Diia.City will start operating in the beginning of 2022
In early 2022, Diia.City will start operating – one of the best legal and tax regimes for IT business. Ukrainian and international IT companies will be able to apply, become residents of Diia.City and pay taxes under this tax system.
This was stated during a press conference by Deputy Prime Minister – Minister of Digital Transformation of Ukraine Mykhailo Fedorov.
At the base of Diia.City are several laws: framework and tax. They have already been approved by the Verkhovna Rada and signed by the President. The project team is currently working on bylaws. After their approval, the service for applying for admission will be launched. The process will be as convenient as possible for all participants.
The project to launch Diia.City has reached the finish line. In the near future, Ukraine will have some of the best tax conditions in the world for IT business. We create a place with the best service, the most profitable tax system, security and without bureaucracy or corruption. Diia.City will help Ukraine to take a worthy place among the world leaders in the digital economyMykhailo Fedorov, Minister of Digital Transformation of Ukraine
Thanks to Diia.City, the growth rate of the IT sector can double to 40-50% per year. The industry’s revenues will have the potential to grow from $ 6 billion to $ 16.5-17 billion. The share of the IT industry in the country’s GDP structure may increase from 4% to 10%, which will form the basis for a faster transition to an innovative, digital economy. The number of jobs could increase to 450,000 by 2025.
Within the special regime, tax rates will be 5 times lower than in the general taxation system. Yegor Chernev, Deputy Chairman of the Verkhovna Rada Committee on Digital Transformation, said that it was in Diya.City that the withheld capital tax would be introduced for the first time. This will be a pilot project for the implementation of PnVK in Ukraine. After that, it can be scaled to other industries. Residents of Diia.City will be able to choose between income tax (18%) and Corporate Income Tax (9%).
Along with traditional forms of cooperation between IT companies and IT specialists, gig contracts are being introduced, which in fact give flexibility to cooperation and a similar tax burden. Regarding the taxation of income of employees and gig specialists, the following rates will apply: personal income tax – 5%, SDR – 22% of the minimum wage, military duty – 1.5%. A 3-year transition period from sole proprietorships to gig contracts / employment contracts has been established.
Deputy Minister of Digital Transformation for IT Development Oleksandr Bornyakov stressed that projects such as Diia.City will help the IT industry to scale and turn Ukraine into the largest IT hub in Europe.
Maxim Slobodyanyuk, the founder of Nika Tech Family, Volodymyr Mnoholetniy, co-founder and CEO of Genesis, and Taras Kitsmei, co-founder and board member of SoftServe, also spoke at the press conference.
Representatives of the IT business expressed their support for the Diia.City project. According to them, it will promote the development of not only service but also food companies, open new opportunities for attracting investment.