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Publication date: 20.05.2024
Lawyer
How does a Diia.City resident register and report their activities during martial law?
Being a Diia.City resident offers many advantages, including favorable tax rates and special business conditions. Here's a comprehensive guide on how Diia.City residents can effectively meet their reporting obligations, especially during martial law.
## Access to online reporting services
The reporting process for Diia.City residents begins with access to the Diia.City online platform.
### 1. Register and login
- **Visit the platform**: go to diia.gov.ua] and register or log in if you already have an account.
- **Verification**: Make sure your identity is verified with an electronic signature.
### 2. Fill out the application
- **Filling out the form**: Fill out the required form and attach the required documents in Ukrainian.
- **Electronic signature**: sign documents with a qualified electronic signature.
### 3. Application submission
- **Authorized submission**: The application can be submitted by the head of the enterprise, an authorized person entered in the Unified State Register, or a representative by proxy.
- **No special financial reporting**: Special financial reporting is not required when applying for permits or licenses.
### 4. Wait for confirmation
- **Confirmation**: after submission, the application is sent to the Ministry of Digital Transformation. Wait for a confirmation message to the registered email address.
## Further steps in the activity process
### 1. Review of the application
- **Review period**: The Ministry of Digital Affairs reviews the application and the documents attached to it within 10 working days.
- **Tacit consent**: if no response is received within this period, the company automatically receives Diia.City resident status.
### 2. Notice of decision
- **Notification**: The Ministry will notify you of its decision (rejection or return without review) to the specified email address.
### 3. Registration of the decision
- **Transparency**: all decisions of the Ministry of Digital are registered in the Diia.City registry for transparency and accountability.
## Understanding tax rates and requirements
As a Diia.City resident company, you have the opportunity to choose a taxation scheme:
- **Corporate taxes**: choose between taxing profits under special conditions (tax on withdrawn capital) at a rate of 9% or keeping the corporate income tax rate at 18%.
- **Labor Taxes**: preferential labor tax rates, including personal income tax of 5%, VAT of 22% (of the minimum wage) and military levy of 1.5%.
## Action.City Status Requirements
To become a resident of Diia.City, companies must meet certain criteria defined by the Law of Ukraine:
- **Compliance with the Law**: Absence of circumstances defined by the Law.
- **Source of income**: at least 90% of the income from the specified activity.
- **Remuneration**: Ensure an average monthly remuneration of at least 1,200 euros for employees and specialists.
- **Headcount**: Hire at least 9 employees and/or specialists.
## Reporting obligations
Diia.City residents must submit both initial and annual compliance reports:
- **Initial report**: to be submitted within 6 months of obtaining Diia.City resident status, covering the first 3 months of residency.
- **Annual report**: Submit no later than June 1 of the year following the reporting year.
## How does Diia.City work during martial law?
The introduction of Diia.City, designed to stimulate the digital economy in Ukraine, became a unique experiment, especially in the conditions of martial law.
### Implementation of Diia.City during martial law
Diia.City was officially launched on February 8, 2022. By the end of 2022, more than 400 enterprises had registered, indicating significant interest even during martial law.
### Loss of resident status
The main reason for the loss of resident status is failure to meet the requirements. However, the administrative procedure allows residents to correct minor discrepancies without losing their status. Despite the fact that some businesses have voluntarily given up Diia.City resident status, the Ministry of Digital has not revoked any residency due to non-compliance, demonstrating a favorable approach.
### Advantages of the Diia.City Residence
Despite the challenges of martial law, the advantages of Diia.City remain:
- **Tax benefits**: reduced personal income tax rate of 5% compared to the standard 18%.
- **Other incentives**: Various tax benefits and rebates, including zero tax on certain transactions and protection against unreasonable checks.
## Conclusion
Navigating the nuances of Diia.City residency during martial law requires an understanding of the framework and selection criteria. The flexibility provided by Diia.City allows businesses to adapt to the evolving situation while enjoying the benefits of status. As this initiative develops, continued collaboration between the authorities and residents of Diia.City will be essential to foster the prosperity of digital economy of Ukraine.
