July 27, 2021

Ukraine Breaking News

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The Ukrainian parliament adopts Diia City, a regime to regulate the IT sector

The Ukrainian parliament adopts Diia City, a regime to regulate the IT sector

On April 15, the Ukrainian parliament adopted the bill no. 4303 to establish specific regulations for the IT sector entitled Diia City. 227 deputies supported the document in the first hearing.

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

Diia City’s goal is “to stimulate the development of Ukraine as a digital state”. According to the document, the local IT industry will grow up to 10% of national GDP compared to 3.7-4.2% it is today. Furthermore, the turnover ratio is expected to increase from $ 6 billion to $ 16.5 billion and the number of specialists will also grow to 450,000 within the next 5 years.

Representatives of the Ministry of Digital Transformations say that membership in Diia City is not mandatory, so IT specialists are free to choose their employment model. State authorities should have minimal impact on Diia City residents and outline the requirements for becoming one. The right to join the regime is granted to legal persons registered under Ukrainian law.

The bill provides

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

The document also establishes the new form of cooperation called “gig-contract”, as well as additional mechanisms to protect intellectual property rights and investments.

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