Authorities shared their vision of IT development

Authorities shared their vision of IT development

On November 22, the DAN.IT office in Kyiv hosted the annual Year-End Summary Finance & Legal Conference, organized by IT Ukraine.  During the panel discussion "IT and the Government", representatives of the government, profile IT association and NGOs analyzed the results of the IT industry and discussed the IT development plan and the role of government in this process, in particular, the possibility of changes in the Tax and Labor Codes.

Representatives of the relevant committee of the Verkhovna Rada and the Ministry of Government stressed that their task is to ensure the growth of the IT industry, not to increase the tax burden.

If you want to develop an industry, the last thing you need to do is tax it.  We will also not initiate inspections, create additional controlling and regulatory bodies.  After all, IT is our chance for a qualitative breakthrough in the economy… Speaking of allegories, the economy is a "pie", the benefits of which are redistributed within the country between industries, businesses, and society.  The domestic market will not increase this "pie".  And what can? IT development.  After all, the IT industry does not share the existing "pie" but allows it to grow through international trade. Take at least Norway, which is interested in Ukrainian IT solutions.  Thanks to such international cooperation, we will be able to completely change the situation in Ukraine within 5-10 years.  Everyone benefits from this: teachers, lawyers, economists - the whole population.  We do not have many such chances.  IT is one of them,

 - Alexander Bornyakov, Deputy Minister of Digital Transformation, is convinced.

Changes to the rules of work in the IT market will be accepted only after they are discussed with IT companies.

This is probably the first time that representatives of the legislative and executive branches are totally on the same page. We are committed to make the IT industry grow. The existing system is not ideal, it does not allow businesses to attract foreign investors.  Some Ukrainian companies are even forced to register their business abroad.  We do not yet have a ready answer on how to solve this problem. However, we promise that as soon as the option appears, we will bring it up for discussion with IT market participants,

- Kira Rudyk, First Deputy Chairman of the Verkhovna Rada Committee on Digital Transformation, assured.

What is the peculiarity of the IT industry and why it is difficult to develop in the current employment relationship, shared a representative of BRDO.

I would talk about effective, not nominal tax rates. More than half of the costs of the IT service company go to the wage fund. With a current tax burden of 41.5%, the service business actually pays sales tax with a very small reduction factor. While in traditional sectors of the economy the cost of the payroll is less than 10%. If you pay taxes on labor relations, then the effective tax rate in IT will exceed 20%, while in other industries it is only 5%. That is why it is difficult for the IT industry to grow in an employment relationship. This will lead to the loss of its competitiveness in the international market,

- Igor Samokhodsky, Head of the ICT Sector of the Office of Effective Regulation (BRDO).

The Year-End Summary Finance & Legal Conference also analyzed the current results of the IT industry.

According to a study of the IT market, which we conducted together with BRDO, 12.5 thousand IT companies are registered in Ukraine, and only 4 thousand of them are "live" businesses.  70% are representatives of the service business, 15% are R&D of large international companies, another 15% - Ukrainian food companies.  More than half of businesses operate for export to the United States. This year, the IT industry came in second place in terms of exports of services.  And if we want the share of IT in GDP to be 10%, which was declared in the relevant Ministry, we need to look for our unique mechanisms to stimulate the industry,

- believes Dmytro Ovcharenko, VP on Financial & Legal issues of IT Ukraine, CEO in ALCOR.

IT Ukraine will continue to promote the development of a platform where representatives of government, IT business, relevant associations and NGOs will openly discuss the needs of the IT industry and plans for sustainable development of the industry.
IT Ukraine is the largest pool of service and product IT companies in Ukraine, which together form 50% of the total export revenue of the IT industry in Ukraine and unite 27% of Ukrainian IT specialists.  The association has been operating in the market for over 15 years.  Our mission is to provide favorable conditions for the development of IT in the country and abroad.  More details on our Facebook page.