Investment Regulation in Ukraine: Key Changes and Trends in 2025

In 2025, the investment climate in Ukraine was shaped by two opposing trends occurring simultaneously: economic recovery and the persistently high levels of risk.

At the outset of 2025, forecasts suggested that, despite ongoing wartime challenges, macroeconomic stabilization and sustained support from international partners would foster a gradual recovery in investment activity. In particular, Ukraine was expected to achieve GDP growth exceeding 3.9%, accompanied by an increase in foreign direct investment inflows. In practice, however, the year’s performance proved considerably weaker due to a range of adverse factors. According to current estimates, Ukraine’s real GDP growth in 2025 reached just approximately 1.8%.

Analysts identify several structural factors that contributed to the deceleration of economic growth compared to 2024. Among the principal causes were the exhaustion of the “low base effect” that had supported growth in 2023–2024, the worsening security environment and prolonged duration of the war, as well as significant disruptions to industrial production and exports resulting from damage to energy infrastructure and logistical networks.

In the Ukrainian context, where substantial investment is critically needed for the reconstruction of infrastructure, the energy sector, and the military-industrial complex, the transformation of the national investment framework has acquired particular strategic importance. This includes the implementation of structural reforms and the continued modernization of the regulatory environment, including the approximation of Ukrainian legislation to EU law.

Against this backdrop, legislative and regulatory efforts undertaken by Ukrainian public authorities in 2025 were primarily concentrated on establishing a comprehensive legal framework for attracting investment into infrastructure projects, while also developing effective mechanisms for the selection, implementation, and oversight of investment projects, particularly those financed through state and local budget resources.

Agreement on Establishment of Reconstruction Investment Fund

In April 2025, Ukraine and the United States signed the Agreement on the Establishment of the Reconstruction Investment Fund, which is intended to serve as one of the principal financial instruments for attracting capital to Ukraine’s economic recovery and for strengthening the strategic partnership between the two countries. This Agreement establishes a framework for long-term investment cooperation aimed at mobilizing both public and private capital to finance priority sectors of the Ukrainian economy.

The core purpose of the Reconstruction Investment Fund is to channel resources into the implementation of critically important projects, particularly in the areas of minerals extraction and processing, infrastructure development, innovation, and the technological modernization of the economy. It also creates mechanisms to facilitate the involvement of international investors, including private corporations, institutional funds, and government entities from partner states supporting Ukraine’s reconstruction.

A defining feature of the Fund’s operational model is its reliance on future revenues generated from new licenses in the critical raw materials, oil, and gas sectors, while existing assets and previously allocated budget revenues are excluded from its financial base. Under the proposed structure, Ukraine will allocate 50% of revenues derived from new royalty payments associated with newly-developed projects to the Reconstruction Investment Fund.

The investment policy of the Reconstruction Investment Fund provides for the exclusive reinvestment of its resources into the Ukrainian economy. During the first 10 years of operation, profits will not be distributed among the participating parties but will instead be fully reinvested into new reconstruction and development projects. Thereafter, partial profit distribution may be permitted in accordance with mutually-agreed governance arrangements.

The Reconstruction Investment Fund is administered on a parity basis between Ukraine and the United States, reflecting a balanced governance structure designed to ensure joint oversight of investment decision-making. A significant role in the implementation of the Agreement is assigned to the U.S. side through the U.S. International Development Finance Corporation (DFC), which is expected to facilitate the mobilization of additional private capital and advanced technologies from the United States, European Union, and other partner countries. Particular emphasis is placed on technology transfer as a strategic component for enhancing the investment effectiveness of funded projects.

The Agreement also provides important tax guarantees, under which revenues and contributions allocated to the Reconstruction Investment Fund are exempt from taxation in both Ukraine and the United States, thereby strengthening the mechanism’s overall investment attractiveness.

