The rapid development of the IT sector in Ukraine has created a special legal regime Diia City, which is characterized by particular conditions for the activities of IT business companies. Diia City establishes new rules for cooperation with IT professionals. There is the possibility of attracting foreigners without obtaining a work permit. There are some changes in taxation, such as the right to choose the object of tax, which may be the company’s profit or withdrawn capital. The new agreement on refraining from competing and other special conditions is implemented.
Diia City mode is not mandatory for the entire IT sector but will apply to those IT companies that become its residents. Admission to Diia City is voluntary, so, companies decide whether to use the special conditions of Diia City or not.
To become a resident of Diia City, you must meet specific criteria and obtain its status.
A resident of Ukraine may be a legal entity, regardless of its location, which meets the following requirements:
Startups have “softer” conditions for obtaining resident status. A startup may have fewer IT staff and specialists and a lower level of remuneration, but only if the company is registered within 24 months of the date of application for a resident; her income does not exceed UAH 7,585,500. in the previous year, in the year of application, in the year of acquisition of the status and the following year. However, there is a transitional grace period when young IT companies must reach the general established conditions. Otherwise, they will lose their status.
When the company cannot acquire resident status:
The procedure for obtaining the status of a resident of Diia City can be considered simple. As the potential resident prepares a minimum of documents that can be submitted electronically using EDS, the review period is only 10 working days.
Among the documents – an application for the status of a resident of Diia City, in addition, an application for the election of a special tax system for residents of Diia City, a power of attorney, if a representative submits the documents.
Consideration of the submitted documents is carried out by the Ministry of Finance and checks the information in state registers, databases, information systems of state bodies, or, if necessary, sends inquiries.
The decision to acquire Diia City resident status is considered taken after 10 working days from the date of receipt of the application. If such application is not returned without consideration and within this time, the authority has not sent the applicant a decision to deny the applicant’s residence status. Information about the resident is entered in a special register of Diia City.
According to the law, the legal regime of Diia City is established for an indefinite period, but not less than 25 years from the date of entry in the Register of Diia City record of the first resident. During this period, Ukraine guarantees the validity of the legal regime and the stability of its conditions.
The Ministry of Finance announced the launch of Diia City in early 2022. We hope that the mechanism for submitting and reviewing the application for the resident status of Diia City and the register of residents will work successfully.
IT companies have time to prepare for joining Diia City, check that they meet specific criteria, and, if necessary, eliminate shortcomings that may hinder access to Diia City.
