Changes to “Diia City” were rejected

by Anastasia Lieberman
Wednesday, October 13, 2021
Changes to “Diia City” were rejected

The bill was approved for the second reading in the Government

On October 6, 2021, at a meeting of the Government committee on finance, tax, and customs policy, amendments to one of the draft laws Diia City have proposed that limit the ability of an IT company to work with private entrepreneurs. But, according to the head of the Ministry of digital transformation Mikhailo Fedoriv, these amendments were not accepted.
In what form will the bill go to parliament

According to Fedoriv, in its current form, the draft law on tax conditions Diia City works as follows:
Companies that pay tax on withdrawn capital (residents will be given a corporate tax to choose from: either income tax 18% or tax on withdrawn capital 9%) will be able to fully work with individual entrepreneurs until 2024. From 2024, the cost of sole proprietorship should not exceed 50%, and from 2025 - 20%.

Taxes for resident companies look like this: personal income tax - 5%, ERUs - 22% of the minimum wage, military tax - 1.5%, corporate tax of choice (income tax 18% or tax on withdrawn capital 9%).
Companies will receive 0% personal income tax as dividends calculated by the resident company, provided they are paid no more than once every two years. And also a tax rebate (with personal income tax) on the number of investments in Ukrainian investing-in-ukraine/business-opportunities/startups/" rel="dofollow">startups.

Residents of Diia City, who will remain with income tax on a general basis (18%), and who have an annual income limit of up to $1.5 million, will be able to work with private entrepreneurs and further, during the entire duration of the Diia City regime.
Tax incentives will not be limited to a single KVED (in the amendments they offered benefits only for programmers) and will apply to all employees of the company.
The conditions of Diya City will be fixed for 25 years.

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