Agrarian business

How to buy land in Ukraine:

The villagers own land shares. The average size of one unit is from 2 to 6 hectares (depending on the region). Nowadays the owners have no right to sell their shares, but they can give it for the long term lease.

Each field consists of a certain quantity of share owners.

To create a company with the land bank about 1000 hectares it is necessary to conclude the land- lease contract with 170-500 shareholders to a legal entity in which the Ukrainian and foreign citizens, as well as Ukrainian and foreign legal persons may be founders.

To create a company with the foreign founder, the following documents are needed:

For individuals:

  • Copy of passport with a translation into Ukrainian;
  • The identification number issued by the Ukrainian tax authorities.

For legal entities:

  • A document that confirms your registration in the country of location (extract from the trade / bank register).

This document must be certified in accordance with the current legislation of the country of issue, translated into Ukrainian and legalized in accordance with the requirements of the current legislation;

  • Articles of Association.
  • Protocol / decision of the authorized body of legal entity about the joining of the Company (LLC).
  • If a legal entity in Ukraine is not represented by director, the attorney (certified, in accordance with current law) and the protocol for authority.
  • Copy of passport.

Taxation of agricultural enterprises.

Today in Ukraine there are the following types of taxation in the agricultural sector:

  • General taxation (the company pays 23% tax on net profit);
  • A flat tax (10% of the profits if the company is not VAT payer and 6%, if it is);
  • Fixed agricultural tax. The right to pay this tax has the agricultural producers, whose share of the income derived from production, processing and sale of their own production is equal 75% or greater. The tax rate depends on the size and location of the land, the type of agricultural activity (can be from 0.15 to 1%). The advantage of this type of taxation is also the fact that VAT remains in the company’s account and can be used them for their own needs

Land Code, 2011-2012

At the moment, sale of agricultural land is impossible, but the lease contracts signed by the company, whose owner can be a foreigner, will act and after a possible change of an owner.

The advantages are obvious:

  • There is no need for capital investment for the land purchase (the possible price is from $ 300 to $ 1000 per hectare);
  • The possibility to sell / buy the company within 1 day.

From 01.01.2013 the new Land Code comes into the force in Ukraine, due to which purchase and sale of land will become a reality.

Buying the ready-made companies (buying corporate rights).

Most of agribusiness companies in Ukraine have the following forms of ownership:

  • LLC (Ukrainian TOV) – Limited Liability Company (Ukrainian Tovarystvo z obmezhenoyu vіdpovіdalnіstyu). The founders may act as Ukrainian citizens and foreigners alike: legal or natural persons.
  • PE (in Ukrainian PP) – Private Enterprise (Ukrainian Pryvatne Pidpryemstvo) or PAF (Ukrainian Pryvatna agrofіrma). Only individuals can be the founders.
  • Farm Enterprise (in Ukrainian SFG – Selyanske fermerske gospodarstvo), sale of corporate rights is not possible.
  • CJSC ( in Ukrainian PRAT) – Closed Joint-Stock Company (in Ukrainian Pryvatne aktsіonerne tovarystvo).
  • OJSC ( in Ukrainian PAT) Open Joint Stock Company (in Ukrainian Publіchne aktsіonerne tovarystvo).

Before buying a company the following checks must be done:

  • Check the company’s debt to the state budget.
  • Check the company’s debt to the market participants.
  • Check the availability for a land lease.
  • Check the arrears of rent payment.

The price of labor in Ukraine (Vinnitsa, Zhitomir, Khmelnitsky regions).

The company has an area for grain growing and 5,000 ha. From 20 to 100 people can run it in the season. The season lasts from March to November.

The official minimum wage per month for today is 150 USD. plus tax (40%).

At the end of the season the workers can go to the Employment Center and return to the company with the beginning of the new season.
The administrative staff works for all year-round, the average salary is 320 USD and above (depending on the location of the enterprise).

After completion of the season the all stuff may receive a premium % of profits.