Leading IT industry associations in Ukraine have expressed concern about a possible tax increase for residents of «Diia. City» residents, which could lead to an outflow of investments and business relocation.
Leading industry associations — Diia City Union, Diia City United, Lviv IT Cluster, IT Ukraine Association, Kharkiv IT Cluster — have published joint statement in which they expressed serious concern about the government’s initiative.
Draft law No. 11416-d supported by the relevant committee of the Verkhovna Rada, provides for an increase in the military tax to 5%. This violates the state’s previously provided guarantees of stable taxation for 25 years for participants of «Diia. City» participants. The IT community believes that such changes could undermine the confidence of foreign partners in Ukraine.
Industry representatives warn of negative consequences of this initiative. They predict a possible withdrawal of companies from the «Diia. City» regime, relocation of business to other jurisdictions, and a decrease in the competitiveness of Ukrainian IT firms in the international market.
«According to experts, if the tax changes are introduced, it could lead to a drop in the IT industry by up to 30% as early as 2025, mass layoffs, job cuts, a deterioration in the trade balance and a decrease in foreign exchange earnings and tax revenues», — the statement said.
The IT community is calling for an immediate dialog with the authorities. They demand a meeting with representatives of the relevant committees of the Verkhovna Rada, the Ministry of Digital Transformation, the Ministry of Economy, the Office of the President of Ukraine, and other government agencies to discuss the situation.
According to industry representatives, Draft Law No. 11416-d needs to be significantly revised. Instead of raising taxes for transparent businesses, the IT industry suggests focusing on fighting the shadow economy. The proposals include reforming the tax and customs system, improving the administration of existing taxes, combating the illegal circulation of excisable goods, and optimizing public spending.
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