✔️What does the Law on Localization of Production in Public Procurement require?
On July 14, 2022, Law of Ukraine No. 1977-IX entered into force, which amends the Law of Ukraine “On Public Procurement” in terms of requirements for the degree of localization of production.
The law requires the mandatory presence of a Ukrainian component for certain commodity items for which state customers announce tenders.
✔️Does localization apply to all products?
Currently no, localization of production is currently spread only to 5 large categories of the engineering industry:
📍railway transport
📍city transport
📍utility and special equipment
📍power engineering
📍aerospace
✔️What percentage of localization must suppliers have?
As of 2022, the degree of localization of production should be equal to or exceed 10%, but this percentage will increase with each subsequent year:
in 2023 – 15%;
in 2024 – 20%;
in 2025 – 25%;
in 2026 – 30%;
in 2027 – 35%;
from 2028 until the end of the 10-year term of this clause – 40%.
✔️How to calculate the degree of localization of production?
According to the formula approved by the Cabinet of Ministers of Ukraine:
SL = (1 – (MV+IV) / C) × 100%,
where SL is the degree of localization of production;
MV – customs value of raw materials, materials, assemblies, units, details, component parts and component products, works, services and other components imported into the customs territory of Ukraine by the manufacturer for the production of goods that are the subject of purchase, hryvnias;
IB – the cost of imported raw materials, materials, units, aggregates, parts, component parts and component products, works, services and other components, purchased separately and/or as part of products for the production of the goods that are the subject of the purchase, from a supplier who is a resident of Ukraine, excluding value added tax, hryvnias;
C is the cost price of the goods that are the subject of purchase, hryvnias.
✔️How to add your product to the list of localized?
📍Check that your product is subject to the requirement to determine the degree of localization
📍Prepare information about the manufacturer and the product, as well as the cost calculation of the product in accordance with the requirements of Appendix 1 and 2 of Resolution
No. 861 📍Choose one of the platforms to perform actions in the Prozorro system
📍Go to site, contact the call center and go through the registration procedure
📍Create an application for the automatic qualification of the manufacturer in the system
📍Add the product by specifying the data in the system and uploading the prepared documents
For more detailed information, you can contact Yulia Danyshchuk JSC Bachynskyi and partners
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