Ukraine | The Verkhovna Rada of Ukraine will consider the draft law on a preferential regime for IT companies

23/11/2020

On November 2, 2020, the Verkhovna Rada of Ukraine registered the long-awaited draft law No. 4303 “On Stimulating the Development of the Digital Economy in Ukraine”, which provides specific legal and tax regimes for IT companies (Diia.City).

The legislation will provide tax incentives for residents of Diia.City; however, IT companies shall comply with several requirements to be eligible for such incentives:

  • To carry out specific IT activities (game development, software development, marketing or online services, research, etc.)
  • To have an average employee salary not less than USD 1400 and at least 9 employees on the staff
  • To receive net income from the sale of products (goods, works, services) which is not less than 90 percent of the general net income
  • To be established 24 months before the date of application to Diia.City and to have a plan for performing startup projects
  • To comply with good standing conditions (applicant is not a foreign/non-profit entity; not in bankruptcy or termination; has no tax debts; state or company from low-tax jurisdictions doesn’t own 25% of its shares, etc.).

In addition, the draft law plans to regulate the instruments common in the global IT community, such as non-disclosure, non-compete, and non-solicitation agreements.

The Ministry of Digital Transformation of Ukraine expects that Diia.City will be launched in the first half of 2021.

How can SCHNEIDER GROUP help?

If you would like more information on legal and tax regimes for IT companies in Ukraine, please do not hesitate to contact us. SCHNEIDER GROUP legal experts in Ukraine will be ready to advise you on peculiarities of the current Ukrainian legislation in this regard.

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