StrategEast CSO, Michael Sheitelman, took part in the open expert discussion on the approval of reform legislation of the IT industry concept, organized by the Committee of the Parliament of Ukraine on Digital Transformation. The event was attended by Deputy Minister of Digital Transformation of Ukraine Olexander Bornyakov, MPs Yegor Chernev and Andrii Nikolaenko.
Denis Aleinikov, adviser to the Minister of Digital Transformation presented a draft of a special legal regime for the IT industry in Ukraine “Diia City” to the leaders of the Ukrainian IT industry, policy makers and representatives of civil society who participated at the event.
Diia City is designed as an extraterritorial high-tech park. Ukrainian IT companies registered in Diia City will receive significant tax preferences, the opportunity to simplify paperwork and other special conditions for their activities, which, according to the project of the Ministry of Digital Transformation of Ukraine, will make this country attractive to the global IT industry.
In particular:
– 5% personal income tax for residents of Diia City, 22% social tax, but it will be levied only on the minimum wage, and 1.5% military tax;
– income tax will be 9%, but will apply only to the withdrawn capital;
– the sale of shares in a startup owned for more than a year will be exempt from taxes;
– for resident companies, elements of British law will be applied, such as options, convertible loans and others;
– residents will be granted the status of a special category in criminal proceedings, which will protect companies from unlawful interference in their work by law enforcement agencies;
– the protection of intellectual property rights to the product of labor of its employees is specially stipulated;
– a legal entity can become a CEO of the company;
– by analogy with Canada and the Great Britain, a new employee status “worker” will be introduced. It will combine the freedoms of a self-employed person with the basic rights of an employee.
According to the developers of the project, Diia City will completely change the face of the Ukrainian IT industry, attract new investments into the industry, help move from outsourcing to the development of own products, with the accumulation of intellectual rights in the Ukrainian jurisdiction.
In October the draft law, which can provide legal grounds for the launch of Diia City, will be submitted to the Parliament of Ukraine. The authors of the project expect to complete the legislative process by the end of 2020.
To learn more about Diia City click here.
StrategEast works on digital transformation of the Eastern Partnership countries, the upcoming tax reduction for the IT industry in Georgia was recently announced at the 2nd StrategEast State and IT Eurasian Forum.
