RESOLUTION

of the Forum “Reconstruction of Ukraine: Quality Institutions and Economic Security”

Resolution of the United Ukrainian Small and Medium-Sized Business

We, representatives of the National Business Coalition of SMEs and the Ukrainian Business Council, which includes more than 200 SME business associations, recognizing our shared responsibility for the recovery, preservation, and sustainable development of Ukraine’s economy, appeal to the President of Ukraine, the Verkhovna Rada of Ukraine, and the Cabinet of Ministers of Ukraine with the following:

Based on the results of surveys and research conducted among businesses in frontline regions, we have identified key threats and formulated priority tasks that will contribute to the preservation and recovery of the economy in frontline regions:

Strategic priority 1. Financial instruments for frontline businesses

Objective: to ensure that businesses in frontline regions have access to investment and resources for recovery and development, minimizing barriers to lending and grant support.

Recommendations:

1. Introduce a mechanism for preferential loans with state guarantees instead of burdensome collateral requirements for micro, small, and medium-sized businesses in frontline communities (including within the framework of the “5-7-9” program).

2. Simplify procedures for accessing financing (loans, grants, compensation): reduce the package of documents, maximize the digitization of applications, and ensure transparent and understandable selection criteria.

3. Expand the possibility of obtaining grants for the restoration of damaged property, replenishment of working capital, and renewal of fixed assets for micro and small businesses affected by shelling or occupation.

4. Create grant programs for the robotization and automation of production for enterprises in the frontline region to compensate for the shortage of skilled personnel, increase productivity, and enhance economic security.

5. Amend the state program “e-Work” with a focus on preserving jobs in frontline communities:

– prioritize applications from businesses in frontline territories;

– increase the maximum grant amounts;

– initiate amendments to paragraph 5 of CMU Resolution No. 738 of 21.06.2022 “Certain Issues of Granting Grants to Businesses”, namely: add damage assessment services to the areas of grant expenditure.

– allow grant expenditure on the restoration of buildings and premises.

6. Introduce targeted programs to compensate for the costs of alternative energy (generators, energy storage devices, fuel, storage systems) for MSMEs operating in areas subject to frequent shelling and regular power cuts.

7. Roll out regional and national grant programs for MSMEs in frontline regions (including through international technical assistance) with transparent selection criteria and priority for businesses that preserve jobs.

8. Remove restrictions and allow compensation to be received by enterprises that are registered and operate in territories designated as Territories of Possible Combat Operations (in accordance with paragraph 1 of Section I of the Ministry of Development’s order), which include regions in need of irrigation restoration. Amend CMU Order No. 1070: increase the budget subsidy to 50% of the cost of the work and remove restrictions for areas of possible combat operations.

9. Amend the Tax Code (Articles 292, 140/142) to provide full tax exemption (PIT, single tax, income tax) for international grants earmarked for the restoration of critical infrastructure, energy security (generation/conservation), and alternative water supply (wells

10. Introduce full legislative exemption from taxation (PIT, UT) for targeted grant (non-repayable) assistance received by both individual entrepreneurs and legal entities from international donors, foundations, and the state budget by supplementing Article 165 of the Tax Code of Ukraine (clause 165.1.69).

11. Develop programs to support exports and international integration of frontline businesses: financial support for participation in trade missions, exhibitions, and fairs; preferential loans for the development of export-oriented production.

12. Introduce compensation for part of the fuel and logistics costs for enterprises that provide critical supply chains (food, medicines, building materials, etc.) in frontline communities.

13. Ensure funding for the reconstruction of business infrastructure in the Kharkiv region and other frontline regions (production facilities, warehouses, service centers) on a co-financing basis: state – community – donor – business.

14. Strengthen support for local businesses through state and municipal procurement mechanisms: priority in procurement for humanitarian needs; priority supply of products and services to the Armed Forces of Ukraine; establishment of minimum quotas for frontline suppliers in state and donor programs. Introduce targeted state subsidies to frontline communities for the implementation of local SME support programs (grants, preferential loans, consulting services) with mandatory co-financing from local budgets and compensation for local tax breaks introduced by local communities.

