Business welcomes the long-awaited improvement of the Diia City regime

30/ 04/ 2024

Last week, the Verkhovna Rada of Ukraine adopted in the first reading the draft law No. 9319 On Amendments to the Tax Code of Ukraine and Certain Other Legislative Acts to Stimulate the Development of the Digital Economy in Ukraine with the provisions revised in accordance with Part 1 of Article 116. For about a year now, businesses have been emphasizing the need for the draft law to be considered and adopted as soon as possible, which would improve the special tax regime for Diia City and eliminate the conflicts that existed in the text. In particular, a conflict in the Tax Code did not allow small companies to become residents of Diia City and enjoy benefits - now this issue is being resolved through the changes provided for in draft law No. 9319. In addition, among the main changes, it is worth noting that the new draft law proposes to address the issue of the aggressor countrys potential participation in Diia City - that is, after the adoption of the draft law, if the direct or indirect owner of a legal entitys shares is a resident of the aggressor state, such companies will not be able to be Diia City residents, regardless of where these people are now. Among other positive changes, the draft law provides for amendments that enable gig specialists to receive education while performing work and/or providing services under a gig contract, which involves combining education in educational institutions. It also provides for the clarification of the peculiarities of taxation of salaries and (or) remuneration under a gig-contract of specialists of the Diia City resident. Additionally, the draft law clarifies the specifics of the amount of unified social tax paid for Diia City residents. The EBA IT Committee sincerely thanks the Ministry of Digital Transformation of Ukraine for supporting the IT industry at all stages of the draft laws consideration, as further improvement of the Diia City regime is tantamount to creating additional conditions to support the industry. In addition, it is worth noting the work of MPs, especially the relevant Parliamentary Committee on Finance, Taxation and Customs Policy, as the EBAs previous proposals were also taken into account when finalizing the text for the first reading, for which the business community is grateful. We look forward to the adoption of the draft law in the second reading and the publication of the official, final text of the document.

Last week, the Verkhovna Rada of Ukraine adopted in the first reading the draft law No. 9319 “On Amendments to the Tax Code of Ukraine and Certain Other Legislative Acts to Stimulate the Development of the Digital Economy in Ukraine” with the provisions revised in accordance with Part 1 of Article 116. For about a year now, businesses have been emphasizing the need for the draft law to be considered and adopted as soon as possible, which would improve the special tax regime for Diia City and eliminate the conflicts that existed in the text. In particular, a conflict in the Tax Code did not allow small companies to become residents of Diia City and enjoy benefits – now this issue is being resolved through the changes provided for in draft law No. 9319.

In addition, among the main changes, it is worth noting that the new draft law proposes to address the issue of the aggressor country’s potential participation in Diia City – that is, after the adoption of the draft law, if the direct or indirect owner of a legal entity’s shares is a resident of the aggressor state, such companies will not be able to be Diia City residents, regardless of where these people are now.

Among other positive changes, the draft law provides for amendments that enable gig specialists to receive education while performing work and/or providing services under a gig contract, which involves combining education in educational institutions. It also provides for the clarification of the peculiarities of taxation of salaries and (or) remuneration under a gig-contract of specialists of the Diia City resident. Additionally, the draft law clarifies the specifics of the amount of unified social tax paid for Diia City residents.

The EBA IT Committee sincerely thanks the Ministry of Digital Transformation of Ukraine for supporting the IT industry at all stages of the draft law’s consideration, as further improvement of the Diia City regime is tantamount to creating additional conditions to support the industry.

In addition, it is worth noting the work of MPs, especially the relevant Parliamentary Committee on Finance, Taxation and Customs Policy, as the EBA’s previous proposals were also taken into account when finalizing the text for the first reading, for which the business community is grateful.

We look forward to the adoption of the draft law in the second reading and the publication of the official, final text of the document.