The strategic location in the heart of Europe allows the country to expand communication channels and create unique projects thanks to a valuable workforce. And if earlier starting a business was associated with an administrative nightmare tied to expensive bureaucratic procedures, now everything is different.

Today, the Diia City legal regime for the IT industry is gaining popularity. It aims to create the most powerful IT community in Central and Eastern Europe, where entrepreneurs will implement the most ambitious projects and practical business ideas. This bill will create more comfortable conditions for IT existence. For example, taxes on labor tend to the following indicators:

  • personal income tax is 5%;
  • the unified social contribution is 22%;
  • the military fee is 1.5%.

Company taxes:

  • 9% on tax on withdrawn capital or 18% on corporate profits, which is a global practice;
  • 0% on the tax treatment of dividends, provided that they haven't been distributed for two or more years.

It’s also vital that Ukraine plans to attract angel investments by introducing tax benefits and 0% on an individual's income from the sale of the shares in a startup.

IT outsourcing is also one of the essential aspects of development, e.g., instead of the outdated Labor Code of Ukraine, GIG contracts are being introduced to regulate labor relations and fix agreements. For specialists, such an agreement allows receiving different social guarantees and freelance advantages. In turn, entrepreneurs will be confident in their staff, regulate the remuneration in foreign currency, and avoid the abuse of official position. Investment and management mechanisms well-known for venture investors also take place. These include convertible loans, shareholders arrangement, liquidation preferences, option and ESOP, warranties and indemnities, liquidated damages.

Read on to learn more about how Ukraine has made it easier to start a business, how the flexibility of its IT staff is manifested, and the country's passport rating dynamics.

Ease of Doing Business

The World Bank Doing Business 2020 report showed that the country improved 6 out of 10 indicators of effective doing business and is ranked 64th out of 190.

Ease of Doing Business ranking_Ukraine

That is manifested in the following aspects:

Dealing with construction permits

  • Before: entrepreneurs had to struggle with more than 20 procedures and pay $1262 to the treasury.
  • Now:getting a building permit has become much easier: firstly, hiring an external supervisor has been removed; secondly, it'll be less costly by reducing the contribution fee to the Kyiv City Council.

Getting electricity procedure

  • Before: it could take you up to 285 days to get electricity. Over the next 53 days, you have to wait for the completion and approval of the project
  • Now: to get technical specifications, you don't need to go through 9 circles of bureaucratic hell: their issuance has become more accessible. The state has also introduced a geographic information system and an outage compensation mechanism. The last one increases power supply reliability

Registering property

  • Before: this process took more time than the OECD norm
  • Now: the registration procedure has been simplified, due to which the land administration system transparency has increased

Crediting

  • Before: Ukraine has a relatively developed financial system
  • Now: improving access to credit information

Protecting minority investors

  • Before: Provides a protective legal framework for investors
  • Now: strengthening protection and disclosure of transactions with interested parties

Trading across borders

  • Before: difficult test, requiring a month to approve six documents, in addition, high costs are associated not only with the import but also the export of containers
  • Now: the time for import has been reduced due to the certification requirements for auto parts.

What is the flexibility of Ukrainian personnel?

A powerful transport industry offers for traveling to Ukraine without any problems: there are 13 airports in Ukraine, which provide flights to 129 destinations in 51 countries. If you’re planning a long-distance connection, then high-speed electric trains or busses can also help out ideally.

Flight from Kyiv_Source_Flight Connections

Source: FlightConnections

Considering that the largest share of IT is concentrated in large regional cities, moving to any IT outsourcing destination will become very convenient.

If you've already settled in any city and want to find staff for your company, you shouldn't focus only on the locals. The two distinctive features of Ukrainians - their mentality and breadth of views allow fitting between other cities or other countries while not experiencing a communication barrier quickly. Also, these people are very adaptive and hardworking. They’re ready to move heaven and earth when it comes to working.

Rating of the Ukrainian passport

Today Ukraine ranks 35th out of 110 in The Henley Passport Index. Another Passport Index rating recognizes Ukraine in 28th place among 89 countries. For an entrepreneur, this means making it easier to enter the country without a visa. In the first option, foreign citizens can stay on the territory of Ukraine for 90 days with a corridor of 180 days. The visa application procedure is also simplified and provides for online registration for citizens of 52 countries.

Ukrainian Biometric Passport

Bottomline

Recently, the trend of launching a business in Ukraine by foreign citizens has become the main subject of discussion: registration of a legal entity has become simpler and takes only a few hours, the level of administration has changed. And if earlier the country couldn’t boast of the efficiency and speed of VAT refund, now it’s at the level of the European Union leading economies. The key feature of this country for doing business is its flexibility in working in various IT outsourcing destinations and implementing the most ambitious projects with optimal investments.

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