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Vitaliy Radchenko, CMS Cameron McKenna Sharp’s roundtable 29 March 2011, Kyiv, Hyatt

Ukrainian Solar Energy Market: Removing Barriers for Growth Legislative regime of solar energy promotion in Ukraine: mechanisms complementary to the Feed-in (Green) Tariff system. Vitaliy Radchenko, CMS Cameron McKenna Sharp’s roundtable 29 March 2011, Kyiv, Hyatt.

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Vitaliy Radchenko, CMS Cameron McKenna Sharp’s roundtable 29 March 2011, Kyiv, Hyatt

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  1. Ukrainian Solar Energy Market: Removing Barriers for GrowthLegislative regime of solar energy promotion in Ukraine: mechanisms complementary to the Feed-in (Green) Tariff system Vitaliy Radchenko, CMS Cameron McKenna Sharp’s roundtable 29 March 2011, Kyiv, Hyatt

  2. What else is there, save for feed-in (green) tariff? • Import • Corporate profit tax • Land tax / land lease • Draft legislation (regulatory, land) • Trends and Issues for follow-up Kyiv / 30204432.1

  3. Import Benefit Tax Code (197.16) – VAT Free regime for import of: • equipment, which works on renewable sources of energy, energy saving equipment and materials, metering equipment, maintenance and cost management of fuel and energy resources, equipment and materials for generation of electricity from renewable sources; • materials, equipment, parts that are used for manufacturing of: а) equipment, which works on renewable sources of energy; b) materials, raw materials, equipment and parts that will be used for production of electricity from renewable energy sources; c) energy saving equipment and materials, goods, exploitation of which will result in saving and rational use of fuel and energy resources; d) equipment formetering, cost control and management Condition These goods are used for one’s own production (!!!) and identical equipment is not produced in Ukraine. The list is approved by CMU (!!!). Infamous Resolution 444 Sanction for violation of the Condition VAT on top + fine (120% of the NBU discount rate per each day of the violation until the payment of VAT to the budget) Kyiv / 30204432.1

  4. Corporate Profit Tax (1) Benefit Tax Code (158.1) – exemption for 80% of profitsoriginating in Ukraine from sales of one’s own produced goodsas per the list of the CMU (!!!), particularly: • equipment, which works on renewable sources of energy; • materials, raw materials, equipment and parts that will be used for production of electricity from renewable energy sources; • energy saving equipment and materials, goods, exploitation of which will result in saving and rational use of fuel and energy resources; • equipment formetering, cost control and management Condition 5 years from the moment of the first profit from increase of the energy efficiency of production process Separate accounting of profits or losses as a result of sales of those goods Tax savings shall be directed to increase of the production. Sanction for violation of the Condition Payment of the CPT on top + fine as per the Tax Code Kyiv / 30204432.1

  5. Corporate Profit Tax (2) Benefit Tax Code (158.2), exemption for 50% of the CPT on profits from energy saving measures and energy saving projects made by the companies that are listed on the state register (NAER) of EE companies (!!!) Condition 5 years from the first date of the first profit from EE measures Onlythe companies included into the sector EE programs Conclusion of NAER on compliance of their projects to EE criteria Separate accounting for profits/losses Sanction for violation The same as previous ones Kyiv / 30204432.1

  6. Corporate profit tax (3) Benefit Tax Code 17(3) transitional provisions, until 2020, FULL CPT exemption for profits from sales on electricity (generated from renewable energy sources) by energy companies (codes 40.11, 40.11.0 in the Codifier of Economic Activities) Condition Savings shall be directed to increase the production, repairs, implmenetation of the new technologies, loan repayment Shall be separately accounted Sanctions for violation Tax on top + fine Kyiv / 30204432.1

  7. Land tax / land lease • Land ownership: not more than 25% of the usual land tax • Land lease: 3% of the normative evaluation for the purposes of lease, max 3.75% of the value of 1ha plague land (cheap bargain), need to change the designation of the state land (except for privately owned land (indiv + companies), farming land plot, individual farming land, land allotments) Kyiv / 30204432.1

  8. News • Law postponing the local content requirement (not enough) • New construction law should facilitate construction • New land legislation (withdrawal for public needs) Kyiv / 30204432.1

  9. Issues to follow-up • No conditions for local content requirement to be in place • Stability of the legislation • Reform of the electricity market • Concentrated solar? Kyiv / 30204432.1

  10. Contacts Vitaliy Radchenko Coordinator, Energy and ProjectsCMS Cameron McKenna LLC6th floor, 38 Volodymyrska St., 01034 Kyiv, Ukrainevitaliy.radchenko@cms-cmck.comTel:       +380 44 391 3377Fax:      +380 44 391 3388 Kyiv / 30204432.1

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