Substantial attention is paid to improvement of legislative and normative base concerning the state regulation of foreign investment processes and to creation of appropriate conditions for efficient attraction of foreign capital to the economy of Ukraine and increase of its amounts.

In Ukraine, there is a practical legislative base that regulates the activity of foreign investors. For today, the main legislative act that determines essential issues of foreign investment is The Law of Ukraine "On foreign investment procedures" dated 19.03.96, No. 93/96-BR This Law has cancelled the of Law of Ukraine "On foreign investments" dated 13.03.92, No. 2198-XII, the Decree of the Cabinet of Ministers of Ukraine "On foreign investment procedures" dated 20.05.93, No. 55-93 and The Law of Ukraine "On the State program of foreign investments encouragement in Ukraine" dated 17.12.93, No. 3744-XII, but it completely preserved the state guarantees of foreign investments protection, which were granted to foreign investors in the territory of Ukraine according to these legislative acts.

In particular, foreign investments in Ukraine are not subject to nationalization. The state authorities have no the right to requisition foreign investments, except for cases, when such investments are required to eliminate consequences of natural disaster, accidents, epidemics and epizootics. In this case, a foreign investor is guaranteed an adequate and efficient compensation. Foreign investors have the right on indemnification, including the lost profit and moral damage suffered by them due to actions, insufficient actions or improper execution of such action on the part of the state bodies of Ukraine or officials that are envisaged by the legislation in respect to a foreign investor.

In case of termination of investment activity, a foreign investor is guaranteed the return of his investment in the natural form or in currency of investment without payment of the customs duty, as well as incomes from these investments in the pecuniary or commodity form. The state also guarantees unobstructed and immediate transfer abroad of profits and other funds in foreign currency, if they were received on lawful basis owing to realization of foreign investments. Should, in the future, in compliance with special legislation on foreign investments, such guarantees of foreign investments protection envisaged by the above-mentioned Law are amended, during ten years from the date of such a legislation becomes valid, on request of a foreign investor, guarantees which are specified by The Law of Ukraine "On foreign investment procedures" will be applied.

The Law of Ukraine "On foreign investment procedures" for foreign investors in Ukraine envisages the national norms: the same conditions of their activity are granted as the ones granted to the domestic investors.

Foreign investors may realize investments in Ukraine in the form of any valuables, in particular, convertible currency, any movable or immovable property and related property rights, shares, bonds, other securities, rights of intellectual property, including the copyright, the right on inventions, know-how, etc.

Foreign investments may be used for any businesses, investment into which is not forbidden by the Laws of Ukraine. In addition, foreign investors are free to choose the form of their investments: by creating a legal entity which completely belongs to the foreign investor or by partial participation in such entities, or on the basis of agreements «contracts» on joint investment activity with Ukrainian enterprises.

Enterprises with foreign investments are any enterprises or organizations which are set up according to the legislation of Ukraine, foreign investments in the authorized capital of which make not less then ten percents.

Should any disputes related to accomplishment of foreign investment between foreign investors and the stata arise on issues of the state regulation of foreign investments and activity of enterprises with foreign investments, then according to the above-mentioned Law such disputes are the subject of consideration in Courts of Ukraine.

The subjects of investment activity, according to The Law of Ukraine "On investment business" are forbidden to invest in objects, creation and use of which does not meet sanitary-and-hygienic, radiation, ecological, architectural and other standards requirements set by the legislation of Ukraine, and violate the rights and interests of citizens, legal entities and the state that are under protection of the Law.

According to The Law of Ukraine "On legal status of foreigners", foreigners have the same rights and freedoms and discharge the same duties as the citizens of Ukraine. Foreigners are equal before the Law irrespective of their place of birth, social and property status, racial and national independence, sex, language, religion, kind of their business and other circumstances. Foreigners are obliged to respect and follow the Constitution and Laws of Ukraine. In Ukraine, foreigners have the right to be engaged in investment, foreign economic and other kinds of business stipulated by the legislation of Ukraine. Foreigners may, according to the legislation of Ukraine, own any property, to inherit and bequeath it, as well as to have personal non-property rights. The legislation of Ukraine guarantees the foreigners their personal immunity, security of residence, non-interference in personal and family affaires, privacy of correspondence, telephone conversations and telegraphic messages, respect of their dignity along with citizens of Ukraine. Foreigners who have committed a crime, administrative or other offences, bear responsibility in accordance with the general practice. The Decree of the Cabinet of Ministers of Ukraine dated 29.12.95, No. 1074 determines the Rules of foreigners entrance to Ukraine, their departure from Ukraine and transit travel through its territory.

