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Publication date: 14.05.2024
Lawyer
**How does Diia.City work during martial law?**
The introduction of a special legal regime of Diia.City, designed to stimulate the development of the digital economy in Ukraine, became a unique experiment, especially in the conditions of martial law. Understanding how this regime works at such times is critical for businesses considering residency. Let's delve into the work of Diya.City under martial law.
**Implementation of Diia.City during martial law**
Diia.City was officially launched on February 8, 2022, and the first wave of registrations began soon after. By the end of 2022, more than 400 enterprises have already been registered, which indicates a significant interest in this initiative even under martial law.
Decisions on acquisition and loss of resident status are published on the official Diia.City website, but without including the motivational part of the decision-making process.
The Diia.City Residency Law stipulates that residents must meet certain criteria at all times during the entire residency period. However, newly established organizations are given a grace period to meet these criteria, provided they meet certain conditions.
**Flexibility during martial law**
During martial law, there is some leniency regarding Diia.City's residency eligibility criteria. Businesses can become residents even if they do not initially meet certain requirements, such as specific activities, number of employees or income thresholds. In addition, the deadline for submitting audit reports has been extended until one year after the end of martial law.
This flexibility takes into account the extraordinary circumstances during martial law and allows businesses to adapt to the evolving situation while enjoying the benefits of Diia.City residency.
**Loss of resident status**
The main reason for the loss of resident status is non-compliance with the requirements. However, the administrative procedure allows residents to correct minor discrepancies without losing status.
Although there have been cases where businesses have voluntarily renounced Diia.City resident status, the Ministry of Digital Affairs has not made any decisions to revoke residency due to non-compliance. This shows a joint approach between the authorities and residents of Diia.City, aimed at supporting business in difficult times.
**Advantages of Diia.City Residency**
Despite the challenges of martial law, the benefits of being a Diia.City resident remain strong. Diia.City resident companies enjoy a preferential tax regime with a reduced personal income tax rate of 5% instead of the standard 18%. In addition, various tax benefits and rebates are available, including zero tax on certain transactions and protection against unreasonable audits.
**Conclusion**
To navigate the nuances of the status of a Diia.City resident during martial law, you need to understand the framework of the regime and the eligibility criteria. While the challenges of martial law are significant, the flexibility Diia.City provides allows businesses to adapt while still enjoying the benefits of residency. As the experiment unfolds, further cooperation between the authorities and residents of Diia.City will be crucial to fostering the prosperity of the digital economy in Ukraine.
