Ukraine develops new legal framework for the IT industry

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According to the International Data Corporation, the IT industry seems to have been less hit by the COVID-19 crisis compared to other business sectors worldwide. The experience gained in 2020 will help to reshape not only companies but also governments and our day-to-day habits. Thanks to such know-how, IT becomes a valuable asset that helps countries to stimulate their economies.

N-iX researchers state that Ukrainian IT generates $5.4 Bn and grows by approximately 26% year on year. The Government is planning to boost the industry further so that it generates over $11,8Bn by 2025 and the key for it is “Dija City”. This is a specific legal framework aimed at IT individuals and enterprises. Dija residents will benefit from minimal state regulation, lower taxation (5% and 9% instead of 18%), special employment conditions, IP protection guaranties, English Common Law and much more. The Project passed the first reading in the Parliament and the official launch is planned after Q1 2021.

Dija City is open for start-ups and companies specialized in software development, testing, publishing, distribution, R&D, telecom and teaching computer science. To become a resident of the Project a company must follow the entry criteria below:

• 90% of revenues are derived from IT activity.
• 9+ employees with a salary more than $1,400 (or equivalent)
• Ukrainian resident without negative criteria (sanctions, bankruptcy, NGO, state-owned companies, etc).

Overall, the Ukrainian IT community fully supports “Dija City” and hopes the Project will help both the industry and the state.

For further information on how you or your business can prepare for the new standards or to discuss your potential actions, please contact our Kyiv Tax and Legal Department at kyiv@eurofast.eu

Eurofast is a regional business advisory organisation employing local advisers in over 23 cities in South East Europe & Middle East . The Organisation is uniquely positioned as one stop shop for investors and companies looking for professional services in South East Europe & Middle East.

03/02/2021

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