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Foreign contractors should be obliged to create Ukrainian units to join reconstruction tenders, CIPE says

By Ukraine Rebuild News Staff

All foreign companies seeking work on the Ukrainian reconstruction should be obliged to create local companies to ensure a “level playing field” with local firms, the Center for International Private Enterprise (CIPE) said in a new report.

The Washington, DC-based think tank, which promotes open market competition in poorer economies around the world, says the creation of local units would ensure foreign contractors pay taxes to Ukrainian authorities and comply with local legislation.

“This means that only individuals and legal entities that are residents of Ukraine may participate in the tender process, encouraging the establishment of appropriate units that will operate within the Ukrainian legal framework and pay taxes in Ukraine,” CIPE said.

CIPE says it position reflects the opinion of the umbrella groups National Business Coalition (NBC), the Ukrainian Business Council (UBC) and the National SME Platform, which together represent 200 Ukrainian business associations.

The organization also called for widely available training for all potential reconstruction contractors on the tender process, compliance issues and due diligence requirements, and the provision of affordable loans for Ukrainian contractors that aren’t a local unit of a foreign firm.

“Attracting foreign investors and providing comprehensive support for the creation of joint ventures between foreign and Ukrainian businesses should be a priority for the state in the recovery process,” said the report.

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