A Special Legal Regime Will Attract Investment and Create the Best Conditions for IT Business

Monday, June 7, 2021
A Special Legal Regime Will Attract Investment and Create the Best Conditions for IT Business

The Diia City project will allow building one of the best tax systems in the world in Ukraine. One of the main goals of the ministry is to increase the share of IT in the country's GDP to 10%

Minister of digital transformation Mykhailo Fedorov at a press conference on Diia City, which has already been approved in the first reading by parliament.

Diia City creates the conditions for business in Ukraine that completely transform the industry. The project envisages the introduction of the most favorable tax system for the development of the IT industry. These are low taxes, effective legislation, a clear model of relations with employees, the absence of risks of undue pressure from the state. As well as prerequisites for global IT giants to open their offices in Ukraine,” Mykhailo Fedorov stressed.

In the special mode of Diia City, the tax burden will be recorded at the level of the simplified taxation system (only 1.5% of the military tax is added).

“Tax conditions of Diia City are aimed at investment development. They will make it easier for Ukrainian IT companies and startups to attract foreign investment. Thanks to this, global IT companies will also be more active in opening their offices in Ukraine, which will have a positive impact on Ukrainian IT specialists — increase the number of jobs and competition for qualified personnel, and thus increase wages," said the MP and deputy chairman of the Committee on digital transformation Yegor Chernev.

The bill also provides the following conditions to stimulate investment:
- 0% income tax on the sale of a natural person's share in a resident company Diia City, if it owned a share for more than 1 year;
- 0% on the income of individuals as dividends accrued by the resident company subject to their payment not more often than once every 2 years;
- tax rebate (with PIT) on the amount of investment in Ukrainian startups. The size of the discount will depend on the amount of the transaction.

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