15. Prioritize projects of frontline communities in the State Regional Development Fund and other reconstruction funds, especially those that directly support MSMEs, veteran businesses, and job creation.

16. Equate job preservation by enterprises in frontline territories with the creation of new jobs under state programs (loans, grants).

17. Provide for state budget subsidies for the installation of protective structures for defense industry enterprises.

18. Review the NBU’s standards for guarantees when issuing loans to critically important enterprises.

Strategic priority 2. Insurance against military risks and compensation

Objective: to create effective tools to cover direct and indirect business losses from military actions so that entrepreneurs can plan their activities and recovery based on clear and transparent procedures.

Recommendation:

1. Introduce a state or public-private system of insurance against military risks for businesses and facilities in frontline regions with clearly defined conditions of access for MSMEs. CMU Resolution No. 1541 provides for state compensation of part of the insurance premiums, but only UAH 1 billion is planned for this program in 2026, which is insufficient.
2. Compensate part of the cost of insurance policies for micro, small, and medium-sized businesses operating in frontline communities through state and donor funding.
3. Create mechanisms for compensating direct losses (damage, destruction, destruction of property) through a combination of insurance instruments and grants for the restoration of fixed assets.
4. Develop and implement a methodology for mechanisms for partial compensation of indirect losses of affected enterprises.
5. Ensure reimbursement of expenses for demining land and territories necessary for the restoration of business activities, including the possibility of collective applications from communities and business associations.
6. Introduce systematic competitive legal and organizational support for entrepreneurs in recording losses and obtaining compensation, including compensation for the costs of assessing damaged or destroyed property.
7. Legislatively define the status of an “affected enterprise” as a business entity that has suffered destruction or damage to its production facilities, equipment, or property as a result of hostilities, terrorist acts, or occupation. At the same time, establish the criteria for such status and provide unique conditions for affected businesses: tax preferences, compensation mechanisms, unconditional partial state subsidization of risk insurance, and simplification of licensing procedures.

Strategic priority 3. Tax and regulatory instruments

Objective: to reduce the tax and administrative burden on businesses operating under shelling and to create a flexible, predictable regulatory environment for frontline territories.

Recommendations:

1. Continue to exempt businesses in Kharkiv from paying land tax and property tax for the duration of martial law and for at least six months after its end, extending similar decisions to other frontline communities in Kharkiv and Sumy regions.

2. Introduce reduced rates of basic taxes (social security contributions, personal income tax, VAT, income tax) for enterprises and individual entrepreneurs operating in high-risk areas, subject to compliance with the specified minimum wage level:

• Amend the Tax Code of Ukraine, Section IV “Personal Income Tax” and Section VIII “Unified Social Contribution,” establishing: “For employers and individual entrepreneurs registered in frontline regions for employees who permanently work in such territories, the unified social contribution rate shall be 11%, and the personal income tax rate is 9%.”
• Add a new provision to Section VIII “Unified Social Contribution” of the Tax Code of Ukraine: “Individual entrepreneurs have the right to voluntarily pay the unified social contribution during martial law. Failure to pay the unified social contribution during this period shall not result in penalties and shall not constitute grounds for the emergence of debt.”
• Amend the Law of Ukraine “On Land Valuation” by introducing a “frontline” coefficient into the formula for normative monetary valuation: 0 — for areas of active combat operations, 0.2 — for high-risk areas, 1 — for rear regions, which will make rent fair and reduce the financial burden on businesses in frontline communities.
• Amend the Tax Code of Ukraine, Section III “Corporate Income Tax,” by adding the following provision: “Corporate profits that are reinvested and directed toward the development of production, equipment upgrades, or capacity expansion in frontline regions are not subject to income tax.”
• Amend Article 181 of the Tax Code of Ukraine: instead of the current rule on VAT registration for businesses with a turnover of more than UAH 1 million per year, establish the following: “Mandatory registration as a value-added tax payer shall occur if the volume of taxable transactions exceeds UAH 10 million during the last 12 calendar months.”
• Introduce a complete exemption from land tax and real estate tax (if it is not used or its use is limited) for businesses whose facilities are located within territories used by the Security and Defense Forces of Ukraine for the engineering and technical arrangement of defense lines, the placement of checkpoints, fortifications, and other military structures.3. Звільнити грантові виплати, включно з коштами міжнародної технічної допомоги, від оподаткування для мікро-, малого та середнього бізнесу.

