The Verkhovna Rada is considering draft laws aimed at creating Defence City – a special legal regime for taxation and state support for enterprises in the defense industry. It is expected that the new regime will be similar to the already functioning Diia.City, which is applied to the IT sector.
This is reported by Business • Media
Main Tax Benefits for the Defense Industry
According to the initiative, until January 1, 2036, defense industry enterprises will be able to take advantage of a number of tax benefits:
- Exemption from profit tax provided that the funds are reinvested.
- Exemption from land tax.
- Exemption from property tax.
- Exemption from environmental tax.
In addition, participants in Defence City will retain the existing tax preferences for the defense industry, including VAT benefits, accelerated depreciation, and tax advantages for employees of relocated enterprises.
Additional Incentives and Support
Enterprises that join Defence City will be able to count on a range of additional incentives. Among them are: simplification of customs procedures, facilitation of military technology exports, additional guarantees of legal protection within criminal proceedings, support for the relocation of production facilities, as well as the possibility for the National Bank of Ukraine to establish special rules for currency supervision and currency operations for such companies.
“It is proposed that until January 1, 2036, the following benefits apply to enterprises in the defense sector: exemption from profit tax provided that funds are reinvested, exemption from land tax, exemption from property tax, exemption from environmental tax.”
Furthermore, the parliamentary financial committee is initiating the expansion of the “Affordable Loans 5-7-9%” program to finance defense industry enterprises, as well as improving the loan acquisition process for such enterprises.