Diia City is a groundbreaking legal and tax regime designed to foster the development of the IT industry in Ukraine. Its goal is to make the country more attractive to IT companies, startups, and specialists by providing favorable business conditions. This article explores the main aspects of Diia City, the conditions for residents, and the tax features.
Diia City is a special legal regime aimed at supporting and developing the IT sector in Ukraine. The main objective of Diia City is to create favorable conditions for the growth of tech companies and the increase of investments in the industry.
Diia City residents are companies that meet certain criteria and have joined this legal regime. Both Ukrainian and international IT companies that comply with the legal requirements can become residents.
To become a Diia City resident , a company must meet several requirements, including:
- Engaging in IT activities.
- Meeting income requirements.
- Adhering to labor compensation standards.
One of the key benefits of Diia City is its special tax regime. The main aspects of taxation for Diia City residents include:
- Reduced personal income tax rate (5%).
- Lowered unified social contribution ( USC ) rates.
- Option to apply the exit capital tax.
- Exemption from value-added tax (VAT) for certain operations.
One of the innovative forms of cooperation is the gig contract . This type of agreement allows IT specialists to work with resident companies on flexible terms. A gig contract with a Diia City resident offers more flexible working conditions compared to traditional employment contracts.
Gig contract (from English "gig contract") is a type of contract used to engage workers for short-term or temporary projects. This term is often used in the modern labor market, especially in the context of service ordering platforms like Uber, Upwork, or Freelancer.com.
1. Temporary nature: Gig contracts typically have a limited duration, often defined by specific projects or tasks.
2. Flexibility: For the client, this provides the ability to quickly engage professionals for a project without committing to long-term obligations. For the worker, it means the flexibility to work on their own schedule and choose projects that interest them.
3. Electronic character: Many gig contracts are facilitated through online platforms, simplifying the process of finding work and exchanging information between parties.
4. Risks for parties: For workers, the main risks include unstable work orders and social guarantees such as health insurance or pension benefits. For clients, it involves ensuring the quality of work performed and responsibility for using intellectual property.
5. Popularity and growth: Over recent years, the gig economy has significantly grown, leading to an increase in the number of professionals choosing this type of work.
Gig contracts enable companies to quickly expand their access to talent, while individual professionals gain more control over their work schedule and the ability to select projects that align with their interests and skills.
The Diia City legal regime is governed by a special Diia City law, which was enacted to create favorable conditions for the IT sector's development. The legislative framework also includes various by-laws and regulatory norms.
Diia City for sole proprietors (SPs) offers several benefits for individuals working in the IT field. These advantages include the possibility of collaboration based on gig contracts, reduced tax rates, and lower social contributions.
Employees of resident companies also enjoy benefits from the special tax regime. Diia City for employees ensures lower tax rates and social contributions, making employment with Diia City residents more attractive.
Diia City is a significant step in the development of the IT industry in Ukraine, offering substantial tax benefits and flexible working conditions for companies and specialists. Through this legal regime, Ukraine can become one of the leading centers of technological development in Eastern Europe. If you are planning to grow your business in the IT sector or become part of an innovative space, residency in Diia City can be a beneficial solution.
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Serhii Floreskul
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Violetta Loseva
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