The law on localization of production came into force

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On July 14, 2022 the Law of Ukraine No. 1977-IX came into force which amends the Law of Ukraine "On Public Procurement" with regard to the requirements to the localization of production (hereinafter referred to as "LP"). The press service of the European Business Association reports.

LP is defined as an indicator of the local content in the unit cost of raw materials, materials, components, units, parts and components for goods, works, services and other components of domestic production in the cost of goods that are subject to procurement.

According to the amendments, the customers are allowed to make purchases of a number of goods related to the processing industry products, or works or services that involve the transfer of such goods, only if the SL is equal to or exceeds: in 2022 - 10% in 2023 - 15% in 2024 - 20% in 2025 - 25% in 2026 - 30% in 2027 - 35% from 2028 to 2032 - 40%.

In agreement with the Verkhovna Rada Committee on Economic Development, the Cabinet of Ministers of Ukraine may:

Change the SL for the next calendar year to 5% downward or up to 10% upward for an individual commodity
reduce the SL for a single purchase
approve additional list of goods that are subject to SL requirements
SL is determined independently by the manufacturer of the goods and confirmed by the Ministry of Economy according to the following formula: SL = (1 - (MB + IS) / S) x 100%, where:

  • SL - the degree of localization of production
  • CU - customs value of the components imported by the manufacturer to the customs territory of Ukraine
  • IВ - value (without VAT) of imported components, purchased from residents of Ukraine
  • C - cost price of the goods that are the subject of purchase

The Ministry of Economy forms and publishes on the official website the list of goods for purchase with a confirmed SL, as well as monitors compliance with the requirements for SL of the goods included in such a list.

It is expected that the Cabinet of Ministers of Ukraine will adopt regulations governing the above procedures to implement the relevant changes.

SL requirements do not apply to procurement, which fall under the Law of Ukraine "On Ukraine's accession to the Agreement on Government Procurement", as well as provisions on public procurement of other international treaties, consent to which is granted by the Verkhovna Rada. Generally, when determining whether a procurement is covered by the provisions of an international treaty, the country of the manufacturer, the origin of the goods, the value of the procurement and other criteria are taken into account.

In addition, until the end of martial law, purchases are made subject to restrictions and exceptions provided for by the Cabinet of Ministers of Ukraine on February 28, 2022 № 169 "Some issues of defence and public procurement of goods, works and services under martial law.


PigUA.info by agravery.com