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.
Dmytro Ovcharenko, Vice President on Financial & Legal issues of the IT Ukraine Association, comments:
On the one hand, the industry is grateful to the authorities for the daily constructive dialogue. After all, we are in the same boat: if the passed laws slow down the growth of IT in the coming years, the responsibility for this will fall on both sides of the dialogue. On the other hand, the IT community is still very, very far from supporting Diia.City. And it's not a matter of quantity, but of quality - the key "red lines" from us are still not implemented in the new bill.
Currently, the authors of the Diia.City initiative state that the draft Law of Ukraine №4303 will be finalized taking into account the vast majority of comments and suggestions of the industry, as well as the best provisions of alternative bills. The IT Ukraine Association participates in a dialogue with the authorities and welcomes the discussion of the option of a batch vote on the draft laws №4303-d, the tax on Diia.City and Masks-show stop-3.
IT Ukraine Association is the largest professional association of Ukrainian service and product companies. As of March 2021, the association represents the interests of 54 IT companies and 52,000+ IT professionals. The mission of the Association is to provide favorable conditions for the sustainable development of information technology in the country.
Bill 4303-2 is an alternative bill from the IT industry to create a special legal regime for IT - "Diia.City". Submitted to the Verkhovna Rada on November 18, 2020 by the People's Deputies of Ukraine headed by Kira Rudyk (leader of the Voice party) and Andriy Nikolayenko (Batkivshchyna faction, member of the Finance, Taxation and Customs Policy Committee of the Verkhovna Rada). The bill was developed in close cooperation with the IT industry, represented by the largest business associations in Ukraine: the European Business Association, the IT Ukraine Association, the American Chamber of Commerce in Ukraine, the Ukrainian Association of Venture and Private Capital with the law firm "Sayenko Kharenko".
"Masks-show stop-3" - the bill №2740, better known as "Masks-show stop-3", provides for amendments to the Criminal Code of Ukraine to protect IT business from abuse by law enforcement agencies, in particular, unwarranted searches, seizure of servers and other equipment owned by entrepreneurs. On January 15, 2020, it was submitted to the Verkhovna Rada, but was rejected and sent for revision. Experts from the IT Ukraine Association, the Supreme Court of Ukraine and scientists worked on its development.