What did IT Ukraine and Deputy Prime Minister agree on

What did IT Ukraine and Deputy Prime Minister agree on

On March 26, Deputy Prime Minister - Minister of Digital Transformation of Ukraine Mykhailo Fedorov met with members of the IT Ukraine Association. The updated version of the bill № 4303 - "On Stimulating the Development of the Digital Economy in Ukraine" and its controversial issues were discussed.

We share the key theses of Mykhailo Fedorov, which he expressed during the meeting:

  • The legal regime of Diia.City is designed to make the best and lowest tax system for IT in the world. Mykhailo Fedorov also stressed that he was against any interference in the system related to labor relations with sole proprietors;
  • Joining Diia.City - is optional, as well as membership in a self-regulatory organization (SRO);
  • The Ministry of Digital Transformation opposes interference in the relations of companies with private individuals. Davyd Arakhamia (Chairman of the Servant of the People parliamentary faction) addressed the IT business with the same message during the presentation of the Diia City project on March 24, 2021, and promised not to allow the adoption of Bill №5054 by the Ministry of Economy on signs of labor relations;
  • Mykhailo Fedorov also said that he had already agreed with Danylo Hetmantsev (Chairman of the Verkhovna Rada Committee on Тaxation and Customs Policy) on the tax burden for IT business in the form of 5% PIT, 1.5% military tax, 9% withdrawn capital tax and 22% SSC from the minimum wage. In the future, he promises to extend this tax burden to the whole country;
  • Amendments to the bill №4303, according to the proposal and comments from the IT industry, will be made between the first and second reading in parliament;
  • Funds for education should not be raised through a self-regulatory organization (SRO) within the framework of Diia.City;
  • Mykhailo Fedorov also promised that he would further work on the protection of IT companies that will remain outside the Diia.City regime.

We remind you that an updated version of the №4303 bill on Diia.City was presented last week. The bill took into account most of the proposals from the IT industry, including the reduction of regulatory powers of the Ministry of Digital Transformation and the optional membership to the SRO. However, the new bill does not contain guarantees that allow companies to keep the IE-model outside the legal regime of Diia City. Currently, some important issues, including tax, are being worked out and will be regulated in a separate tax bill.