Ukrainian Parliament adopts Diia City, regime to regulate the IT industry

On April 15 Ukrainian Parliament adopted bill No. 4303 to set the specific regulations for the IT industry titled Diia City. 227 MPs supported the document in the first hearing.

According to the authors, “Diia City is the first transparent legal regime that aims at opening new vistas for the development of the product companies and startups in Ukraine“.

The goal of Diia City is “to stimulate the development of Ukraine as the digital state”. Based on the document, the local IT industry will grow to 10% of the national GDP as opposed to 3.7-4.2% it amounts to today. Moreover, the turnover ratio is expected to increase from $6 billion to $16.5 billion, and the number of specialists will also grow to 450 thousand within the next 5 years.

The representatives of the Ministry of the Digital Transformations claim that joining Diia City is not mandatory, hence, the IT specialists are free to choose their employment model. The state authorities are expected to have a minimum impact on the Diia City residents and outline the requirements for becoming ones. The right to join the regime is given to the legal persons registered following the Ukrainian legislation.

The bill envisages

  • the freedom for activity (all residents have the right to carry out their business activity independently, choose forms and cooperation models);
  • governmental non-interference with business;
  • presumption of eligibility of the residents’ activity;
  • stability – the regime is set for 15 years min.;
  • formal nature of the procedure of becoming a resident of Diia City.

The document also establishes the new form of cooperation titled “gig-contracts” as well as additional mechanisms of the protection of intellectual property rights and investments.

The legislation was developed in collaboration with the representatives of the industry and the majority of their suggestions were included. The authors of the bill mention that there will also be some minor changes in the draft for the second hearing.

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