The Law of Ukraine dated 17.02.2000, No. 1457 "On elimination of discrimination in taxation of subjects of entrepreneur business which are created with the use of property and funds of domestic origin" establishes that in the territory of Ukraine subjects of entrepreneur business or other legal entities, their affiliates, branches, separate subdivisions, including permanent representation offices of non-residents set up with participation of foreign investments, irrespective of forms and date of their contribution, are subject to procedures of currency regulation, tax and levies collection envisaged by Laws of Ukraine for enterprises with no foreign investments.

Special legislation of Ukraine on foreign investments, as well as the state guarantees of foreign investments protection determined by the legislation of Ukraine, does not regulate issues related to currency, customs and tax laws acting in the territory of Ukraine, if otherwise is not stipulated by international treaties of Ukraine ratified by the Supreme Council of Ukraine.

This Law does not apply to legal relations determined by The Law of Ukraine "On stimulation of automobiles production in Ukraine". The Decree of the President of Ukraine dated 07.07.98, No. 748 "On some issues of foreign investment" resolves the issues relating to foreign investments in the form of acquiring of the state promissory notes and makes it possible to provide protection for foreign investments in the form of securities, and will raise the investment rating of Ukraine.

The Law of Ukraine dated July 15, 1999, No. 977 "On amendments to some laws of Ukraine with the purpose of investment activity stimulation" determines that operations on transfer of capital property as payment to the authorized fund of a legal entity with the purpose of formation of its complete property complex in exchange for corporate rights emitted by such entity, including during import of capital property to the customs territory of Ukraine (except for goods liable to the excise tax), or their export beyond the customs territory of Ukraine are not object to the value added tax.

The actually contributed foreign investments, as well as contracts (agreements) on joint investment activity with participation of a foreign investor are subject to registration according to the procedure determined by Decrees of CMU dated August 7, 1996, No. 928 "On approval of Regulations on the procedure of the state registration of foreign investments", and dated January 7,1997,No. 112 "On approval of Regulations on the procedure of the state registration of agreements (contracts) on joint investment activity with participation of a foreign investor". These documents determine the procedure of registration, the state bodies which realize it, list of the required registration document, terms of registration certificates issue, etc.

Unregistered investments do not give the right on receipt of guarantees of their protection and any privileges envisaged by The Law of Ukraine "On foreign investment procedures".

The Law of Ukraine "On foreign investment procedures" introduces the new procedure of property foreign investments admittance through the border. Articles 18 and 24 of these Laws stipulate that a foreign investor's contribution to the authorized fund of enterprises with foreign investments, as well as under agreements (contracts) on joint investment activity is not liable to the customs duty. Admittance of property which is imported to the territory of Ukraine as foreign investments is realized on the basis of the note issued by the enterprise for the amount of the import customs duty with delay of payment for not more than 30 calendar days from the dated of registration of the import cargo customs declaration. In case of actual transfer of the specified property to the balance of the enterprise within the period of the delayed payment, which is confirmed by the tax inspection located in the area of the enterprise legal address, the note is redeemed, and the import customs duty is not applied.

If within the period of three years from the foreign investment transfer to the balance of the enterprise with foreign investments, the property which was imported into Ukraine as contribution of the foreign investor to the authorized fund of the specified enterprise is assigned, including in connection with termination of the enterprise's business (except for export of foreign investments abroad), the enterprise with foreign investments should pay the import customs duty which is computed basing on the customs value of such property in the Ukraine currency according to the official exchange rate of Ukraine determined by the National Bank of Ukraine as on the date of such property assignment.

The procedure of issue, accounting and redemption of notes issued during import of property to Ukraine as the foreign investor's contribution to the authorized fund of the enterprise with foreign investments, as well as under agreements (contracts) on joint investment activity, and payment of the import customs duty in case of assignment of the specified property is approved by the Decree of the Cabinet of Ministers of Ukraine dated August 7, 1996, No. 937.

