Summary of the First ITU Legal Talks Series Meeting This Year

On March 6th, an online meeting took place as part of ITU Legal Talks, organised by the IT Ukraine Association with the participation of our legal ITU Partner Company EBS. The topic of the first meeting of this year’s series was ‘Аudit of Diia.City Residents: Requirements, Reporting, and Independent Conclusion’.

 

The audit of Diia.City residents is an important part of ensuring compliance with legal requirements. The audit process includes checking the residents’ reports for compliance with legislative requirements.

 

 

Speakers at the event, Kateryna Harbuz, Partner, Legal Practice Leader EBS and Maksym Mokhomor, Partner, Audit Practice Leader EBS, discussed the following:

 

The supervisory body, the Ministry of Digital Transformation, checks whether the company meets the requirements for Diia.City resident status. The requirements for Diia.City residents include:

• Only legal entities registered in Ukraine can be residents;
• The legal entity must engage in one or more activities provided by law;
• The average monthly remuneration must be at least €1,200;
• The legal entity must have at least 9 employees (gig specialists or workers);
• 90% of the income must be from activities recognised as qualified within Diia.City.

 

Reports on compliance and audits are divided into an initial (submitted within the first 3 full months of residency status and not subject to audit for startups) and an annual (submitted yearly and subject to audit). Note! Companies must ensure continuous and full compliance with the requirements throughout their entire residency.

 

Procedure for submitting reports:

1. The resident is responsible for submitting the report and the accuracy of the calculations.
2. The auditor does not prepare the compliance report but checks the correctness and compliance of the data.
3. The report is filled in on the Diia.City website through the resident’s cabinet.
4. The auditor’s report is added in PDF format with the auditor’s qualified electronic signature.

 

The Ministry of Digital Transformation recommends using the accrual method as confirmation of income. The report must include the average monthly remuneration, the number of employees, qualified income, and, for startups – additional data on income for the previous period. The responsibility for failing to submit the report is the loss of resident status (if delayed for more than 20 working days or if not submitted on time for two years) and switching to the basic rate of personal income tax (18% for full residents).

 

How to choose an auditor: 

• The law stipulates that Diia.City audits must be conducted by auditors who can perform mandatory audits. These auditors are listed in registers administered by the body responsible for public oversight of auditing activities. 
• Auditor registers: third and fourth registers.
• When choosing an auditor, it is advisable to select from the registers or conduct tenders on public platforms. 
• The choice of auditor also depends on communication and the experience of previous auditors, particularly for other types of audits (PSBO, IFRS, initiative audits). 
• Auditors provide not only auditing services but also consulting.

 

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