To implement the Agreement, on 5 November, 2025, the Cabinet of Ministers of Ukraine adopted Resolution No. 1411 On Certain Issues of Ensuring the Implementation of the Agreement between the Government of Ukraine and the Government of the United States of America on the Establishment of the American-Ukrainian Investment Fund. This resolution establishes the institutional and procedural framework necessary for the practical implementation of the bilateral arrangements. It defines the mechanisms of cooperation between public authorities, Ukrainian businesses, and American partners, while also specifying the approaches to the implementation of infrastructure and resource-sector projects within the framework of the Reconstruction Investment Fund.

The Resolution outlines the sectors covered by the Agreement, including subsoil use and infrastructure, establishes the principles governing project financing in cooperation with the Reconstruction Investment Fund and authorized institutions, and sets forth the core requirements for project participants with respect to investment participation and commercialization. It also provides for the development of transparent procedures for the selection of projects and counter-parties.

At the initial stage of its operations, the Reconstruction Investment Fund identified three primary areas of investment focus: greenfield projects, transactions involving the expansion and modernization of existing assets (including M&A operations), and venture capital and growth-oriented projects. This structure reflects a strategic effort to balance long-term infrastructure investment with higher-risk, high-return development instruments.

At the same time, efforts are under way to expand the investment platform by attracting additional private capital, particularly via co-investment mechanisms and partnership programs. In this context, the capital of the Reconstruction Investment Fund is viewed as a catalyst capable of leveraging substantially greater volumes of private investment into reconstruction projects.

Accordingly, the practical implementation of the Agreement on the Establishment of the Reconstruction Investment Fund during the second half of 2025 was primarily institutional in nature, focusing on the establishment of governance structures, the adoption of the necessary regulatory framework, and the identification of strategic investment priorities.

Reform of public investment management

In January 2026, the Ministry of Finance of Ukraine announced that a key stage of the public investment management reform had been completed in 2025, establishing unified rules for the planning, selection, and financing of investment projects at the national, regional, and local levels.

Among the principal achievements were:

• the adoption of a comprehensive public investment management methodology applicable at the state, regional, and local levels, covering the full investment cycle, including planning, preparation, appraisal, selection, implementation, and monitoring of investment projects;
• the enactment of amendments to the Budget Code of Ukraine, which established the legal foundations for medium-term budget planning of public investments;
• the approval of an implementation plan for the Public Investment Management Reform Roadmap for 2024–2028;
• the creation of the institutional framework for the reform, including the establishment of the Strategic Investment Council and inter-agency coordination bodies.

The public investment management reform implemented in 2025 marked a critical stage in Ukraine’s transition toward a systematic and strategically-oriented model of state investment policy. The reform is designed to integrate investment planning into the broader budgetary process, introduce medium-term planning mechanisms, create a unified portfolio of investment projects, and ensure a full-cycle system for project selection and monitoring. During 2025, the principal regulatory and institutional foundations of the reform were established, primarily through the adoption of secondary legislation and the launch of new coordination mechanisms. At the same time, practical implementation remains at an early stage, and the long-term effectiveness of the new model will largely depend on the institutional capacity of the state and the continued adaptation of procedures to the realities of a wartime economy and post-war reconstruction.

The new version of the Law of Ukraine On Concessions

The reform of concession legislation implemented in 2025 through the adoption of the Law of Ukraine No. 4510-IX On Public-Private Partnership of 19 June, 2025 became a significant component of the broader transformation of Ukraine’s investment policy in the context of a wartime economy and preparations for large-scale reconstruction. This legislative act effectively amends the previous Law of Ukraine On Concessions of 3 of October, 2019, by introducing a fundamentally revised regulatory framework.

The essence of the concession reform extends beyond isolated amendments to existing provisions; rather, it establishes a new systemic model in which concession mechanisms are incorporated into a broader public-private partnership (PPP) architecture. This reflects a strategic shift away from the fragmented use of concessions as a standalone investment instrument toward a unified system for attracting private capital into public infrastructure and development projects.

