Rada approves laws on Defence City

The Verkhovna Rada of Ukraine adopted in the second reading and as a whole two key bills that lay the foundation for the implementation of the Defence City initiative.

Danylo Hetmantsev, a member of the Verkhovna Rada from the Servant of the People faction, head of the parliamentary committee on finance, tax and customs policy, has written this on Telegram, the Ukrainian News agency reports.

In particular, the Rada approved bill No. 13420 — on amendments to the Tax Code of Ukraine and other laws of Ukraine on support for enterprises of the defense-industrial complex and bill No. 13421 — on amendments to Section XXI "Final and Transitional Provisions" of the Customs Code of Ukraine on support for enterprises of the defense-industrial complex.

Key provisions of the documents:

• The Defence City legal regime is being introduced until January 1, 2036 (or until Ukraine joins the EU)
• Instead of the List of Defense Industry Enterprises, the Defence City Register is being created under the management of the Ministry of Defense
• Clear rules for residents: the status, conditions for its receipt and control are determined by the Law "On National Security of Ukraine"
• The share of a resident's qualified income - from 75% (for aircraft manufacturing - from 50%)

Instruments to support residents:

• tax benefits (exemption from income tax subject to reinvestment, land, real estate and eco-tax)
• simplified customs procedures
• simplified export control of military goods
• the possibility of the NBU establishing currency supervision features
• support for relocation and increasing the security of production facilities

As the Ukrainian News agency earlier reported, the adoption of the special "Defence City" regime for defense industry enterprises will allow Ukraine to significantly increase the production of weapons and defense goods. According to experts, this amounts to between USD 9 and USD 30 billion each year.

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