Deputies rejected an alternative bill from the IT industry

On March 3, the People’s Deputies voted to send Bill №4303 on the legal regime for IT Diia.City for a second reading. 288 deputies voted for this decision, thus, the alternative bill №4303-2 was rejected.

In November 2020, the IT industry presented an alternative bill №4303-2. It was developed in close cooperation with the industry represented by the largest business associations in Ukraine. It took into account the factors necessary for the further development of the export industry within the legal experiment for the IT industry Diia.City.

The IT Ukraine Association is concerned that the bill, which was being developed with the IT industry, has been rejected. At the same time, we insist on the inclusion of key proposals from the IT industry in the new bill 4303-d.

We would like to remind you that the Diia.City regime was planned as a package reform, which will consist of a basic law*, tax law and the law “Masks-show stop-3″*. Currently, the dialogue is conducted exclusively around the main bill №4303, which has become the subject of discussions between the government and the IT industry. Also, a bill on special tax conditions, which are a key component of the initiative, has not yet been registered.

As noted in the appeal of business associations to the President of Ukraine dated August 27, 2020, to stimulate the development of the IT industry, it is important to avoid any additional regulation and maintain the existing tax burden. In the context of Diia.City, it is also important to avoid the following provisions:

• increasing the regulatory burden on the industry, creating new regulatory bodies and giving them broad powers;
• restrictions on the cooperation of companies with sole proprietors. The proposal to provide a transition period from sole proprietorships to gig contracts for at least 3 years is currently being discussed;
• introduction of the concepts of gig contracts in the current wording and provisions set out in the draft law №4303. In its latest version, there are only 8 articles governing gig contracts, while the Labor Code needed 265 articles to address all the nuances of the relationship between employee and employer.
• the absence of an instrument of hidden additional taxation in the form of mandatory membership fees of residents in a self-regulatory organization (SRO) within the Diia.City.