DIIA.CITY AND GIFTS

Digital transformation has long been a part of our lives. With the help of electronic services and systems, you can perform many actions without leaving your home. This saves time and effort for citizens and is a fairly convenient communication channel for citizens with public authorities.

But the transformation does not stand still, and in December 2021, changes were adopted to the Tax Code of Ukraine on digital transformation. These changes included the introduction of a special tax program for IT businesses, called Diia.City.

The Diia.City program provides for a significantly lower tax rate when used than usual. For example, for tax professionals in this program is only 5% on personal income tax, instead of 18% for their employment in the state. The difference is obvious.

Also, companies registered in Ukraine (residents) when using Diia.City can choose which tax rate to use (profit tax - 18% or tax on withdrawn capital - 9%).

What taxes are subject to the withdrawn capital system and taxed at the rate of 9%?

• First, the payment of income from dividends.
• Secondly, the payment of interest, commissions, payment of fines and so on.
• Thirdly, the payment of royalties.
• Fourth, the payment of income from joint activities for residents of Diia.City.
• Fifth, other types of taxation specified in the Law of Ukraine № 1946-9.

Tax benefits Diia.City

Дія.City users have the opportunity to continue to cooperate with individual entrepreneurs. For such companies, there are usually some restrictions on cooperation with individual entrepreneurs, but if the company's annual income is less than 40 million and if they have chosen income tax, then no restrictions apply to them.

Tax limits for Diia.City

The limitation of dividends is not subject to taxation if they are paid no more than once every two years, and the company itself is a payer on the withdrawn capital. Thus, the legislator puts certain tax restrictions on Дія.City

The volume of services between Diia.City and FLP will decrease every year. Thus, from the beginning of 2025, the volume of services cannot exceed 20% of the costs for previous reporting periods. Although in 2024 no more than 50% is allowed.

Therefore, if we analyze Diia.City and taxes, we can conclude that this program is designed to create a favorable economic situation for the IT business. But this is a completely new program that requires detailed study, and in some cases the help of a specialist in its application. If you want to use Diia.City but don’t know where to start, then you should seek the help of an IT lawyer who will help you deal with the newly adopted law and taxation features in Diia.City. After all, timely legal assistance is the key to reliable and stable business operation. And new digital technologies are just a part of a complex mechanism.