---
title: "Ukraine Cabinet Approves Private Construction of Underground Defense Plants"
description: "Ukraine's Cabinet allowed private businesses to build underground defense plants and simplified component imports by lifting duties and VAT."
date: 2026-10-22T10:32:42.907Z
lang: en
url: https://xab.info/en/posts/ukraine-private-business-underground-defense-plants
tags: [ukraine, defense-industry, underground-factories, government-policy, economy, military]
author: "Alexander Buran"
publisher: "XAB.info"
---

# Ukraine Cabinet Approves Private Construction of Underground Defense Plants

![Warehouse of finished unmanned aerial vehicles at a secured enterprise of Ukraine's defense-industrial complex](https://xab.info/media/2026/10/22/ukraina-chastniy-biznes-podzemnye-zavody-opk/ukraina-chastniy-biznes-podzemnye-zavody-opk-1.webp)

## Key Points

- Private companies are authorized to build underground facilities for the defense sector
- At least 25% of the built facility area must be allocated for defense needs
- Component imports funded by international partners are exempt from duties and VAT
- Customs clearance procedures have been streamlined multifold

The Cabinet of Ministers of Ukraine has approved a package of decisions aimed at strategically supporting the domestic defense-industrial complex amidst ongoing hostilities. A key initiative is the involvement of private capital in constructing secure underground production facilities, designed to protect arms manufacturing from regular missile and drone strikes.

### New Opportunities for Private Developers in Defense

Under the government-approved regulations, private companies now have the legal right to independently build underground defense-related facilities. Subsequently, investors can lease out completed spaces, transfer them for use, or sell them directly to enterprises engaged in military production. This approach significantly simplifies the creation of necessary engineering infrastructure and allows for the rapid expansion of capacities for manufacturing weapons and equipment.

To implement the project, developers will need to conclude official agreements with special zone residents, government contractors, or companies designated by the Ministry of Defense as critical for the defense sector. Meanwhile, regulatory requirements obligate investors to allocate at least 25% of the total built facility area specifically for defense needs.

### Preferential Imports and Customs Simplification

The second major area of government reform concerns the import of components funded by Ukraine's international partners. A special mechanism has been introduced to fully exempt such shipments from import duties and value-added tax (VAT). This measure aims to reduce the financial burden on manufacturers and speed up the logistics of essential parts.

Additionally, the government has significantly simplified customs inspection and clearance procedures by implementing a single-window mechanism. According to relevant agencies, these changes will reduce the duration of bureaucratic procedures several times over, ensuring an uninterrupted flow of raw materials and equipment to enterprises.

### Significance of the Reform and Manufacturing Scale-Up

The measures adopted by the Cabinet of Ministers aim to attract off-budget investments to build secure infrastructure, accelerate the scaling of defense capacities, and facilitate the relocation of plants from hazardous regions. Amid intense hostilities and constant aerial threats, moving production underground is becoming a critical factor for the survival and technological advancement of Ukraine's military-industrial complex.

## Fact-Check & Sources

- [В Украине разрешили частному бизнесу строить подземные оборонные производства](https://www.rbc.ua/ukr/news/ukrayini-dozvolili-privatnomu-biznesu-buduvati-1792664417.html) - Official statement by the Ukrainian Cabinet and Ministry of Defense regarding new rules for constructing underground defense plants and preferential imports.

## FAQ

### Who is allowed to build underground defense facilities in Ukraine?

Private companies and developers can build such production facilities using their own funds and then transfer them to defense enterprises for ownership, lease, or use.

### What portion of the underground facility's area must be allocated for defense?

According to the rules, investors are required to dedicate at least 25% of the built facility's area to the defense sector.

### What tax reliefs were introduced for component imports?

Components for weapons production funded by international partners can now be imported with exemptions from import duties and VAT.