Ukraine | The law regulating taxation of the “Diia City” has been adopted

29/12/2021

On December 20, 2021 the President of Ukraine signed a law on tax conditions of the special legal regime for IT – “Diia City”.

The law is aimed at providing tax incentives for the IT industry, establishing a comprehensive system of measures necessary for the development of the digital economy in Ukraine. They include:

  • Choice of corporate tax to be paid: tax on withdrawn capital – 9% or income tax on general grounds – 18%.
  • Special tax rates for income of employees of IT companies and gig-specialists: personal income tax (PIT) – 5%, the unified social contribution – 22% of the minimum wage, the military fee – 1.5%. If a specialist receives more than EUR 240 thousand a year, then all income above this limit will be subject to PIT at a rate of 18%.
  • Establishment of a period for the transition from the individual entrepreneur model to gig-contracts and labor contracts. From 2024 the costs of resident companies to single tax payers (including individual entrepreneurs of group 3) shall not exceed 50%, and from 2025 – 20%. However, companies that will pay income tax and whose annual income will not exceed UAH 40 million will be able to work with individual entrepreneurs without restrictions after 2025.
  • There is a 0% rate on dividends accrued by the company provided they are paid no more often than once in 2 years.
  • There is a tax discount (for PIT) on the amount of investment in Ukrainian startups.

How SCHNEIDER GROUP can help

If you need to understand the peculiarities of taxation in the IT sphere, contact us. SCHNEIDER GROUP experts in Ukraine will advise you on the legal regulation of activities as a resident of “Diia City”.

Request more information

    I agree with the personal data handling policy.
    Privacy Notice

    Newsletter sign up

    subscribe

    Subscribe to our newsletter to receive current news, our Industry Insight reports, invitations to our events, and more.