The bill “On Amendments to Certain Legislative Acts of Ukraine Concerning the Motivation of Investment Activities in Ukraine” (No. 8124 of March 15, 2018) may lead to a significant underfunding of the investment needs of territorial communities.
The Verkhovna Rada of Ukraine has registered a bill that provides for the cancellation of participation interest.
We recall that participation interest is the transfer of funds to the local budget by the customer for the purpose of creating and developing the social, engineering and transport infrastructure of the settlement. The maximum amount of share participation in the development of the infrastructure of a settlement can not exceed:
- 10% of the total estimated cost of the construction of the facility – for non-residential buildings and structures;
- 4% of the total estimated cost of the construction of the facility – for residential buildings.
The funds received as participation interest in the development of the infrastructure of the settlement are used exclusively for the creation and development of the engineering and transport and social infrastructure of the respective settlement.
Supporters of these changes speak about the need to improve the conditions for doing business in Ukraine, while forgetting that the cancellation of participation interest can lead to a significant underfunding of the investment needs of the territorial communities.
- The indicator of ease of business dealing “Doing Business” for Ukraine will not actually change, but the possibility of corruption abuses is guaranteed to increase, – Dina Serebryanskaya, the expert of the Association of Ukrainian Cities on Local Economic Development, candidate of economic sciences, says. - Share contributions are a serious financial resource of municipalities. By the results of 2017, their volume amounted to 1.9 billion UAH. And their share in the total volume of non-tax revenues of local budgets was 7.3% last year. Having such a source of income, local councils send money for road repairs, development of communications near new buildings, construction of kindergartens, schools, medical institutions. Thus, the investment attractiveness of the territories is improving. When this bill is adopted, the community will lose this resource.
