The Second Edition of the Project on Taxes “Diia City” Is Published

by Anastasiia Lieberman
Friday, November 5, 2021

On November 1, the website of the Goverment published the second version of the bill, which describes the tax regime for "Diia City"

The press office of Diia City reports that:

Companies paying income tax of 18%, whose annual income does not exceed UAH 40 million, will be able to work with sole proprietors without restrictions throughout the operation of the Diia City mode.

For all other residents, payments to private individuals should not exceed 20% of total costs. For those companies that will pay tax on withdrawn capital, amounts above the limit will be taxed at this rate of 9%.

Companies that pay income tax will have to include those expenses for private individuals that exceed 20% in the financial result.
Restrictions on working with sole proprietorships will be fully effective only from 2025. Until then, there will be a transition period of three years: until 2024 — without restrictions, in 2024 without taxes will allow payments that do not exceed 50%.
Also, according to the text of the second edition, the salary of an employee (remuneration of a gig specialist) in resident companies should not exceed a total of 240,000 euros per year. The amount above the limit will be taxed on the income of individuals at 18%.

The IT Ukraine Association notes that the second edition retained the tax rates promised to residents of Diia City (personal income tax — 5%, ERUs — 22% from one minimum wage, military tax — 1.5%) But at the same time left restrictions on work with FOP:

"People's deputies took into account the wishes of the IT industry to maintain tax rates for residents of Diia City. But at the same time, they imposed restrictions on the involvement of FOP residents to perform work or provide services, if such a company is a payer of income tax on a general basis. The question of how critical this restriction is for IT companies, the members of the financial and legal committee of the association will discuss next week," — said the executive director of the association Kostiantyn Vasyuk.

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