The Verkhovna Rada has passed at the first reading bill No. 5376 on amendments to the Tax Code of Ukraine regarding the stimulation of the development of the digital economy in Ukraine, which regulates the tax conditions of the special legal regime Diia City.

Some 281 MPs voted for the relevant document.

The bill introduces a special taxation regime for companies-residents of Diia City and the income of their employees, including gig specialists. The document, in particular, gives Diia City residents the opportunity to choose between paying income tax (18%) and tax on withdrawn capital at a rate of 9%.

The bill exempts individuals from taxation on dividends accrued by a resident company, provided that they are paid no more than once every two years. In addition, a zero tax rate will be applied to income from the sale by an individual of a share in a resident company of Diia City, provided that an individual has owned it for more than one year.

The bill also introduces a tax cut for individuals in case of acquiring a stake in a start-up company that is a resident of Diia City. The amount of the discount will depend on the amount of the transaction.

It is expected that the introduction of these norms will allow IT companies to more actively attract investments for scaling and development. They will also have an additional incentive to reinvest in business development.

The bill also establishes special tax rates for employees of IT companies. So, it is proposed to introduce tax on income of individuals in the amount of 5% (the wage of employees under employment contracts, remuneration of gig employees under gig contracts, royalties for the creation of an official work and the transfer of rights to official works), single social security tax – 22% of the minimum wage and 1.5% military duty.