A year ago, the Law “On Stimulating the Development of the Digital Economy in Ukraine” (Law on Action.City) came into force in Ukraine, which introduced a new legal regime for the IT industry in our state.

The concept of Action (Dia) from the developers is low taxes, the ability to build a transparent corporate structure and it is easier to attract investment.

Let's remember how it was

The official start of work Dia.City took place on February 8, 2022 as part of the Dia Summit and at the same time the acceptance of applications for special regime resident status began.

According to Action, already on February 16, 2022, such giants as Reface, Roosh, Monobank, MacPaw, Ajax Systems, Revolut, EPAM Systems, Samsung, Genesis, NiX Solution, Softserve, Sigma.Software, RIA.com, became residents of Deya.City. Rozetka, Plarium, Deus Robots and many well-known technology companies.

As of September 9, 2022, 345 resident companies were registered in the Dia.City register.

As you know, among the main “buns” is Dia.City – tax rates. On January 1, 2022, changes to the Tax Code came into force regarding the taxation of companies that are residents of Dia.City and specialists of Dia.City - Law of Ukraine “On amendments to the Tax Code of Ukraine and other laws of Ukraine on stimulating the development of the digital economy in Ukraine” No. 1946- IX dated 12/14/2021.

What you should know about taxes.

Income tax

City residents have the right to choose a general taxation system and pay income tax or choose a taxation regime with payment of corporate income tax under special conditions.

At the same time, residents do not have the option “choose a simplified taxation system (single tax)”.

If a company that is a single tax payer becomes a resident, in accordance with paragraphs. 10 pp. 298.2.3 of the Tax Code, such a company is obliged to switch to paying other taxes and fees determined by the Tax Code from the first day of the month following the tax (reporting) quarter in which the taxpayer received the status of a resident of Dіa.City.

The transition to taxation as a resident of Dіa.City - taxpayer under special conditions is possible once during a calendar year.

There are different options for switching to paying income tax under special conditions: submitting an application for the election of such a taxation system simultaneously with an application for obtaining the status of a resident of Dia.City or a transition in the process of carrying out activities after acquiring the charter of a resident of Dia.City.

The application form and the procedure for its consideration are approved by the Ministry of Finance.In the case of filing an application for a transition to taxation under special conditions when applying for the status of a resident of Dіya.City, such residents are considered residents of Dіa.City.

City - taxpayers under special conditions from the first day of the month following the quarter in which the legal entity is entered into the Action register.

If a company decides to switch to paying income tax under special conditions after acquiring the status of a resident of the Action, then the application for the transition is submitted no later than 15 calendar days before the start of the next calendar quarter.

Such a City resident is considered a tax payer under special conditions from the first day of the month following the quarter in which the corresponding application is submitted to the regulatory authority.

If, when registering as a resident of Dia.City, an application is not submitted to switch to taxation as a resident of Dia.City - a taxpayer under special conditions, then such a company is considered a resident of Deya.

City - a taxpayer on a general basis.If a resident decides to waive taxation under special conditions, such an application must be submitted no later than 10 calendar days before the start of the new calendar year.

Income tax rates:

18% – tax rate for residents who choose to pay income tax on a general basis;

9% – tax rate for residents who have chosen corporate income tax under special conditions.

If a resident chooses a general taxation system, income tax is determined and paid according to the general rules defined by the Tax Code for income tax. Income tax under special conditions is, in fact, UNIC.

Its main idea is the taxation of a certain list of transactions for the distribution of profit and payments equivalent to them (operations for the withdrawal of funds from the company - subclause 135.2.1, clause 135.2 of Article 135 and subclause 141.9-1.2, clause 141.9-1 of Art. 141 of the Tax Code of Ukraine).

Such operations include, in particular:

•      dividend payment;
•      return of the deposit in connection with the withdrawal of the participant;
•      payment of interest, commissions, fines under loan agreements;
•      royalties;
•      free supplies;
•      financial assistance not returned within 12 months;
•      investing in objects outside the territory of Ukraine;
•      a number of settlements with non-residents and a number of other payments.

Although the Dia.City stakeholder, the Ministry of Digital Development, declared one of the advantages of the regime - simplification of tax administration for residents, tax reporting if the NNPC is elected seems to be quite difficult.

On August 12, 2022, the State Tax Service published a draft order of the Ministry of Finance of Ukraine “On approval of Amendments to the Tax Declaration Form for Corporate Income Tax,” the purpose of which is to bring the declaration form into line with the provisions of the Code for a special tax regime for residents of Dіa.City under special conditions. It is planned that residents who have elected the NNPC must fill out the Calculation of tax on transactions of a resident City - a taxpayer under special conditions on 19 sheets.