MPs took into account business proposals for Diia.City

13/ 10/ 2021

Listen to online Stop   MPs took into account business proposals for Diia.City On October 12, the Verkhovna Rada Committee on Finance, Tax, and Customs Policy considered draft law №5376 dedicated to the tax component of the future Diia.City concept. This time there was a quorum of participants at the meeting which allowed the deputies to profoundly discuss and vote for certain amendments to the draft which was already adopted in the first reading this summer. Between the first and second readings, a range of disruptive amendments was added to the text bringing the draft law under threat and nullifying the attractiveness of the Diia.City concept developed by the Ministry of Digital Transformation and the European Business Association. The IT Committee of the European Business Association insisted in official letters, in meetings, and, in fact, the public, that the changes proposed by the deputies could stop the positive development of the industry. Fortunately, the EBA proposals were taken into account, namely: Pre-declared tax rates have been maintained. We are talking about PIT for specialists at the rate of 5%, SSC – at 22% of the minimum wage. In terms of corporate taxes, there is an option of the withdrawn capital tax at the rate of 9% or income tax at 18%. These tax rates will apply to all employees of the Diia.City resident company. That is, the amendment that proposed to limit the list of professions eligible to such taxation to one NACE (!) was rejected. An adequate compromise was reached on the issue of interaction with specialists in the simplified taxation system. Thus, the following transitional period has been set for restrictions on working with FOPs: from 2024 expenditures on FOPs should not exceed 50%, and from 2025 - 20%. Besides, companies that remain on the general taxation system (i.e., income tax at 18% instead of the withdrawn capital tax at 9%) and whose annual turnover does not exceed UAH 40 million can work with FOPs without restrictions. Tax conditions are guaranteed to remain unchanged for 25 years. That is, there will be no increase in the tax burden for Diia.City residents for 25 years. As agreed, the draft law does not provide for a cap on specialist salaries of 240,000 euros. Therefore, if a specialist receives more than 240,000 euro a year - all income above this limit is subject to an additional 18% personal income tax. Such a limit is quite logical and expedient, there are just a few numbers of such specialists in individual companies if they even exist, so the state considers this remark to be rational. The EBA business community is grateful to the deputies of the relevant VRU Committee and the Ministry of Digital Transformation for their tremendous work on the whole concept. It is great that thanks to the joint work on the text and the idea of ​​Diia.City, we were able to provide conditions that have every chance to stimulate the development of the information technology industry. However, the community continues to monitor the situation, as any amendment can be submitted during the vote for the second reading in Verkhovna Rada. However, the business hopes that there will be no surprises for the industry in the session hall.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

MPs took into account business proposals for Diia.City

On October 12, the Verkhovna Rada Committee on Finance, Tax, and Customs Policy considered draft law №5376 dedicated to the tax component of the future Diia.City concept. This time there was a quorum of participants at the meeting which allowed the deputies to profoundly discuss and vote for certain amendments to the draft which was already adopted in the first reading this summer.

Between the first and second readings, a range of disruptive amendments was added to the text bringing the draft law under threat and nullifying the attractiveness of the Diia.City concept developed by the Ministry of Digital Transformation and the European Business Association.

The IT Committee of the European Business Association insisted in official letters, in meetings, and, in fact, the public, that the changes proposed by the deputies could stop the positive development of the industry.

Fortunately, the EBA proposals were taken into account, namely:

• Pre-declared tax rates have been maintained. We are talking about PIT for specialists at the rate of 5%, SSC – at 22% of the minimum wage. In terms of corporate taxes, there is an option of the withdrawn capital tax at the rate of 9% or income tax at 18%.
• These tax rates will apply to all employees of the Diia.City resident company. That is, the amendment that proposed to limit the list of professions eligible to such taxation to one NACE (!) was rejected.

• An adequate compromise was reached on the issue of interaction with specialists in the simplified taxation system. Thus, the following transitional period has been set for restrictions on working with FOPs: from 2024 expenditures on FOPs should not exceed 50%, and from 2025 – 20%. Besides, companies that remain on the general taxation system (i.e., income tax at 18% instead of the withdrawn capital tax at 9%) and whose annual turnover does not exceed UAH 40 million can work with FOPs without restrictions.

• Tax conditions are guaranteed to remain unchanged for 25 years. That is, there will be no increase in the tax burden for Diia.City residents for 25 years.

• As agreed, the draft law does not provide for a cap on specialist salaries of 240,000 euros. Therefore, if a specialist receives more than 240,000 euro a year – all income above this limit is subject to an additional 18% personal income tax. Such a limit is quite logical and expedient, there are just a few numbers of such specialists in individual companies if they even exist, so the state considers this remark to be rational.

The EBA business community is grateful to the deputies of the relevant VRU Committee and the Ministry of Digital Transformation for their tremendous work on the whole concept. It is great that thanks to the joint work on the text and the idea of ​​Diia.City, we were able to provide conditions that have every chance to stimulate the development of the information technology industry. However, the community continues to monitor the situation, as any amendment can be submitted during the vote for the second reading in Verkhovna Rada. However, the business hopes that there will be no surprises for the industry in the session hall.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.