1. Core Entry Requirements
A legal entity may apply to the Ministry of Defence (MoD) for inclusion in the List of Defence‑Industrial Enterprises (the “Defence City list”) only if it simultaneously meets all three criteria below:
| Criterion | Threshold / Rule |
|---|---|
| Revenue test | In the full calendar year preceding the application, ≥ 90 % of net income must derive from the sale of self‑produced goods, works, or services for defence purposes. |
| Compliance test | The company must not fall under any exclusion clauses in sub‑para 75.1.1 of the draft—e.g., tax arrears, sanctions links, Russian ownership, FATF‑blacklist ties, non‑profit status, previous major contract default, etc. |
| Location test | The legal entity (or at least one separate subdivision) is physically located in a territory (region) designated by the MoD as eligible for Defence City status. |
A firm expressly named as a defence contractor in an inter‑governmental agreement that involves Ukrainian MoD is deemed to satisfy the MoD’s inclusion criteria automatically.
2. Tax & Fee Benefits (valid through 1 Jan 2036)
| Tax | Benefit |
|---|---|
| Corporate income tax (CIT) | 0 % on profits reinvested within 12 months into cap‑ex, R&D, or production upgrades (no dividend payouts except to the state). |
| Land tax | Exempt. |
| Real‑estate tax (non‑land) | Exempt. |
| Environmental tax | Exempt. |
| Existing perks | VAT preferences, accelerated depreciation, benefits for relocated plants and staff remain in force. |
3. Customs, Currency & Relocation Support
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Fast‑track customs clearance and simplified export controls for military/dual‑use goods.
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NBU may set special FX‑supervision rules (within two months of the law’s enactment).
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Relocation option: Residents can apply to MoD for state‑facilitated relocation; procedures will be set by Cabinet decree.
4. Ongoing Resident Obligations
| Obligation | Frequency / Condition |
|---|---|
| Quarterly revenue test | Maintain ≥ 90 % defence‑related net income each quarter. |
| Compliance upkeep | Must continue to satisfy all “no‑violation” conditions (tax, sanctions, contract performance, etc.). |
| Reporting | Submit quarterly activity reports to MoD; timely payment of licensing fees for any exports. |
| Location | Remain in MoD‑approved territory unless officially relocated. |
Failure triggers removal from the list and retroactive payment of all taxes plus penalties for the entire exemption period.
5. Information Protection
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The list itself and all resident reports are classified as official information:
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Not displayed in the public Unified State Register.
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Not shared via standard inter‑agency data exchanges.
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Statistical bodies must withhold resident data from public releases during martial law and for three months thereafter.
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6. Governance & Appeals
| Aspect | Authority / Mechanism |
|---|---|
| List maintenance | MoD issues decisions to include or remove entities; Cabinet approves detailed procedure. |
| Appeals | Companies may challenge MoD refusals or deletions in Ukrainian courts. |
| Oversight | MoD monitors compliance; shares list data with State Tax Service, Ministry of Justice, Prosecutor General, etc. |
Bottom Line
To secure Defence City residency—and an 11‑year package of tax holidays and regulatory fast lanes—a company must be 90 % defence‑focused, fully compliant, and located in MoD‑designated zones, then sustain those metrics quarter‑by‑quarter. Removal means paying back every exempted hryvnia with penalties, underscoring the program’s “high‑benefit, high‑discipline” design.
