Association addresses Government with proposals regarding IT Industry

Association addresses Government with proposals regarding IT Industry

Recently, a government meeting under the chairmanship of the Prime Minister of Ukraine Denys Shmyhal regarding measures to increase the export of Ukrainian goods and services was held. The IT industry was represented at this meeting by Yefrem Laschuk, political and legal issues director of the IT Ukraine Association.

During the government meeting the most urgent issues for the IT industry were discussed:

  • the possibility of temporary travel abroad to conscripts during martial law;
  • the launch of the reserve mechanism for employees of IT companies;
  • the exemption from VAT payment on transactions for software supply products from 2023 to 2028.

The Prime Minister of Ukraine confirmed that the Government would allow a 2-month extension to the reserve status of professionals who had already been booked by enterprises, institutions and organizations. At the same time, the eVidryadjennia mechanism is currently being finalized, due to the paragraph of the resolution on depositing UAH 200,000 causing a significant negative public response.
Following the results of the meeting, the Association has sent proposals to the Ministry of Economy regarding measures that will contribute to increasing the export of goods and services by Ukrainian IT companies.

1. Allowing conscripts who are founders, managers or employees of IT companies, as well as self-employed IT professionals, temporarily travel abroad during martial law for at least 14 days for the needs of conducting business as per the eVidryadjennia registration procedure. It should be noted that the Association was the initiator of the development and implementation of the IT professionals’ temporary travel abroad during marital law mechanism.

2. Prompt reserve mechanism implementation for possibly conscripted professionals who work in IT companies or provide services to such companies as sole traders. The Association has developed proposals for the formation of the procedure and criteria for assigning business entities to enterprises, institutions and organizations that are critically important for the economy’s functioning and ensuring the vital activities of the population in the special period, as well as for the project of Law No. 7687 of August 22, 2022 "On Amendments to the Law of Ukraine "On Mobilization Training and Mobilization" regarding the reserving of those potential conscripts for the period of mobilization and wartime". The Association proposes to reserve those liable for military service who are hired as employees or engaged under a contract as self-employed or as gig specialists in accordance with the Law of Ukraine "On Stimulating the Development of the Digital Economy in Ukraine". Not only legal entities (enterprises, institutions and organizations), but also some traders should be critically important for the functioning of the economy and ensuring the vital activities of the population in the special period. Therefore, such entities should be "business entities and non-profit organizations".

The Association also prepared the Cabinet of Ministers of Ukraine resolution draft "On Amendments to the Resolution of the Cabinet of Ministers of Ukraine No. 194 of March 3, 2022 on "Certain issues of reservation of conscripts under the legal regime of martial law" regarding the establishment of criteria for determining business entities and non-profit organizations that are critically important for the functioning of the economy and ensuring the provision of vital activities of the population in the special period.

The Association proposed criteria for determining the specified subjects in a norm with the following content: "The Ministry of Economy, in accordance with paragraph 5 of the first part of Article 25 of the Law of Ukraine "On Mobilization Preparation and Mobilization", checks business entities and non-profit organizations that are critically important for the functioning of the economy and (or) ensuring the provision of vital activities of the population in the special period, in accordance with the following criteria:

  • the monthly amount of payment of the employees involved is at least UAH 20 000;
  • the number of employees is at least 10;
  • the legal entity does not have a tax debt, the total amount of which is more than 10 minimum wages (based on the amount of the minimum wage established on January 1 of the current calendar year)".

3. Extension of the exemption from value-added tax on software product supply operations until 2028 to support businesses working for Ukrainian customers (such customers include not only businesses, but also government and communal enterprises, institutions and organizations). The Association appealed to the Ministry of Economy of Ukraine and the Committee of the Verkhovna Rada of Ukraine on Finance, Tax and Customs Policy with a request for support for the draft Law of Ukraine No. 7611 of July 28, 2022 "On Amendments to Subsection 2 of Chapter XX "Transitional Provisions" of the Tax Code of Ukraine (regarding the prolongation of features of taxation of software products)". The cancellation of this norm will lead to an increase in the tax burden on IT companies that are focused on the Ukrainian market, as well as a 20% increase in the cost of developing software and software products, and, accordingly, to a decrease in the competitiveness of companies with development centers in Ukraine. A likely consequence of the cancellation of the norm may be a reduction in highly paid jobs in the industry, as well as a decrease in company spending on social and charitable projects. Although it is precisely on the basis of Ukrainian IT companies that numerous volunteer profile platforms have been created and supported, which help the Armed Forces of Ukraine and relevant charitable foundations.