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Update on Foreign Investment in Ukrainian Agricultural Land

The moratorium on alienation of Ukrainian farm land has long prevented meaningful foreign investment into the Ukrainian agricultural sector. To somehow obtain access to agricultural land, instead of outright ownership foreign investors had to register Ukrainian companies that entered into lease agreements with landowners, most with a "right to buy" option if and when the moratorium will be lifted.

However, if the current amendments to the legislation will be approved, the lifting of moratorium will not allow any legal entities to purchase their leased land despite any provisions to the contrary in their lease agreements. To add insult to injury, the suggested taxes and other mandatory payments to the state, will decrease any profits generated from the leased land.

By way of background, at the end of 2012, the Verkhovna Rada (the Parliament) adopted Law №11315, further extending the moratorium on selling agricultural land until January 1st, 2016, right after the next Presidential elections. Under the draft law, privatization of farm land will benefit the Ukrainian government first and foremost, followed by select Ukrainian citizens. For instance, potential buyers of farm land can only be (a) the Ukrainian government; (b) regional state authorities; (c) the State Land Bank; or (d) Ukrainian citizens. Moreover, only the first three categories have the priority right to purchase any agricultural land that is offered for sale. All individuals who wish to own more than 100 hectares will need to obtain permission from GosZemAgenstvo (the State Land Agency). This is a highly controversial requirement because it allows government bureaucrats to decide which Ukrainian individuals can own large parcels of farm land.

The Corporate Takeover of Ukrainian Agriculture | Country Fact Sheet - Dec. 2014 |

'Sapere aude'

by Oui (Oui) on Sun Apr 16th, 2023 at 10:10:21 PM EST
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