4. Allow the use of part of the grant funds from state programs (in particular, e-Robota) to compensate for the costs of assessing damage to property as a result of military actions.

5. Cancel tax debts for 2022–2024 for enterprises that have suffered confirmed war damage in frontline communities in an amount not exceeding the damage that has been compensated or restored by the enterprise.

6. Amend currency legislation to simplify the repayment of loans from foreign creditors by businesses in frontline territories, including softening or canceling penalties for late payments caused by military actions.

7. Refrain from applying penalties and fines for violations of foreign economic transaction deadlines if such violations are directly related to military risks, logistics restrictions, blocking of bank transactions, or occupation.

8. Introduce a regime of “total deregulation” for micro, small, and medium-sized businesses for the period of martial law + 6 months.

9. Establish a moratorium on on-site inspections of businesses in frontline communities (except for inspections related to life and health safety, the environment, and critical infrastructure) until the end of martial law.

10. Focus state supervision and control measures in the area of cash register use by micro-enterprises exclusively on high-risk categories of taxpayers.

11. Raise the VAT registration threshold in line with the inflation index for the years when it remained unchanged.

12. Deregulate procedures for connecting businesses to power grids and other utility networks by reducing the time and number of approvals required.

13. Suspend regulatory acts that do not affect safety and basic social standards but create a disproportionate administrative burden for businesses in frontline communities.

14. Introduce public and independent state supervision of land issues in frontline territories to reduce the risk of abuse in situations where owners cannot personally protect their rights due to security circumstances.

15. Strengthen the protection of legal business and fair competition: create mechanisms for rapid response to cases of administrative pressure, unfair competition, and abuse of monopoly power.

16. Simplify requirements for shelters and premises for training and vocational education, maintaining basic safety standards but removing excessive bureaucratic barriers for educational and training institutions.

17. Regulate the legal status of relocated businesses, namely:

18. Legislate the status of relocated businesses that have moved their operations from temporarily occupied, frontline, and other territories that have been subject to active hostilities since February 24, 2022.

• Provide for the reflection of this status in state registers (in particular, the Unified State Register, information systems of the State Tax Service, and, if necessary, other registers) with clear legal consequences for:

− access to state, local, and donor support programs;

− participation in public procurement and grant competitions;

− lending, opening accounts, and other banking operations.

• Clearly stipulate that the relocation of a business entity does not create an obligation to change its tax address if the entrepreneur does not wish to do so, and cannot be a basis for restricting access to support programs, banking services, or cooperation with counterparties.
• Introduce safeguards against discriminatory practices by banks, regulatory authorities, and other institutions that:

− refuse to provide loans or services solely because of a tax address in a temporarily occupied or frontline territory;

− force re-registration without a direct legal requirement.

• Provide that relocated businesses can use all state support instruments provided for businesses in both host and frontline territories without additional barriers related to the legal uncertainty of their status.

Strategic Priority 4. Preservation of human capital and development of veteran entrepreneurship

Objective: to retain and develop human capital in frontline territories, create opportunities for veterans, IDPs, and local residents to realize their potential in entrepreneurship and employment.

Recommendations:

1. Introduce a mechanism for 100% reservation of key personnel at critical enterprises in frontline regions, including individual entrepreneurs.

