Local budgets will receive a portion of subsoil use royalties beginning in 2018

On 20 December 2016, the Ukrainian Parliament approved a new law providing that local budgets will receive a portion of revenues from subsoil use royalties.

Currently, 100 percent of such revenues go directly to the state budget. However, under the new law, the state budget will receive only 95 percent of the revenues. The remaining 5 percent will be distributed among the territories where the subsoil is used.

In Ukraine, exploration for, and production of, oil and gas must be approved by local authorities. The allocated portion of royalty revenues may serve as an incentive to such authorities when providing the necessary approvals.

The new law will enter into force on 1 January 2018.

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