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Ukraine has introduced a special legal regime for IT resident companies of Diia.City

10 Feb, 2022
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Ukraine has introduced a special legal regime for IT resident companies of Diia.City

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A special legal framework for Diia.City has been issued in Ukraine. IT companies will receive new conditions for taxation and interaction by the State.


Ukraine has introduced a special legal regime for the IT industry. It provides special conditions of taxation for legal entities, residents of Diia.City. IT companies are promised flexible employment conditions and a separate procedure for cooperation with regulatory authorities. This was announced by the Ministry of Finance during the fourth Diia Summit conference, which was held in Kyiv. The project also plans to launch a fund that will pay for 50% of online training for IT professionals.

The Ministry of Digital Transformation also presented updates to the application for Diia.City and new electronic services: change of place of registration, services for drivers, pension documents, etc.

According to the Minister of Digital Transformation Mikhaylo Fedorov, thanks to Diia City, the income of the IT industry in Ukraine by 2025 may grow to $16.5 billion, and the number of jobs in this industry is planned to be increased to 450,000.

SoftServe will be one of the first residents and plans to apply today, said the company's founder Taras Kitsmey. Also residents of Diia.City will be fintech company Revolut, Ukrainian MacPaw and American UST. Only developers of software or computer games and companies in related fields, such as robotics and cybersecurity, can become residents.

Companies must meet the following criteriato join the special regime:

  • work in the IT industry;
  • hire at least 9 people;
  • pay your employees at least € 1,200 per month (startups can be paid such salaries not immediately, but in a year).

Advantages:

  • Official IT professionals will pay a lower income tax (PIT) of 5% instead of 18%.
  • The Single Social Contribution (SSC) of 22% of the minimum wage and the military levy of 1.5% remain unchanged. Companies now pay 41.5% if they work full-time.
  • If a specialist receives more than € 240,000 per year, he will pay 18% income tax.
  • Residents will be able to choose which corporate tax to pay: 9% withholding tax or 18% withholding tax.

Diia.City allows resident companies to cooperate with private individuals until 2024. After that, companies must switch to gig contracts or employment contracts. Expenditures on private individuals should be reduced to 50% in 2024 and to 20% in 2025.


The Odessa Journal

The Odessa Journal

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