Cabinet mulls "virtual free economic zone"

The Ministry of Digital Transformation in November will submit to the Verkhovna Rada a bill on a virtual free economic zone for IT companies.

The zone will envisage a special tax regime "Diia.City".

Deputy Prime Minister, Minister of Digital Transformation Mykhailo Fedorov made the announcement during today's Diia Summit in Kyiv where new digital products were showcased, an UNIAN correspondent reports.

"We are submitting the Diia.City bill next month, which will set a precedent for our country," the minister said.

Fedorov says many foreign companies are awaiting the move and queuing up to enter the Ukrainian market.

Diia.City, a virtual free economic zone for IT companies with a special tax regime will become Europe's largest technology hub.

Read alsoIT industry's share in Ukraine's economy may grow to 10% – Deputy PMThe expected changes provide for the replacement of income tax with 10% exit capital tax, a single social contribution (SSC) at 22% of the minimum wage, and 1.5% of military duty. Labor taxes provide for 5% personal income tax (PIT).

To become a resident of the virtual free economic zone, applying companies must have their commercial activities correspond to specially developed classifiers.

The Ministry of Digital Transformation aims to bring the share of IT and creative industries from the current 3-4% to 10% of GDP.

Digital Ministry's major goals

• Digitization of public services in full in the next two years;
• 95% coverage of transport infrastructure and settlements by the high-quality Internet; and
• Involvement of 6 million Ukrainian citizens in a program for the development of digital skills.

Ministry's target

Fedorov earlier said the ministry had set a target that Ukraine should enter the Top 3 countries in terms of data openness.