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The Draft Law on Diia.City will be again submitted for the first reading

18/ 02/ 2021
  On February 17, there was an open meeting of the Verkhovna Rada Committee on Digital Transformation participated by the EBA representatives. Thus, the discussions were focused on the revision of the Diia.City initiative, namely draft laws №4303 / -1 / -2 and further steps to finalize and implement it. As a result, the main draft law №4303 was recommended by the Digital Transformation Committee for the first reading, while the alternative ones were rejected. At the same time, the EBA IT community considers that the alternative draft law №4303-2 is the most acceptable as it covers at maximum all aspects of the industry. In general, the discussion was mainly dedicated to the problematic issues previously identified by the industry: The gig contracts concept. The possibility to maintain the existing form of interaction between IT companies and FOPs of the 3rd group within the framework of Diia.City. The establishment of a self-regulatory organization of Diia.City residents and mandatory membership fees. According to the authors of the draft law №4303, the concept of gig contracts should resemble contractual relations, not labor ones. It was agreed with the industrys reservations that such a new employment format required a significant change in labor law and the regulation of by-laws - and these issues are difficult to resolve immediately. The compromise proposal was the permission to interact with private individuals (FOPs) without restrictions under the Diia.City for a year after the gig contracts will be fully operational. That is until the mechanism is finalized, companies will be able to become residents even with 100% FOP employment. Then after the gigs are enshrined in law, it will be necessary to switch to this new model within a year or leave the Diia.City. After all, the authors of the draft law №4303 are firmly convinced that the very idea of ​​interaction with FOP contradicts the work concept of Diia.City but is not prohibited for non-residents. At the same time, the European Business Association reported that the recent VRU initiative №5054 on amendments to the Labor Code of Ukraine, in fact, eliminates the ability of IT companies to interact with private individuals. Therefore, future gig contracts may also fall under the risks of reconceptualization. Unfortunately, no resolutions to this issue have been announced so far. Regarding the self-regulatory organizations, the authors of the draft law stipulate that membership in this association will still remain mandatory for residents of Diia.City, as well as the payment of membership fees. The main goal of organizations should be the development of educational opportunities at the cost of these same contributions. Then the question arises - if the company has been actively developing education in Ukraine for many years at its own expense (launching its own universities, partnerships, and grant programs, etc.), then will it have to pay a double tax on education? Besides, this obligation undermines the principles of the Constitution of Ukraine, namely Article 36, that no one should be forced to join any association of citizens. So, the issue remains open. The VRU Committee on Digital Transformation supported the submission of the draft law №4303 for another first reading, taking into account certain provisions of alternative №4303-1 and №4303-2. Thus, the updated version of the draft law will be marked with the d letter, and its text will be based on №4303. The European Business Association looks forward to working together to finalize the future draft law №4303-d, taking into account most of the №4303-2 provisions. Currently, the Diia.City concept does not have other goals except for increasing the tax burden and creating unnecessary regulatory superstructure to control the industry. And the long-delayed changes to the Labor Code leave the industry without a choice and, in fact, simply force it to choose the lesser of two evils. Therefore, the European Business Association hopes for cooperation in finalizing the future draft law №4303-d with the consideration of most of the rules of the alternative draft law№4303-2. After all, it is important to create a truly working and useful document for the whole industry.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.  

On February 17, there was an open meeting of the Verkhovna Rada Committee on Digital Transformation participated by the EBA representatives. Thus, the discussions were focused on the revision of the Diia.City initiative, namely draft laws №4303 / -1 / -2 and further steps to finalize and implement it. As a result, the main draft law №4303 was recommended by the Digital Transformation Committee for the first reading, while the alternative ones were rejected. At the same time, the EBA IT community considers that the alternative draft law №4303-2 is the most acceptable as it covers at maximum all aspects of the industry.

In general, the discussion was mainly dedicated to the problematic issues previously identified by the industry:

  • The “gig contracts” concept.
  • The possibility to maintain the existing form of interaction between IT companies and FOPs of the 3rd group within the framework of Diia.City.
  • The establishment of a self-regulatory organization of Diia.City residents and mandatory membership fees.

According to the authors of the draft law №4303, the concept of “gig contracts” should resemble contractual relations, not labor ones. It was agreed with the industry’s reservations that such a new employment format required a significant change in labor law and the regulation of by-laws – and these issues are difficult to resolve immediately. The compromise proposal was the permission to interact with private individuals (FOPs) without restrictions under the Diia.City for a year after the “gig contracts” will be fully operational. That is until the mechanism is finalized, companies will be able to become residents even with 100% FOP employment. Then after the “gigs” are enshrined in law, it will be necessary to switch to this new model within a year or leave the Diia.City. After all, the authors of the draft law №4303 are firmly convinced that the very idea of ​​interaction with FOP contradicts the work concept of Diia.City but is not prohibited for non-residents.

At the same time, the European Business Association reported that the recent VRU initiative №5054 on amendments to the Labor Code of Ukraine, in fact, eliminates the ability of IT companies to interact with private individuals. Therefore, future “gig contracts” may also fall under the risks of reconceptualization. Unfortunately, no resolutions to this issue have been announced so far.

Regarding the self-regulatory organizations, the authors of the draft law stipulate that membership in this association will still remain mandatory for residents of Diia.City, as well as the payment of membership fees. The main goal of organizations should be the development of educational opportunities at the cost of these same contributions. Then the question arises – if the company has been actively developing education in Ukraine for many years at its own expense (launching its own universities, partnerships, and grant programs, etc.), then will it have to pay a “double tax on education”? Besides, this obligation undermines the principles of the Constitution of Ukraine, namely Article 36, that no one should be forced to join any association of citizens. So, the issue remains open.

The VRU Committee on Digital Transformation supported the submission of the draft law №4303 for another first reading, taking into account certain provisions of alternative №4303-1 and №4303-2. Thus, the updated version of the draft law will be marked with the “d” letter, and its text will be based on №4303.

The European Business Association looks forward to working together to finalize the future draft law №4303-d, taking into account most of the №4303-2 provisions. Currently, the “Diia.City” concept does not have other goals except for increasing the tax burden and creating unnecessary regulatory superstructure to control the industry. And the long-delayed changes to the Labor Code leave the industry without a choice and, in fact, simply force it to choose the lesser of two evils.

Therefore, the European Business Association hopes for cooperation in finalizing the future draft law №4303-d with the consideration of most of the rules of the alternative draft law№4303-2. After all, it is important to create a truly working and useful document for the whole industry.

 

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

 

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