In this article, you will find out what Diia.City is, the main advantage of this initiative, and how it can be of interest to those interested in innovations and opportunities in the IT sector. Here you will find comprehensive information on the terms of registration in Diia.City, preferential taxation and other aspects that make this regime attractive to modern IT entrepreneurs and professionals.
Diia.City is a special tax and legal regime created to stimulate the development of IT business in Ukraine. This initiative is aimed at attracting foreign investment, developing the technology industry and ensuring the competitiveness of the Ukrainian IT sector in the global market. Residency in Diia.City provides access to numerous benefits, including reduced tax burden and simplified business processes for companies and professionals working in this area.
One of the key advantages of residency in Diia.City is tax benefits. Companies that have become residents of Diia.City enjoy a special tax regime.
A company resident in Diya.City has to pay 9% exit capital tax instead of the usual 18% corporate tax. While the tax base for corporate income tax is the entire profit of the company, in the case of exit capital tax, it is only the part of the profit that will be withdrawn, for example, through the distribution of dividends.
There is also a favourable tax regime for shareholders, as the tax rate on dividends is 0%, provided that they are distributed no more than once every 2 years. For comparison, under the general taxation system, this rate is 5% for residents and 9% for non-residents, unless otherwise provided by a double taxation treaty.
The resident will be entitled to preferential rates of labour taxes, which he will pay for employees and gig workers, namely: 5% personal income tax (instead of 18%); 22% unified social tax (on the minimum wage, regardless of the amount of income), and 1.5% military duty.
A legal entity registered in Ukraine in accordance with the procedure established by law, regardless of its location and place of business, may become a resident of Diia.City. The requirements for an applicant for Diia.City residency are set out in Article 5 of the Law of Ukraine “On Stimulating the Development of the Digital Economy in Ukraine”.
In particular, the company must meet the following requirements:
It is not necessary to meet all the requirements to become a Diia.City resident: a company may not meet the criteria for salary and average number of employees until 31 December of the calendar year following the calendar year in which it became a Diia.City resident. In addition, no financial statements, special permits or licences are required when applying.
A company cannot become a resident of Diia.City:
The registration procedure in Diia.City is simple and will take about 10 minutes of your time. For convenience, online registration is provided, and detailed instructions are available on the website of the government portal Diia.
So, you need to take the following steps:
The application can be submitted by:
Based on the results of the review, four options are possible:
Along with the decision itself, the Ministry of Digital Transformation also sends you a substantiated explanation by email. All decisions of the Ministry of Digital Transformation are entered into the Diia.City register.
“Diia.City” offers an innovative tax and legal regime that provides IT companies and professionals with a variety of benefits and opportunities. So if your company meets the conditions described in this article, this could be a great incentive to take further steps.
1.Introduction. New wording of the Law. On 17 November 2023, the Draft Law on Amendments to the Tax Code and the Law of Ukraine on Virtual Assets (the "Draft Law") was submitted to the Verkhovna Rada. This Bill was long awaited because since the adoption of the Law on 17…
Estonia, due to its attractive legal regulation, favorable tax conditions and ease of administration, is popular among investors. Many entrepreneurs choose this particular jurisdiction to register their business. However, after registering the company, shareholders always face the question of how to distribute dividends in the company. Therefore, this article is…
Cyprus is often chosen as a place of incorporation for companies due to its favorable tax jurisdiction. This country has long been famous for its low tax rates, efficient company management, and high level of flexibility in solving legal business issues. In this article, we consider in detail one of…