The Verkhovna Rada of Ukraine has approved two draft laws providing for the creation of Defence City — a special legal regime to support enterprises of the defence-industrial complex. Draft laws No. 13420 and No. 13421 introduce amendments to the Tax and Customs Codes as well as other laws of Ukraine.
The launch of Defence City will significantly increase the production of modern Ukrainian weapons and equipment, foster the development of innovative technologies, attract investment into the sector, and enhance the capabilities of Ukraine’s Defence Forces.
Experts from BRDO, in cooperation with specialists from the Ministry of Defence of Ukraine, worked on amendments for the second reading, taking into account proposals from industry associations in the defence-industrial sector. As a result, the final version of the draft laws better reflects their needs.
Key benefits for Defence City residents:
- Tax incentives up to 2036: exemption from corporate income tax provided it is reinvested; exemption from land and real estate tax on assets used in production; exemption from environmental tax.
- Simplified customs procedures during martial law and for one year after its termination.
- Support for relocation and increased security of production facilities.
- Simplified rules for international transfers of defence products.
Enterprises of the defence-industrial complex that are of strategic importance to the country’s defence capability, meet transparency standards, and have no ties to the aggressor state may join Defence City.
The Ministry of Defence of Ukraine will compile the list of enterprises eligible to participate in the special regime according to the established criteria. The main requirement is that the majority of a company’s revenue must come from defence production — at least 75% (for enterprises in the aircraft industry — 50%).