According to Article 19 of the above-mentioned Law the enterprise with foreign investments independently determines the sale conditions for its products (works or services). Products of enterprises with foreign investments are not subject to licensing and allocation under condition of their certification as the products of their own making and according to the procedure established by the Decree of the Cabinet of Ministers of Ukraine dated September 5, 1996, No. 1061 "On approval of the procedure for determining products of own making for enterprises with foreign investments".

The Law of Ukraine "On agreements on distribution of products" created favorable and stable conditions for investment into exploration, search and extraction of minerals in Ukraine. With the purpose of implementation of provisions of the Law of Ukraine "On distribution of products" the Cabinet of Ministers of Ukraine has accepted decrees dated 16.03.2000, No. 509 "On approval of Regulations on the Interdepartmental Commission on formation and implementation of agreements on distribution of products", dated 28.04.2000, No. 741 "On the use of the part of the produced goods which remains as the state property according to agreements on distribution of products", and dated 12.07.2000, No. 1119 "On setting up the Interdepartmental Commission on formation and implementation of agreements on distribution of products".

The Law of Ukraine dated 16.07.99, No. 997 "On concessions" determines the concepts and legal bases for regulation of concession relations between the state and public property, as well as conditions and procedure of its implementation for the purpose of a more efficient use of the state and public property.

For the purpose of realization of provisions of the Law of Ukraine "On Concessions" the Cabinet of Ministers of Ukraine has accepted the Decrees dated 11.12.99, No. 2293 "On approval of the list of objects which possess the right of the state property and which may be granted in concession", dated 18.01.2000, No. 72 "On the register of concession agreements", dated 12.04.2000, No. 639 "On approval of the Procedure of concession payments", dated 12.04.2000, No. 642 "On approval of Regulations on concession competitions and entering concession agreements on objects that belong to the state and public property and are granted in concession", dated 12.04.2000, No. 643 "On approval of a typical concession agreement", dated 13.07.2000, No. 1114 "On regulations on the procedure to determine the objects of concession, which may be liable to privileges in respect to concession payments, grants and compensations and conditions for their granting".

Article 49 of the Law of Ukraine "On banks and banking business" dated 28.03.1991 gives the right to create commercial banks with participation of foreign legal entities and individuals. The National Bank of Ukraine issues licenses for creation of such banks. The National Bank of Ukraine in compliance with the legislation of Ukraine determines the licensing procedure.

The Law of Ukraine "On scientific and technical information" dated 25.06.1993 provides for the right of foreign legal entities and individuals, as well as stateless persons, to invest into development into the sphere of scientific and technical information of Ukraine in compliance with the current legislation.

According to Article 3 of the Law of Ukraine "On property" foreign investors are the subjects of the property right and are entitled to possess, in the territory of Ukraine, houses, structures and other property used for welfare and industrial purposes. In addition, legislative acts may establish kinds of property that cannot be the property of legal entities belonging to other states and international organizations.

Approval on 06.10.98 of the redrafted Law of Ukraine "On lease of land" that envisages possibility for development of such organizational form for agricultural enterprises as private - rent enterprises was the first step towards reforms in agriculture and activation of entrepreneur business. Tenant farmers may be both Ukrainian and foreign individuals and legal entities.

With the purpose of creation of better conditions for effective use of land, stimulation of entrepreneur business, encouragement of investments, on 19.01.99, the Decree of the President "On sale of land of non-agricultural purpose" was accepted, and the appropriate draft of the law was prepared. It envisages sale of land of non-agricultural purpose to individuals and legal entities, including, enterprises with foreign investments. For the purpose of implementation of the above-mentioned Decree, the Decree of the Cabinet of Ministers of Ukraine dated March 24, 1999, No. 440 approved the procedure for filing applications on sale of land of non-agricultural purpose and the form of the state certificate on land property right, procedure for expert pecuniary assessment of land of non-agricultural purpose dated 16.06.1999, No. 1050.

