Business has voiced critical things to consider in the Diia City project

04/ 06/ 2020

On June 3, the IT community of the European Business Association met with government officials to discuss the Diia City project. Thus, Mr. Mykhailo Fedorov, Deputy Prime Minister, Minister of Digital Transformation, Mr. Oleksandr Borniakov, Deputy Minister of Digital Transformation, and Ms. Svitlana Vorobei, Deputy Minister of Finance of Ukraine. After reviewing the draft concept of Diia City, the IT industry highlighted 5 key aspects that either differed from the previously discussed agreements or were not properly specified in the document. First, it is important to maintain the existing contractual relations, which have proved their effectiveness in a dynamic IT industry and allowed it to grow at a rate of 25-30% annually. At the same time, if the labor relations concept is introduced in the law, then it should be completely distinguished from the existing contractual model of interaction with the FOP of the 3rd group so that companies would have the right to choose its convenient mechanism. The second is to maintain the current tax regulations, at least for the time of exiting the crisis. In general, specific interest rates have not yet been foreseen or specified in the draft project. So, it is important to consider the global implications of quarantine when establishing the tax policy. Western countries allocate huge funds to support their domestic companies, develop their products to not focus on imports. For example, the United Kingdom provides a 25% reduction in the tax burden for the creative industries, and the United States - $ 2.2 trillion. to stimulate the economy during the pandemic. This means that Ukrainian IT will not only receive fewer orders due to the general global crisis, but competition will also increase significantly. The third is to avoid creating new IT regulations. Establishing new regulatory bodies within the Diia City project will exert additional pressure from the government on businesses, so there will be precedents for corruption schemes, and to some extent, the rules of the free economy will be diminished. At the same time, the IT industry has proven that it can exist and thrive quite effectively when there is no overregulation. Fourth, it is important to ensure the right to choose. It is necessary to preserve the right to freely choose a convenient model of work and equal conditions for companies. In other words, it is still important to allow companies to decide for themselves whether to switch to Diia City or work as usual to keep the industry going. The fifth is the development of human capital. The IT industry is dependent on education to develop and keep pace with the times. Therefore, the Diia City concept should provide a mechanism for talent development, as it is the key factor for the future success and growth of IT. During the meeting, it was agreed that business and government will continue to cooperate in this aspect to create a convenient and attractive concept for the further development of the industry. The next meeting is scheduled for next week to work out specific project norms. On behalf of the business, we thank Mykhailo Fedorov, Oleksandr Borniakov, and Svitlana Vorobei for the dialogue and willingness to cooperate.

On June 3, the IT community of the European Business Association met with government officials to discuss the Diia City project. Thus, Mr. Mykhailo Fedorov, Deputy Prime Minister, Minister of Digital Transformation, Mr. Oleksandr Borniakov, Deputy Minister of Digital Transformation, and Ms. Svitlana Vorobei, Deputy Minister of Finance of Ukraine.

After reviewing the draft concept of Diia City, the IT industry highlighted 5 key aspects that either differed from the previously discussed agreements or were not properly specified in the document.

First, it is important to maintain the existing contractual relations, which have proved their effectiveness in a dynamic IT industry and allowed it to grow at a rate of 25-30% annually. At the same time, if the “labor relations” concept is introduced in the law, then it should be completely distinguished from the existing contractual model of interaction with the FOP of the 3rd group so that companies would have the right to choose its convenient mechanism.

The second is to maintain the current tax regulations, at least for the time of exiting the crisis. In general, specific interest rates have not yet been foreseen or specified in the draft project. So, it is important to consider the global implications of quarantine when establishing the tax policy. Western countries allocate huge funds to support their domestic companies, develop their products to not focus on imports. For example, the United Kingdom provides a 25% reduction in the tax burden for the creative industries, and the United States – $ 2.2 trillion. to stimulate the economy during the pandemic. This means that Ukrainian IT will not only receive fewer orders due to the general global crisis, but competition will also increase significantly.

The third is to avoid creating new IT regulations. Establishing new regulatory bodies within the Diia City project will exert additional pressure from the government on businesses, so there will be precedents for corruption schemes, and to some extent, the rules of the free economy will be diminished. At the same time, the IT industry has proven that it can exist and thrive quite effectively when there is no overregulation.

Fourth, it is important to ensure the right to choose. It is necessary to preserve the right to freely choose a convenient model of work and equal conditions for companies. In other words, it is still important to allow companies to decide for themselves whether to switch to Diia City or work as usual to keep the industry going.

The fifth is the development of human capital. The IT industry is dependent on education to develop and keep pace with the times. Therefore, the Diia City concept should provide a mechanism for talent development, as it is the key factor for the future success and growth of IT.

During the meeting, it was agreed that business and government will continue to cooperate in this aspect to create a convenient and attractive concept for the further development of the industry. The next meeting is scheduled for next week to work out specific project norms.

On behalf of the business, we thank Mykhailo Fedorov, Oleksandr Borniakov, and Svitlana Vorobei for the dialogue and willingness to cooperate.