Локалізація (local content requirement, Ukraine)

The rule

Point 6-1 of Section X of Law 922-VIII, inserted by Law No. 1977-IX of 16 December 2021, provides that temporarily, from 2022 and for a term of ten years, special rules apply where the value of the procurement item is at or above 200,000 UAH. The buyer may procure the listed goods only if their ступінь локалізації виробництва — degree of production localisation — is at or above:

• 2022 — 10 per cent
• 2023 — 15 per cent
• 2024 — 20 per cent
• 2025 — 25 per cent
• 2026 — 30 per cent
• 2027 — 35 per cent
• from 2028 to the end of the ten-year term — 40 per cent

Not later than 31 October each year, the Cabinet may — in agreement with the relevant Verkhovna Rada committee — vary the following year's figure for any individual listed good, by up to 5 percentage points down or 10 up. It may also reduce it for a single procurement.

How the percentage is calculated

The Law states the formula:

СЛ = (1 − (МВ + ІВ) / С) × 100 %

where МВ is the customs value of raw materials, components, assemblies, parts, works, services and other inputs imported into Ukraine by the manufacturer to produce the good; ІВ is the value of imported inputs bought separately or as part of other products from a Ukrainian resident supplier, excluding VAT; and С is the cost of production of the good.

The manufacturer calculates its own figure. The Authorised Body — the Ministry of Economy — then confirms it under a Cabinet-set procedure, publishes a list of procurement items with confirmed localisation on its official website, and monitors continued compliance for goods already listed.

What is covered

Subpoint 2 sets out the list, and it is specific rather than sectoral, running to roughly a hundred named entries. The main groups are: generator sets — diesel, spark-ignition and turbogenerator; transformers, including liquid-dielectric, voltage, measuring and supply transformers; electrical capacitors; ambulances and patient transport vehicles; buses of every description, including city, tourist, articulated, low-floor and electric buses; goods vehicles, tankers, tippers, vans, truck cranes, vehicles with lifting platforms, mobile drilling rigs, fire appliances, breakdown vehicles, road sweepers, water sprinklers and refuse collection vehicles; bodies, trailers and semi-trailers; railway and tramway locomotives and rolling stock, freight wagons, passenger carriages and trolleybuses; helicopters, aircraft and aero engines; steam and hydraulic turbines; pumps and compressors; and mining and construction equipment, including roadheaders, earthmoving machinery, mechanical shovels and excavators.

Subpoint 3 lets the Cabinet, again with committee agreement, approve an additional list of processing-industry goods with its own localisation requirement, not exceeding the subpoint 1 figure for the year. Goods already in subpoint 2 cannot be added to it.

The exemptions that matter most

The closing paragraph of point 6-1 disapplies the whole rule to procurement covered by Ukraine's accession to the WTO Government Procurement Agreement, and to the procurement provisions of other ratified international treaties. Point 3 of the Особливості restates this in operational form: the localisation rule is not applied where the country of origin of the goods is a party to the GPA, or a country with which Ukraine has another ratified treaty containing procurement provisions, including free trade agreements. For most EU, UK, US, Japanese, Korean and Canadian manufacturers, that is the answer — localisation does not bind you.

Two further carve-outs sit in point 3 of the Особливості: goods bought for the Armed Forces, other military formations or law-enforcement bodies at their request and transferred onto the requester's books; and a defined list of energy generation equipment — steam turbines, gas-piston, cogeneration and generator sets, gas turbines, modular boiler houses, heat pumps, boilers and diesel generators with their components — exempt until 31 December 2026 where needed to overcome or prevent a state or regional emergency in the electricity system, and until 25 March 2028 for the Kyiv backup power project. That carve-out was rewritten by Cabinet Resolution No. 957 of 15 July 2026, effective on publication.

Point 3 also disapplies subpoint 4 of point 6-1 and substitutes its own rule for works and services: where performing them involves the buyer acquiring a listed good whose value within the subject matter meets the point 6-1 threshold, the works or services are procured with the localisation rules taken into account.

What to do about it

First, check origin. If your goods originate in a GPA party or an FTA partner, the rule does not apply and you should say so, with evidence of origin, in your bid.

If it does apply, the gate is administrative before it is industrial: you cannot rely on having Ukrainian content, you need to be on the Ministry of Economy's published list of items with confirmed localisation, at a percentage at or above the current year's figure. Calculate against the formula early — imported inputs bought from a Ukrainian distributor still count as imported, which is the point most manufacturers miss.

And plan against the schedule, not the current year. A product that clears 30 per cent in 2026 fails at 35 in 2027 unless the domestic content share moves. If you are structuring a supply chain or a joint venture around Ukrainian public demand for vehicles, rail or machinery, the design target is 40 per cent, not today's number.

Related terms

• Law 922-VIII — Ukraine's Public Procurement Act
• Особливості (CMU Resolution 1178) — Ukraine's martial-law procurement overlay
• Тендерна документація (tender documentation, Ukraine)
• Відкриті торги з особливостями (open tendering with peculiarities, Ukraine)

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