Among the most significant changes were the harmonization of procedures governing the preparation and implementation of PPP projects, including concessions, as well as the introduction of unified rules for the selection of private partners. Lawmakers substantially simplified regulatory requirements by reducing the duration and complexity of procedures, which had previously been regarded as one of the principal barriers to investor participation. At the same time, the reform expanded the range of available state support instruments, including the introduction of grant co-financing mechanisms, the enhancement of state guarantee frameworks, and the strengthening of creditor protections, particularly through the formalization of direct agreements and step-in rights mechanisms for the replacement of private partners.

An important innovation was the expansion of the scope of application of concessions, including into new sectors related to critical infrastructure and even certain defense-related facilities. In parallel, special regimes were introduced for selected industries, providing for simplified procedures for project implementation. These approaches are intended to accelerate the launch of investment initiatives and enhance the flexibility of the regulatory framework.

At the same time, deregulation and the expansion of discretionary powers granted to public authorities give rise to a number of risks. In particular, simplified procedures may lead to a reduction in competition and transparency, while the proliferation of special regimes may result in fragmentation of legal application. An additional challenge remains the significant dependence of the new model on secondary legislation, which may create legal uncertainty for investors.

Overall, the 2025 reform establishes the necessary legal preconditions for the more active use of concessions as an instrument for attracting investment into Ukraine’s reconstruction.

Updating of Foreign Exchange Restrictions by the National Bank of Ukraine

In 2025, the National Bank of Ukraine continued the gradual liberalization of foreign exchange regulation, progressively easing restrictions introduced in response to the imposition of martial law. These measures represent a form of controlled currency deregulation aimed at restoring elements of market functioning in the foreign exchange sector while maintaining macro-financial stability.

In particular, the amendments approved by Resolution of the Board of the National Bank of Ukraine No. 53 of 9 May, 2025, On Amendments to Resolution of the Board of the National Bank of Ukraine No. 18 of 24 February, 2022, further specify the list of transactions permitted within the investment limit. These include settlements related to “historical” foreign economic obligations, refunds of advance payments under contracts, financing of foreign subsidiaries, as well as certain categories of payments connected with judicial and arbitration proceedings.

By Resolution of the Board of the National Bank of Ukraine No. 95 of 5 August, 2025, On Amendments to Resolution of the Board of the National Bank of Ukraine No. 18 of February 24, 2022, the scope of dividend repatriation was expanded. In particular, the payment of dividends for the year 2023 was permitted within a cumulative monthly limit of EUR 1 million (or its equivalent). This development effectively enabled businesses to partially repatriate profits generated during earlier periods of operating activity, starting from 1 January, 2023, thereby indicating a gradual broadening of the horizon of foreign exchange liberalization.

Another regulatory development concerned the continued implementation of conceptual approaches aimed at restoring the market for foreign exchange derivatives, developed in cooperation with international financial institutions, including within the framework of the IMF program engagement. In this context, a phased reintroduction of transactions involving foreign exchange derivative instruments, previously subject to significant restrictions, has been envisaged.

In particular, market participants were granted the possibility to conduct foreign currency sales for hryvnyas under forward contracts without the delivery of the underlying asset, thereby expanding the toolkit for managing foreign exchange risk. At the same time, residents (legal entities and sole proprietors) were allowed to enter into forward contracts with delivery of the underlying asset for the purpose of hedging foreign exchange risks arising from foreign economic transactions, particularly import-related contracts.

In addition, the National Bank of Ukraine expanded the list of foreign exchange transactions related to fund refunds, in particular by permitting the return of erroneously transferred foreign currency between clients’ accounts.

An important element of the liberalization process was also the harmonization of regulatory approaches to external loans raised with the participation of a pool of foreign creditors, including international financial institutions. From now on, the servicing and repayment of such obligations may be carried out not only in favor of IFIs but also in favor of other participants of the lending pool, provided that they meet the applicable credit rating requirements. Furthermore, transfers to foreign guarantors, sureties, and insurers are permitted in cases where they perform obligations on behalf of resident borrowers, which aligns with the approaches already applied to export credit agencies.

