D_ya.City

2021

President of Ukraine approved the terms of a special legal regime for IT companies "Diya.City"

In December 2021, President of Ukraine Volodymyr Zelensky signed Law No. 5376 "On Amending the Tax Code of Ukraine to Stimulate the Development of the Digital Economy in Ukraine." This document defines the tax conditions of the special legal regime for IT companies "Diya.City."

The peculiarities of resident taxation of Diya.City include the payment of income tax on enterprises on the principle of tax on withdrawn capital. There is also a tax on the income of individuals and the income of specialists - residents of Diya.City in the form of salaries, remuneration for a gig contract, copyright remuneration for the creation of an official work and the transfer of rights to official works at a rate of 5% if such income of a specialist does not exceed the equivalent of 240,000 euros per year.

President of Ukraine Volodymyr Zelensky approved the conditions of a special legal regime for IT companies "Diya.City"

Tax rates within Diya.City will be five times lower than the general tax system. Residents will be able to choose between income tax (18%) and tax on withdrawn capital (9%).

According to Deputy Prime Minister - Minister of Digital Transformation of Ukraine Mikhail Fedorov, IT-Business will be able to join the new tax regime in late January - early February 2022. We are talking about both Ukrainian and foreign technology companies that will have the opportunity to become residents of Diya.City.

Fedorov emphasized that all tax systems still working will also remain - Diya.City will become an "alternative, a new option."

The Ministry of Digital Transformation receives several appeals every week from companies wishing to join Diya.City (and not only from Ukrainian).

The terms of taxation under Diya.City will be valid for 25 years. They will apply to all employees of resident companies. According to Fedorov, by 2021, the share of the IT industry in Ukraine's GDP is 4-4.5%. And thanks to Diya.City, it can grow to at least 10%. At the same time, IT revenues can increase from $6 billion to $16.5-17 billion.^[1]

President of Ukraine signed a law on tax benefits for IT companies

President of Ukraine Volodymyr Zelensky signed the basic law on the creation of a special legal regime in the country for the IT industry "Diya.City." This was announced on August 11, 2021 by the press service of the Ministry of Transformation of Ukraine.

With Diya City, taxes for IT companies compared to the general taxation system will become five times less... I am sure that with Diya City Ukraine will become a powerful IT hub in Eastern and Central Europe, "wrote Minister of Digital Transformation Mikhail Fedorov in his Telegram account.

President of Ukraine Volodymyr Zelensky signed a law on tax benefits for IT companies

The law on Diya.City for at least 25 years introduces a special legal regime with special tax conditions for IT-Business. They will apply to resident companies. According to the authors of the initiative, Diya City will help increase the growth of the share of the IT industry in Ukraine's GDP to 10%. In the Verkhovna Rada, Diya City was called a virtual analogue of Silicon Valley.

The Ministry of Digital Affairs of Ukraine hopes that thanks to Diya.City, the IT industry will be able to use effective tools to build a transparent corporate structure of the company and attract foreign investment, scaling and capitalization. Among other things, the law introduces:

• GIG contracts - a new form of interaction with IT specialists, combines the advantages of freelance and social guarantees;
• the average monthly salary of a Diya City employee should be 1,200 euros in equivalent;
• elements of English law to attract investment;
• Mechanisms for intellectual property protection.

The basic law on Diya City defines the general principles of the special mode:

• freedom of activity;
• non-intervention by the State;
• presumption of the validity of resident activities;
• stability;
• The formal nature of the resident status process.^[2]

2020: Announcement of Diya City, a technology hub with a special legal regime

At the end of September 2020, the Ministry of Digital Transformation of Ukraine presented the concept of law reform for the IT industry. The initiative was called "Diya.City."

It involves special tax and legal conditions for IT-Business and the creative industry, including a tax on withdrawn capital at a rate of 10% instead of income tax, labor tax (5% personal income tax), ERUs (22% of the minimum wage) and military levy (1.5%).

A special regime for IT specialists will operate throughout the country. It will not be possible to make legislative changes to it for 15 years.

Diya City will become the largest technological hub in Europe with a special legal regime, "wrote Ukrainian Minister of Digital Transformation Mikhail Fedorov on his Facebook page. - The conditions of Diya City will be interesting for Ukrainian and international IT companies, investment funds, startups, educational organizations.

Ministry of Digital Affairs of Ukraine presented a special legal regime for the development of the IT industry

According to Fedorov, only those technology companies whose activities will correspond to the specially developed KWEDam Diya City will be able to become residents of Diya City.

It is expected that by 2025, thanks to the project, more than 450 thousand jobs will be created in the country. The project will attract more than $11.8 billion in the IT industry. It is planned that the initiative will interest Ukrainian and international IT companies, investment funds, startups and educational organizations.

Diya City will cover such technological areas as agrotech,, fintech,, blockchain, artificial intelligence cloud computing medical neuronets and biotechnology, Internet of Things trading platforms, aviation and space technologies, drones advertising, marketing and promotion, animation, graphics and audio, eSports and. outsourcing business processes Mintsifri^[3]

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