The Decree of the President of Ukraine dated July 23, 1998, No. 817 "On some measures on decontrolling of entrepreneur business" is focused on improvement of the procedure of complex control over activity of the subjects of entrepreneur business to prevent intrusion of the state bodies into entrepreneur business and

to reduce the number of audits. For the purpose of implementation of the above-mentioned Decree, the Cabinet of Ministers of Ukraine by its Decree dated January 29.1999. No. 112 approved the procedure of coordination for scheduled audits of financial and economic activity of subjects of entrepreneur business by supervising bodies.

In conformity with Article 20 of the Law of Ukraine "On foreign investment procedures" enterprises with foreign investments pay taxes in compliance with the legislation. At the same time, special privileges for investment business may be established for separate subjects of entrepreneur business who are engaged in implementation of investment projects with the use of foreign investments and such projects are realized under the state programs on development of priority industries, in social sphere and development of territories.

That is, the legislation gives the possibility to create, in some cases, more favorable conditions for realization of projects that are important for the Ukrainian economy by engaging direct foreign investments. As an example of practical application of the above-mentioned norms, there is the Law of Ukraine "On stimulation of automobiles production in Ukraine" dated September 19, 1997, No. 535/97 BP, which has determined conditions that are required to support and develop the motor car industry.

Besides, in conformity with the Law of Ukraine "On foreign investment procedures" special procedure for investment activity may be established in the territories of special (free) economic zones (SEZ). Creation of such zones is one of elements of the investment policy which gives the possibility, by increasing investments, including foreign ones, into separate regions of Ukraine to assist acceleration of the social and economic development of such territories, improvement of use of their natural and economic potential, attraction and introduction of new technologies, meeting the demand of the home market in high-quality products, etc.

So, by way of experiment and with the purpose of development of new approaches to implementation of economic reforms in Ukraine and introduction of new forms of entrepreneur business, the Decree of the President dated 30.06.95, No. 497/95 created the South-Crimea experimental economic zone "Sivash" in the territory of Krasnoperekops'kyy and Armjans'kyy districts of the Autonomous Republic of Crimea in February 1996. Today, 24 investment projects are realized in this zone for the total amount of 55 million US dollars.

With the purpose of creation of jobs and employment of personnel from the closed down mining and other enterprises of the Donets'k Region, The Law of Ukraine dated 24.12.98, No. 356-XIV "On special economic zones and special conditions for investment activity in the Donets'k Region", for the term of 60 years, the special economic zones "Donets'k" and "Azov" have been created.

For the term till January 1, 2020, in the territory of the Lviv Region, within the administrative-territorial boundaries of Javorivsky district (excluding the territory occupied by the military range and military units) the special economic zone "Javoriv" (the Law of Ukraine "On SEZ "Javoriv" dated 15.02.98. No. 402-XIV) has been created.

In compliance with the Law of Ukraine dated 04.02.99, No. 420-XIV "On special economic zone of tourist-recreation type "Kurortpolis Truskavets" and with the purpose of stimulation of investment and innovation activity focused on conservation and effective use of natural medical resources of the resort Truskavets, the appropriate zone has been created within the administrative- territorial boundaries of the town Truskavets in the Lviv Region for the period of 20 years.

The Law of Ukraine dated 03.06.99, No. 721 "On the special economic zone "Slavutich" with the purpose of creation of new jobs for employment of the staff of the closed down Chernobyl nuclear power plant the SEZ "Slavutich" has been created.

With the purpose of attraction of investments, creation of the modern transport and market infrastructure, as well as to overcome the consequences of the flood in the Zakarpats'ka Region and in conformity with the Decree of the President of Ukraine dated 09.12.98, No. 1339/98 "On the special economic zone "Zakarpatje" the SEZ "Zakarpatje" has been created for the period of 30 years.

Any subject of entrepreneur business that is registered within the territory of such zones as the subject of a particular zone and is entitled to receive a number of privileges depending on the type of the zone. In particular, creation of the following is envisaged:

- Special customs zone with special procedure for import of goods and other items to the territory of such zones and for export of goods and other items from such zones;

- Special taxation privileges (privilege concerning taxation of income received from economic activity by non-residents in the territory of the zone; exemption from payment of levies to the State Innovation Fund, the special procedure of calculation of the gross revenue of enterprises for the purpose of taxation, etc.);

- Special currency regulations, which free such enterprises from obligatory sale of foreign currency proceeds received from sale of goods (works, services) that were produced or rendered within the SEZ;

- Special land use regulation (exemption from the land tax for the period of land development).