The next stage of foreign exchange liberalization provides for the introduction of a so-called incentive-based regulatory model. In particular, the list of transactions that may be carried out beyond general restrictions within the investment limit is being expanded, including dividend repatriation. The investment limit is defined as the amount of foreign investment contributed in foreign currency to the charter capital of an enterprise starting from 12 May, 2025.

In addition, mechanisms are being introduced for the conversion of a resident’s external debt into a non-resident’s equity contribution to the charter capital of the respective enterprise, thereby creating additional instruments for business capitalization. At the same time, banks are permitted to reflect such transactions in their information systems as an early termination of the corresponding credit obligations.

Taken together, these regulatory changes indicate a transition by the National Bank of Ukraine toward a more flexible model of foreign exchange regulation, combining the gradual restoration of market mechanisms with the retention of certain elements of currency control. This approach is aimed at maintaining a balance between stimulating investment activity and ensuring the stability of the foreign exchange market in the conditions of a wartime economy.

Draft amendments to the Tax Code of Ukraine

On 4 November, 2025, the Verkhovna Rada of Ukraine adopted in the first reading the draft Law of Ukraine On Amendments to Section XX ‘Transitional Provisions’ of the Tax Code of Ukraine regarding the Compensation of Investments through Taxes (registration No. 13415). This draft bill forms part of the state policy framework aimed at stimulating investment activity and is designed to accelerate capital inflows into high value-added sectors of the economy.

The objective of the legislative initiative is to attract large-scale investment into the processing industry, create new jobs, and support the recovery of Ukraine’s economy through the introduction of a mechanism for partial compensation of investment costs. Conceptually, the proposed approach is aligned with models of regional state aid applied in the European Union, particularly those aimed at supporting investment in strategically important sectors of the economy.

This draft proposes amendments to the Tax Code of Ukraine through the introduction of a special tax incentive regime for business entities included in the Register of Investors implementing investment projects in the processing industry. The main tax incentives include:

• exemption from value added tax on the importation into the customs territory of Ukraine of new equipment and components used exclusively for the implementation of an investment project. The list of such equipment and the corresponding UCC FEA (Ukrainian Classification of Goods for Foreign Economic Activity) codes are to be defined by the provisions of the Customs Code of Ukraine;
• exemption from corporate income tax for a period of up to 10 years from the commencement of the investment project;
• the possibility of partial or full exemption from the land tax and lease payments for state and communal land plots, subject to a decision of the relevant local self-government authority.

The scope of these tax incentives applies to Ukrainian resident legal entities engaged in economic activities in the processing industry, as well as in the processing of industrial and household waste (excluding landfill disposal). At the same time, the draft excludes so-called socially undesirable activities, particularly the production of alcoholic beverages and tobacco products.

The administration of the mechanism will be carried out through the Register of Investors implementing investment projects in the processing industry. The procedure for maintaining the register, the conditions for inclusion and exclusion, as well as reporting requirements regarding the implementation of investment projects will be determined by the Cabinet of Ministers of Ukraine.

Overall, the proposed model combines fiscal incentives with elements of state investment regulation and is aimed at establishing a predictable and targeted mechanism for supporting investment in strategically important sectors of the economy.

Draft Law of Ukraine On the Screening of Foreign Direct Investment

In 2025, the Ministry of Economy of Ukraine, together with an inter-agency working group consisting of authorized bodies of the security and defense sector and central executive authorities, worked on developing a risk assessment mechanism related to foreign investments, particularly with regard to their compliance with national interests. This approach establishes a new model of state control over foreign direct investment (FDI), designed to combine investment openness with security-related restrictions, in line with the practices of the European Union and OECD countries.

