What is Defence City?
Defence City is a government initiative that establishes special conditions for enterprises producing military equipment and weapons. It aims to strengthen Ukraine’s defense capacity, ensure rapid scaling of production, and support domestic and international manufacturers working with Ukrainian defense firms.
Key Benefits for Defence Industry Companies
The law introduces significant incentives for companies that qualify:
-
Tax exemptions
-
no income tax (with reinvestment requirement);
-
no land and real estate tax (if used in production);
-
no environmental tax.
-
-
Simplified trade and customs
-
accelerated customs procedures;
-
simplified international transfer of defense products.
-
-
Support for relocation & security
-
state-backed relocation programs;
-
protection and fortification of critical facilities.
-
Who Can Join?
Defence City is open to defense industry manufacturers recognized as strategically important for Ukraine’s security. Companies must meet transparency and compliance requirements to benefit from the regime.
According to the Ministry of Defense, the goal is to create a cluster where both Ukrainian and foreign defense producers can safely operate, innovate, and expand production.
Why It Matters
Prime Minister Denys Shmyhal emphasized that the Defence City initiative is about accelerating Ukraine’s technological edge:
“We are creating even more favorable conditions for Ukrainian gunsmiths. We are acting quickly and encouraging our manufacturers to do so. Our weapons are our smart power.”
The move reflects Ukraine’s determination to expand domestic weapons production while attracting international defense partners, ultimately strengthening both its battlefield resilience and long-term defense ecosystem.
✅ Takeaway: With the signing of the Defence City law, Ukraine is offering unprecedented incentives for arms manufacturers — making the country not only a frontline defense hub, but also an attractive investment destination for global defense companies.
