OKKO, John Deere, and BMW. Large Taxpayers in Ukraine Started to Move Out to Villages

For the last four years, 55 companies have changed their place of incorporation and moved out of big cities to united territorial communities, i.e. villages. This number equals 4% of the large taxpayers. Among them are OKKO, John Deere, BMW, and Huhtamäki.

Half of these companies (25 businesses) that moved out to villages operates in the wholesale area. Eight companies operate in the field of vehicle sales or vehicle maintenance.

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To what industries belong the companies that changed their place of incorporation to a village

Wholesale	25	43.9%
Sale of motor vehicles and motorcycles and their maintenance	8	14.0%
Agriculture and hunting	4	7.0%
Warehousing and logistics	4	7.0%
Retail	3	5.3%
Food production	2	3.5%
Electricity, gas, steam, and conditioned air supply	2	3.5%
Other	9	15.8%

For analysis purposes, we selected businesses that are large taxpayers. For the last year, the turnover of each listed company is over UAH 1.65 billion (EUR 50 million).

Oleksandr Khudiakov, CEO of AL-KO KOBER Ukraine that moved to the village Velyka Dymerka, explains the decision to change the place of incorporation using several factors: land cost, its availability, logistic operators as neighbors.

«We have good relationships with the village council that is now called the UTC. We were the best taxpayers in our UTC in 2019», 

— said Oleksandr Khudiakov.

Local taxes and fees paid by large taxpayers include the property tax, parking tax, and tourism fee. Also, the part of the personal income tax will be deducted from employee salaries.

«There are particular benefits of big businesses moving out to countrysides: the employment rate increases, the underemployment issue is solved, young people do not move abroad or to a big city, diligent investors improve the state of a locality, while the village infrastructure develops. Moreover, the major advantage is that a portion of taxes goes to local budgets, thus keeping villages afloat and helping them develop», 

— commented Oleksandr Chereshniuk, the Head of the Vchoraishensk UTC.

In turn, communities may attract businesses by various methods:

• a preferential local tax rate,
• assistance with permit documents,
• provision of land plots, vehicles, and real property for usage or rent,
• cooperation with residents.