On 22 September, 2025, the Verkhovna Rada of Ukraine registered a framework draft bill On the Screening of Foreign Direct Investments, which provides for the introduction of a mandatory screening procedure for foreign investments in sensitive sectors of the economy in accordance with European standards. The draft defines the approach to identifying investments subject to screening, as well as the general framework for assessing their potential impact on national security.

The sectors subject to screening include critical infrastructure, extraction of strategically-important minerals, as well as activities related to military goods and dual-use items. The establishment of this list reflects the legislator’s intention to focus regulatory oversight on the most sensitive sectors of the economy.

The screening procedure will apply in cases where a foreign investor acquires a significant level of influence over a company, in particular through the acquisition of more than 25% of voting shares or the ability to exercise decisive influence over its management bodies. In addition, screening may be triggered by the acquisition or lease of assets whose value exceeds a defined threshold of the company’s total asset value.

Overall administration of the screening mechanism is expected to be entrusted to the Cabinet of Ministers of Ukraine, supported by a specially-authorized inter-agency commission. Its composition may include representatives of relevant ministries and security sector bodies, thereby ensuring the cross-sectoral nature of decision-making.

This draft bill establishes a review period for investment transactions of up to 90 calendar days, with the possibility of extension where additional analysis is required. It also provides for legal consequences in cases where investments are undertaken without undergoing the mandatory screening procedure, including the possibility of declaring such transactions void, as well as restricting the corporate rights of the investor.

This draft also introduces an obligation for foreign investors to monitor changes in ownership structures and submit regular reports to the competent authorities, with the aim of ensuring ongoing oversight of investment implementation.

In the context of interaction with competition law-enforcement agencies, the draft proposes a model under which merger control proceedings conducted by the Anti-monopoly Committee of Ukraine would take into account whether the investment screening procedure has been completed in advance or whether its application has been deemed unnecessary. This establishes an additional layer of coordination between the state’s competition and investment policies.

Expert assessments note that the framework draft law establishes a general architecture for an  investment screening system but contains a number of evaluative concepts and delegates a significant portion of procedural regulation to the Cabinet of Ministers of Ukraine. This approach creates potential risks of expanded administrative discretion and inconsistencies in law-enforcement practice.

Alternative draft law No. 14062-1, as registered on 6 October, 2025, proposes a more detailed regulatory model, in particular by embedding key procedural elements directly at the level of legislation. It provides for clearer review timelines, requirements for reasoned decision-making, the possibility of conditional approval of investments, and enhanced investor protections, including the right to appeal and the protection of confidential information. At the same time, the implementation of such a model would require the establishment of a specialized institutional infrastructure and adequate resource provision.

Overall, both draft laws reflect a common trend toward the development of a foreign investment screening system in Ukraine that seeks to balance national security priorities with the requirements of investment attractiveness and European integration.

Conclusions

In 2025, Ukraine’s investment policy is increasingly characterized by a systemic transformation, reflected in three interrelated dimensions: (1) the development of institutional mechanisms for capital attraction, including the Reconstruction Investment Fund; (2) the modernization of the public investment management system and its integration into the budgetary process; and (3) the establishment of new regulatory frameworks for controlling investments in sensitive sectors of the economy.

Public investment management reform lays the groundwork for a shift toward medium-term, strategically-oriented planning of public investments, which is a key precondition for improving the efficiency of budget resource allocation.

A substantial component of the transformation of the investment environment is also the revision of the concession regulatory framework, aimed at deregulating procedures, expanding public-private partnership instruments, and increasing flexibility in attracting private capital.

At the same time, the National Bank of Ukraine is continuing its policy of controlled foreign exchange liberalization, gradually restoring market-based mechanisms of currency regulation. The implemented measures indicate a transition toward a more flexible model that combines the stimulation of investment inflows with the preservation of macro-financial stability.

Another emerging trend is the potential development of tax incentive mechanisms for investment, particularly through the introduction of compensation-based models for investments in the processing industry.

A further significant development is the declared intention to establish a foreign direct investment screening system, reflecting a balance between investment openness and the state’s security priorities.