Diia City: what have the IT business and government  agreed on

Diia City: what have the IT business and government agreed on

On June 3, government officials met with members of IT Ukraine and major business associations to discuss the concept of Diia City and the further development of relevant bills. 

Representatives of IT companies and business associations: the IT Ukraine Association, the American Chamber of Commerce Ukraine, the European Business Association, and the Union of Ukrainian Entrepreneurs participated in the meeting.  The Deputy Prime Minister - Minister of Digital Transformation Mykhailo Fedorov, Deputy Minister of Digital Transformation Oleksandr Bornyakov and Deputy Minister of Finance of Ukraine Svitlana Vorobey were present on behalf of the authorities.

Participants discussed the following:

  • the idea and the concept of Diia City and further work on the relevant bill;
  • the vision of the Ministry of Finance on tax conditions for the IT industry;
  • the importance of freeing employment relations from the influence of outdated Labor Code;
  • giving IT companies the right to choose their residency in Diia City.

Representatives of the IT industry highlighted the key factors that should be considered in the development and implementation of the Diia City program:

  1. Currently, the IT industry operates under fixed tax conditions, that allow it to grow by 20-25% annually. In the context of the global economic crisis, any tax increase for the Ukrainian IT industry, as well as additional regulation or dramatic changes in tax legislation, are unacceptable;
  2. Under no circumstances should the Diia City program become an additional state regulator of the IT industry;
  3. IT companies must retain the right to accept of refuse their residency in Diia City;
  4. The right of IT specialists to freely choose the model of cooperation with legal persons must be preserved. This should be both an employment relationship and a contractual relationship between Individual entrepreneurs and legal persons.
  5. The issue of state support and the development of higher and secondary technical education is one of the main issues for the development of the domestic IT industry. However, the direction of education and talent development is not represented in the program today.

The meeting resulted in the decision to set up a working group with the participation of representatives of four business associations, the Ministry of Digital Transformation and the Ministry of Finance. A joint strategic session is scheduled for June 9 to identify a favorable model and further develop the project's legal framework.