In addition to creation of SEZs there is a practice of introduction of special investment procedures in separate regions of Ukraine (within the territories of priority development) related to implementation of investment projects in such fields of economic activity, which are determined as priority ones for the specified territory. The special procedure of investment activity provides for granting of tax and customs privileges to such subjects of entrepreneur business, which have concluded the agreement with local authorities on implementation of the investment project in the priority industry.

The envisaged privileges provide for exemption for the specified period:

1. From the import customs duty and the value added tax on equipment and goods (excluding excise goods) used for realization of the investment project;

2. From taxation of the profit of new enterprises, which are contributing investments, the amount of which is determined for each particular territory;

3. From payment of levies to the State Innovation Fund; establishes the special procedure for computation of the gross revenue of enterprises for the purpose of their taxation.

Special procedures of investment activity are introduced for the period of 30 years in the territories of priority development in the Donetsk region (the Law of Ukraine dated 24.12.98, No. 356-XIV "On special economic zones and special procedure of investment activity in the Donetsk region"), and for the same period, in the territory of towns Brjanka, Pervomaysk and Stakhanov of the Lugans'k Region (the Decree of the President of Ukraine dated 18.12.98, No. 1359/98 "On special procedure of investment activity in the territories of priority development in the Lugans'k Region"), as well as for the period of 15 years in the Zakarpats'ka Region (the Law of Ukraine "On special procedure of investment activity in the Zakarpats'ka Region" dated 24.12.98, No, 357-XIV).

For the purpose of implementation of Decrees of the President of Ukraine, as well as after approval of the appropriate Laws of Ukraine, new special economic zones “Interport-Kovel" (the Decree dated 22.06.99, No. 702/99), “Nikolayev” ( the Decree dated 28.06.99, No. 758/99). "Porto-Franco” in the territory of the Odessa marine trade port" (the Law of Ukraine dated 23.03.2000, No. 1607) and "Port Crimea" in the Autonomous Republic of Crimea" (the Decree dated 27.06.99. No. 740/99) have been created and within the territories of such zone subjects of entrepreneur business who are registered as subjects of a particular zone are entitled to receive privileges concerning taxation, customs duty, currency regulation and other privileges depending on the particular zone.

The special procedure of investment activity concerning realization of investment projects in those kinds of economic activities, which are determined as priority ones for the given territory is introduced within the territory of priority development in the Chernigiv Region (the Decree dated 27.06.99, No. 729/99), in the Volyns'ka Region (the Decree dated 27.06.99, No. 730/99), in Zhitomir Region (the Law off Ukraine dated 03.12.1999, No. 1276), in the Autonomous Republic of Crimea (the Decree dated 27.06.99, No. 740/99), as well as in the city of Kharkov (the Law of Ukraine dated 11.05.2000, No. 1714). Such procedure provides for establishment of special tax, customs and other privileges for the subjects of entrepreneur business who have entered into agreement with the local authorities on realization of the investment project in the priority industries. The Law of Ukraine dated 16.07.99, No. 991 "On special procedure of investment and innovation activity of technological institutions "Semi-conductor technologies and materials, optoelectronics and sensory equipment", "Institute of electric welding named after E. O. Paton", "Institute of monocrystals" determined both legal and economic conditions for introduction and functioning of the special procedure for investment and innovation activity of technological institutions in such cities as Kiev and Kharkov.

Important legal documents, which regulate relations between the subjects of investment activity, are the Interstate Agreements "On assistance and mutual protection of investments". Such Agreements are the guarantees of granting the fair status to investments and their protection in the territory of another state. Such agreements have already been signed with 50 countries of the world. A number of projects are in the stage of their coordination.

For better protection of foreign investments, on April 3, 1998 on behalf of Ukraine the Washington Convention of 1965 on procedures of solving investment disputes between the states and foreign individuals was signed. The Law of Ukraine dated March 16, 2000, No. 1547 ratified the above-mentioned Convention by the resolution of the Supreme Council of Ukraine.