Ukraine

Ease of Doing Business Rank: 64

Overview

 

Geographic location

Ukraine is an eastern European country partially surrounded by Russia in the north and east. Belarus also lies to the north, while Poland, Slovakia and Hungary lie to the west and Moldova and the Black Sea to the south.

Spoken language

The official language of Ukraine is Ukrainian, spoken by 67.5% of inhabitants. The largest minority language is Russian, spoken by 29.6% of the population. The country recognizes an additional 13 minority languages.

A small percentage of inhabitants speak foreign languages such as English, German, French, Spanish, Italian and Arabic.

Population

The 2019 population estimate is 44 million.

According to 2014 data, Kyiv is the largest city (2,950,819), followed by Kharkiv (1,470,902) and Odesa (1,013,159).

Popular industries

The top industries in Ukraine are power generating, fuel, ferrous and non-ferrous metallurgy, chemical and petrochemical and gas, machine-building and metal-working, forest, woodworking and wood pulp and paper, construction materials, light, food and others.

Education

The Legatum Prosperity Index ranks Ukraine’s education system 37 out of 149.

Popular entity types

The most common type of business entities in Ukraine are Limited Liability Company and Joint Stock Company.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Ukraine incentives for business

Companies generating less than UAH 3 million may qualify for tax holidays, providing they meet specific requirements.

The country also offers a simplified tax regime with reductions in corporate income tax to qualifying entrepreneurs and legal entities. Income must be less than UAH 5 million and meet employment criteria. Tax rates range between 10% and 20%, depending on the group classification and industry.

Qualifying agricultural producers enjoy tax rates of between 0.19% and 6.33%, providing income generated from products generates at least 75% of the previous year’s gross revenue.

Ukraine also offers a foreign tax credit to companies to offset tax paid abroad, providing they have a Double Tax Treaty with Ukraine.

History & Features

 

Main cities for business

Kyiv is the capital city and financial center of the country.

Popular historical & tourist attractions

Ukraine offers diverse landscapes, vibrant cities, ancient castles, and a deep, rich cultural history. The country has nine UNESCO World Heritage Sites with two in the capital city of Kyiv: Pechersk Lavra and St. Sophia Cathedral.

Pechersk Lavra was built as an Orthodox Christian monastery and includes a system of narrow underground corridors links living quarters and underground chapels. St. Sophia Cathedral, built in 1051 AD, is topped with gold domes and was originally the burial place of Kyiv’s rulers. It was designed to rival Hagia Sophia in Constantinople and contributed to the spread of Orthodox thought and the Orthodox faith in the Russian world from the 17th to the 19th century.

The city of Lviv has a UNESCO-protected historic center. The area was settled in the late Middle Ages and flourished as an administrative, religious and commercial center.

The Ancient City of Tauric Chersonese features the remains of a city founded by Dorian Greeks in the 5th century BC on the northern shores of the Black Sea.

Ukraine also has many impressive castles, including Lubart’s Castle in Lutsk. It was built in the 14th century and is one of the few surviving monuments of the Grand Duchy of Lithuania. Its iconic image graces the 200 UAH bank note.

The country also has many national parks and areas of outstanding natural beauty. Shatsky National Natural Park includes forests, the deepest lake in Ukraine and sandy beaches.

In the south of Ukraine lies the Askania-Nova reserve, a protected UNESCO natural area. The region includes a virgin steppe, protecting many rare, endemic and threatened species.

The Carpathian Mountains lie on the western border and include Mount Hoverla, the highest point in the country. It is a popular spa and ski area with mountain lakes, dense pine forests and countless alpine villages.

Odesa is one of Ukraine’s largest seaports and trading hubs with miles of sandy beaches. It offers historic treasures, but plenty of nightlife, restaurants and water activities as well.

Chernobyl may not be the first place you’d consider visiting after the catastrophic nuclear energy accident of 1986. However, animals have returned to the area after more than thirty years and the government has started to build an official, safe green corridor for tourists. Currently, visitors can tour the site with a guide, but only in select areas.

History

Nomadic Scythians originating from southern Siberia extended their influence into the northern Black Sea area during the 7th century BC. Later, Greeks settled and founded city states.

Ukraine was also the site of early Slavic expansion and the medieval state of Kievan Rus which became a powerful nation in the Middle Ages. It disintegrated in the 12th century when Mongols conquered southern and eastern Ukraine.

Northern and western Ukraine remained independent until the 14th century, but Poland and Lithuania fought off the Mongols and occupied the region. Eventually, Lithuania took control of northern and northwestern Ukraine. Poland controlled the southeastern region. The two powers formed the Polish–Lithuanian Commonwealth in 1569.

Peasants were forced into serfdom. Some fled to the steppes of Ukraine, established self-governing communities and came to be known as Cossacks (freemen). Even though they were known for their military usefulness, nobility continually tried to push them into serfdom which led to rebellions.

By 1648, the Cossacks united, formed a state, and undermined the foundations and stability of the Commonwealth. However, the Cossacks found themselves trapped in the midst of a military and diplomatic rivalry. Eventually, Poland dominated western Ukraine and Russia dominated the east. By 1793, Poland’s power had declined and most of Ukraine fell to the Russian Empire.

During the 19th century, Ukraine remained under firm Russian control. However, nationalism was on the rise, which led to the Ukrainian War of Independence from 1917 to 1921. The USSR prevailed and in 1922 Ukraine became the Ukrainian Soviet Socialist Republic. Farms were collectivized under communist rule which led to a manmade devastating famine between 1932 and 1933.

Axis armies occupied Ukraine from 1941 to 1944. The Ukrainian Insurgent Army fought for Ukrainian independence while some Ukrainians fought with the Soviets.

After World War II, some amendments were allowed to the Constitution of the Ukrainian SSR and Ukraine became a founding member of the United Nations. However, the region remained under Soviet rule.

During the 1980s, discontent grew in Ukraine which led to demonstrations. With the dissolution of the Soviet Union in 1991, Ukraine officially declared itself an independent country. However, the transition to democracy did not go smoothly and the country was thrown into political turmoil.

In 2013 and 2014, a wave of demonstrations swept across Ukraine and the parliament subsequently removed the president from power. The new president served four years, before the election of a new leader in 2019.

Today, the country operates under a semi-presidential representative democratic republic with an emerging free market economy.

Other relevant facts

According to 2018 data, most Ukrainians identify as Eastern Orthodox (67.3%), followed by Greek Catholic (9.4%), Latin Catholic (0.8%), Unspecified Christian (7.7%), Protestant (2.2%) and others or no religion.

According to the 2001 census, most inhabitants identify as Ukrainian (77.8%), followed by Russian (17.3%), Belarusian (0.6%), Moldovan (0.5%), Crimean Tatar (0.5%), Bulgarian (0.4%), Hungarian (0.3%), Romanian (0.3%), Polish (0.3%), Jewish (0.2%) or other (1.8%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Ukraine is the 77th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Ukraine 147th globally and states, “Progress has lagged on many much-needed but contentious structural reforms such as cutting subsidies and raising energy tariffs, fiscal consolidation, and the fight against corruption.”

World Bank’s “Doing Business” rankings rate Ukraine 64th for ease of doing business in the world.

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