Verkhovna Rada supports special taxation regime for the Diia City residents: personal income tax at 5% and 9% tax on distributed profits

On June 2, 2021, on the first reading, the Ukrainian parliament adopted bill №5376 that makes amendments to the Tax Code of Ukraine regarding Diia City regime. 281 deputies voted “for” it. The draft imposes special tax rates for resident companies of Diia City. The bill that establishes a special IT industry Diia City regime was adopted by the Verkhovna Rada on the first reading back in April 2021.

Both the Diia City bill and the special taxation regime for its residents are in one package — they do not work without each other. Previously, we wrote about what the Diia City regime is, as well as its disadvantages.

The bill, which was adopted by the deputies on the first reading today, imposes the following special tax rates for resident companies of Diia City:

  • personal income tax at 5% (this rate can be applied for the salaries of resident companies’ employees, for payments to gig specialists on gig contracts, for royalties);
  • unified social contribution in the amount of the minimum insurance contribution for employees of resident companies, or at the rate of 22% of the determined amount of the USC base determined under the terms of the gig contract;
  • corporate tax or income tax at 18% or a 9% tax on distributed profits;
  • military tax at 1.5%.

AIN.UA will follow the further work of the parliament on these bills.