Engineering industry

The principal legislative act, which defines state policy and activities of business entity in mechanical engineering, is The Law of Ukraine “On Stimulating Development of National Machine Building for Agroindustrial Complex”, dated 7 February 2002 (hereinafter referred to as the “Law of Ukraine “On Stimulating Development of national machine Building”).

The Law “On Stimulating Development of national machine Building” states the priority development of domestic mechanical engineering for agroindustrial complex as the principal state policy, establishes favourable economical conditions for the increase in production volume for agricultural machinery and equipment for food and processing industries.
According to the Law “On Stimulating Development of national machine Building”, domestic mechanical engineering for agroindustrial complex is to be viewed as a set of industrial enterprises, research and development organisations, educational institutions and other establishments, irrespective of patterns of ownership, that among other things provide the organisation of production, market monitoring, personnel training in order to meet the needs of agricultural production and industry in machinery and equipment, in which total volumes of production, regarding the items for growing, harvest, storage and procession of agricultural products, are not less than 50%.

The development of domestic mechanical engineering (namely, generation and manufacture of machinery and equipment, its technical maintenance and repair, as well as the formation of the market infrastructure for domestic machinery and equipment for agroindustrial complex) is a priority trend in the development of national economics.

State administration of domestic mechanical engineering for agroindustrial complex is carried out by the Cabinet of Ministers of Ukraine and authorised central executive authority, the powers of which are determined according to the Constitution and the Laws of Ukraine.

The following peculiarities of tax policy can be applied to the enterprises of domestic mechanical engineering for agroindustrial complex:

• VAT concessional taxation of transactions on payment of inputs cost aimed at research and development works and production of prototypes of new machinery and equipment for agroindustrial complex; expenses on development and planning of mainstream production of new machinery and equipment for agroindustrial complex are charged to gross production expenses;
• cut-down income tax rate, related to the export sales of machinery and equipment for agroindustrial complex;
• regulation of land tax peculiarities and lease fee on land plots used by enterprises of domestic mechanical engineering for agroindustrial complex.

In the due course of its activities related to the principal trends of further formation and development of market of domestic machinery and equipment for agroindustrial complex, the Cabinet of Ministers of Ukraine passed a Regulation “On Approval of State Programme of Development of Domestic Mechanical Engineering for Agroindustrial Complex for 2007-2010” dated 26 September 2007. The Programme is aimed at the settlement of various issues in system development of mechanical engineering for agroindustrial complex and provision of agricultural and processing enterprises with high-performance competitive domestic machinery and equipment.

The Regulation describes current state of domestic mechanical engineering for agroindustrial complex, sets out the aims of programme regarding development, trends, programme implementation and expected result.

Licensing in Mechanical Engineering

Under the legislation of Ukraine, the manufacture of motor vehicles and busses is subject to licensing regarding transport mechanical engineering. The Law of Ukraine “On Licensing of Certain Types of Economic Activity” dated 1 June 2000, stipulates mandatory licensing of this activity.

But it should be taken into consideration that under the Law of Ukraine “On Road Traffic” dated 30 June 1993, only those transport vehicles are allowed to participate in road traffic, construction and operating conditions of which meet the requirements of effective rules, norms and standards of Ukraine, which have certificate of conformity to such requirements and have undergone state technical check-up. The construction of transport vehicles must correspond to the requirements of current rules, norms and standards, as well as to the established level of emission of contaminants into atmosphere, and all reference documentation should be approved by the respective state authorities.

Before the launch of batch manufacturing of transport vehicles or their component parts, special tests and trials are run; according to their result, a set form certificate is issued. Such tests and trials are carried out according to the procedure established by the Cabinet of Ministers of Ukraine.

Under the Law of Ukraine “On Licensing of Certain Types of Economic Activity”, the following is subject to licensing: development, trial, production, operation activity of launchers, spacecrafts and their component parts, terrestrial space infrastructure and its component parts, equipment as a part of space segment of satellite systems.