R&D and innovative industries
1. A legal regime for IT business called Diia City provides for profitable legal and tax regime for IT companies. Companies engaged in R&D in IT and telecom are eligible to become a Diia City resident.
The following incentives are available for “Diia City” residents, in particular:
- a special corporate income tax regime;
- a new form of cooperation between “Diia City” residents and IT specialists;
- venture investment tools, etc.
2. The Law “On State Support for Investment Projects with Significant Investments in Ukraine” introduces an investment incentives system intended for new large-scale projects that will provide for investments of more than EUR 20 mln, create more than 80 new jobs and engage in certain activities, in particular R&D. Such projects will be eligible for state support that will amount up to 30% of the total investment made in the forms of tax, customs, lands, and infrastructure incentives.
3. The Law of Ukraine “On Industrial Parks” aims at attracting investments into the industrial and R&D sectors of the economy of Ukraine. Managing companies, companies-initiators and/or participants of industrial parks are eligible to enjoy tax and customs incentives, compensation of interest rates on loans, non-refundable financing, compensation for connecting to engineering grids.
4. The state program for investment in startups, including in the IT sector, is preparing to be launched.
Within the state program “eRobota”, the Government will provide grant support for the Ukrainian startups. The new grant program for startups will be administered by the Ukrainian Startup Fund.
Financial support will be provided to startups at different stages of their development – from an idea to a finished product – in the form of grants of UAH 750,000 to 3.5 million to cover, in particular, expenses on R&D.
5. Temporarily till 2025, tax incentives have been in force for aircraft companies to support them in establishing full-scale serial production of modern aircrafts. Aircraft companies may benefit from CIT exemption provided that released funds (amounts of tax that are not paid to the budget and remain at the disposal of the company) are used, in particular, for R&D work on aircraft construction, introduction of new technologies etc.
Moreover, manufacturers engaged in development of aircraft products may enjoy CIT exemption; land tax exemption; VAT exemption for operations on import into the customs territory of Ukraine in the customs regime of import of necessary equipment; VAT exemption for supply of the results of R&D activities.
6. To establish successful production of electric vehicles in Ukraine and support R&D activities in the sector of the economy, a special tax regime applies for companies engaged in the production of electric motors, lithium batteries and chargers for them, electric vehicles. The above-mentioned companies are exempted from CIT until December 31, 2035.
The released funds (amounts of tax that are not paid to the budget and remain at the disposal of the company) can be used only for research and development work in the field of electric transport, creation and re-equipment of material and technical base, increase in production, introduction of new technologies.