    

2. Make systemic changes to legislation (the Law “On Mobilization,” Resolution of the Cabinet of Ministers No. 76) to allow the reservation of key personnel for all enterprises, not just critical enterprises, as well as for individual entrepreneurs (FOP), thereby equating them with legal entities in terms of mobilization registration and deferral.
3. Change the approach to determining critically important enterprises for reserving employees: instead of a single coefficient of 2.5, establish a regionally adapted average wage level, in particular for the Sumy region — 1.5. This will allow for the difference between border and rear regions to be taken into account and will create realistic conditions for businesses operating in wartime.
4. Introduce an “economic reservation” model for owners and employees of micro, small, and medium-sized businesses operating in critical sectors (food security, logistics, energy, construction, medicine, etc.).
5. Ensure transparent and predictable mobilization approaches, taking into account the shortage of personnel in frontline communities, by providing for consultations with local authorities and business associations.
6. Simplify procedures for entrepreneurs and key employees to travel abroad to participate in business negotiations, exhibitions, and training programs with clear criteria, electronic submission of documents, and guarantees of return.
7. Launch training and retraining programs in areas critical to recovery (construction, energy, logistics, manufacturing, IT, agriculture, etc.) in partnership with communities, employment centers, educational institutions, and business associations.
   
8. Develop programs for the reintegration of veterans into the business, public, and municipal sectors: training, retraining, mentoring programs, internships, local employment programs, and support for veteran business initiatives.
   
9. Introduce special programs to support self-employment among veterans and internally displaced persons in frontline communities (grants, consultations, mentoring, assistance with business registration).
   
10. Provide safe premises for offline training and vocational education (vocational education centers, business schools, economic sustainability hubs) as an infrastructure base for human capital development in frontline territories.
    
11. Develop and approve model local entrepreneurship support programs for frontline communities (in particular, programs for the restoration of damaged business property).

Other institutional and ecosystem proposals

Objective: Strengthen the institutional environment and business support ecosystem in frontline regions through partnerships, platforms, and clusters.

Recommendations:

1. Grant the Rise Together crowdfunding platform the status of a recognized nationwide initiative to support entrepreneurship, bringing together the resources of businesses, communities, philanthropists, and international partners to rebuild SMEs in frontline regions; Consider the possibility of co-financing by the state and international donors of projects verified through the Rise Together platform, with priority given to businesses in frontline communities; Integrate Rise Together into state and regional programs for business recovery, grant support, and reintegration as an additional tool for mobilizing private resources.

    

2. Promote the launch and support the development of new business clusters in frontline regions (manufacturing, agricultural, creative, logistics, etc.), recognizing them as an important tool for economic recovery and export development.
3. Introduce supervision and mentoring programs for new clusters by successful cluster initiatives with more than three years of experience.
4. Ensure stable support for entrepreneurship development programs through business associations with proven experience, including grant funding for business associations, clusters, and business development centers.
5. Ensure transparent, accountable, and predictable distribution of international financial assistance at the regional and community levels, involving business associations in consultations, priority selection, and results monitoring.
6. Create a “project bank” of frontline communities for businesses, donors, and investors with descriptions of projects, needs, co-financing opportunities, and potential partners.
7. Provide for the mandatory involvement of representatives of business associations from frontline communities in working groups when preparing draft laws, local and state programs related to the restoration and special economic regime for frontline territories.
8. Consider the issue of legislatively enshrining the concept of “frontline territory (region/area). This concept will be used as the sole legal basis for further determining and granting preferences, tax breaks, compensation, guarantees, subsidies, and regulatory relief for businesses and the population.
9. Include the cross-sectoral pilot project “Public transport services, infrastructure renewal, development of localized production of small-capacity environmentally friendly rolling stock” in the priorities for economic sustainability of frontline regions, in particular through support at the regional and local administration levels, promotion of the development and implementation of co-financing mechanisms, including through access for private investors to Ukraine Facility financial instruments.

The resolution is sent to the Cabinet of Ministers of Ukraine, the Office of the President of Ukraine, relevant committees of the Verkhovna Rada of Ukraine, central executive bodies, regional military administrations and local self-government bodies of frontline communities, as well as international partners and donor organizations that support Ukraine’s economic recovery.

The Forum participants express their readiness to continue cooperation in working groups, advisory bodies, and public-private platforms to implement the proposals outlined in the Resolution.

The business community calls on the President of Ukraine, the Cabinet of Ministers of Ukraine, and members of parliament from all political forces to discuss and support the proposals formulated by think tanks and representatives of business associations based on the findings of surveys and studies, and to adopt the necessary amendments to regulatory and legal acts as soon as possible.

National Business Coalition MMB                                                                                                   Ukrainian Business Council