On September 3, members of Diia.City United met with Danylo Hetmantsev, Chairman of the Verkhovna Rada’s Committee on Finance, Taxation, and Customs Policy, as part of our ongoing Dialogues with the Authorities series.

The closed discussion covered key issues directly impacting the development of Ukraine’s tech industry — from the future of the Diia.City special tax framework for virtual assets and the taxation of digital platforms. 

The meeting took place on the same day Parliament passed the bill on virtual assets in its first reading — a crucial step toward legalising cryptocurrency circulation in Ukraine and a legislative effort to which we contributed.

Key Takeaways

  • Tax Policy Stability: No abrupt tax changes are planned. The Committee does not consider a VAT increase an effective solution for covering the budget deficit.

These figures are disproportionate. We wouldn’t solve the core issue but instead create a host of new problems by overburdening the transparent sector of the economy.

  • Virtual Assets: With the bill passing its first reading, the industry and lawmakers will actively collaborate to refine the text ahead of the second reading.
  • Defense City: The mechanism for simplifying exports will be developed at the bylaw level within two months of the law being signed.
  • Digital Platforms (DAC7): A revised draft law that includes business proposals is anticipated next month.
  • No Retroactive Changes: The Constitutional Court’s ruling on the unconstitutionality of retroactive tax regulations will be upheld.

Diia.City: Challenges and Prospects

Danylo Hetmantsev explained his position on the Diia.City special tax framework. He stated that its main problem is insufficient effectiveness, noting that out of 2,200 residents, only a small fraction have transitioned their staff from private entrepreneur contracts (known as “FOPs”) to formal employment agreements.

If we agree on creating the world’s best legal framework, the next logical step should be an initiative from the Ministry of Digital Transformation to eliminate the option of conducting IT activities through the FOP model, Hetmantsev remarked.

According to  the Committee Chairman, one of the key challenges to preserving Diia.City is pressure from international partners — particularly the IMF, which advocates for the elimination of preferential tax regimes.

Virtual Assets: Refining the Details

Following the bill’s passage in its first reading, the intensive phase of text refining begins. Danylo Hetmantsev urged industry experts to participate in reviewing and analysing the draft law:

The main problem is that almost no one has read it. This is a very large piece of legislation. We definitely need expertise from the market.

Diia.City United will prepare and submit detailed proposals for the second reading, incorporating best international practices. Key priorities include:

  • Clarifying the regulator’s powers.
  • Banning Ukrainian operations for service providers that work with citizens of the aggressor state.
  • Ensuring a balance between state authority and the rights of business entities.

Defense City and Export Regulation

While the Defense City bill has been signed by the President, its key operational mechanisms — including the algorithm for simplified exports — have been delegated to the level of by-laws. 

According to Hetmantsev, this was a deliberate decision due to the highly specific nature of the defense tech sector:

A simplified export procedure must be established. We will ensure this mechanism is effective and truly functional.

The Cabinet of Ministers has two months to develop the relevant regulations after the law comes into effect.

Digital Platforms: The Search for Balance

Regarding the taxation of income earned via digital platforms (in line with DAC7), Danylo Hetmantsev confirmed his readiness to simplify procedures and consider business proposals. 

Specifically, the discussion covered the possibility of integration with the Diia platform for streamlining the process for obtaining a special taxpayer status.

Industry representatives emphasised the need for fast and user-friendly processes for drivers and other contractors working through digital platforms.

Tax Stability and European Integration

The Committee Chairman reaffirmed the commitment to a predictable tax policy. He stressed that the number one priority for his Committee is European integration, regardless of the next Verkhovna Rada’s composition.

We thank Danylo Hetmantsev for his openness to dialogue and his willingness to hear the perspective of the tech industry. We believe that constructive cooperation between our Association and key parliamentary committees is essential for shaping well-reasoned policies that meet the needs of our industry.

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* Through our closed-door Dialogues with the Authorities meetings, we continue to foster direct engagement between the tech industry and key state institutions. Our goal is to build a transparent and predictable regulatory environment for the Ukrainian tech companies.

** Want to access exclusive events like this? Join the largest association of product tech companies in Ukraine. Contact us at members@diiacityunited.org to learn more about the benefits of joining Diia.City United.