On Wednesday, the Parliament adopted in the first reading draft law No. 9139, which will create conditions for the development of Ukrainian wine production, competitive in the world.
First of all, draft law No. 9139 is aimed at implementing relevant EU regulations on viticulture and winemaking, the production of flavoured wine products, and new production standards.
It is worth noting that the adoption of the draft law is an important stage in the deregulation of the wine industry, as it replaces outdated instruments of market regulation. The corresponding decision to support the need for the adoption of 9139 was supported on May 24 at the meeting of the Intergovernmental Working Group on the Issues of Accelerated Review of Instruments of State Regulation of Economic Activity, in the work of which BRDO participates.
What will 9139 change?
We sincerely welcome this decision and call on elected officials to adopt the draft law as a whole in order to provide conditions for the development of Ukrainian winemaking and its competitiveness on world markets.
BRDO participates in the work of the IWG within the EU4business: SME Policies and Institutions Support (SMEPIS) project, implemented by Ecorys in a consortium with GIZ, BRDO and Civitta.
Today, a significant part of the catch of Ukrainian aquatic biological resources and the products made from them are belong to the shadow economy. BRDO together with the Ministry of Agrarian Policy and the State Fisheries Agency are actively working on the introduction of a transparent mechanism in Ukraine that will ensure their traceability and prevent illegal and unregulated fishing. This is necessary for the development of fisheries and aquaculture in our country.
The Parliament has taken an important step in this direction: the European integration draft law No. 9545 and its interrelated No. 9546 have been registered, in the development of which the BRDO team participated.
What innovations do the bills foresee?
Why is this important?
Ukraine has a significant potential for the development of not only fisheries, but also aquaculture, which is currently underestimated and not fully realised.
Bills No. 9545 and No. 9546 will change this situation:
This will give impetus to the further development of aquaculture in Ukraine, the creation of products with added value and the attraction of new players to the market, and, accordingly, the growth of the economy.
It is proposed to introduce an electronic system of traceability of the origin of fishery and aquaculture products. It will allow to receive information about the history, source of origin and suitability for consumption of aquatic biological resources and products from them.
This innovation will provide:
In recent years, BRDO, together with other NGOs and entrepreneurs, demanded the publication of financial statements of enterprises in the form of open data. As a result, in March 2023, the State Statistics Service of Ukraine finally published the information submitted by companies for 2022. Using these data, the BRDO IT&Telecom sector team prepared an overview of the situation on the Ukrainian IT market.
Before that, for similar studies, we relied on generalised information, surveys, and expert assessments. The release of the financial statements allowed BRDO to analyse the industry in more detail. When working on the review, the BRDO team used data from the State Statistics Service, aggregated by the analytical service YouControl.
Using this data, the BRDO IT&Telecom sector team prepared an overview of the situation on the Ukrainian IT market. So, the largest Ukrainian employers in the field of IT – what can be said about them?
With this material, we continue the series of publications dedicated to the review of the largest Ukrainian IT companies in 2022 by the amount of net income. The full version of the document, which provides information on the top 30 companies, is available at the link. The previous material of the series is here.
Simplify state regulation for sellers of alcohol and tobacco – such a decision was made by the IWG on deregulation following the results of a regular meeting.
What exactly is recommended to be optimised?
Digitize obtaining licenses for wholesale and retail trade in alcoholic and tobacco products and electronic cigarettes. Applying for a license will be possible through Action. The term for obtaining a license will be reduced from 10 days to 1 day.
When it will be implemented, the risks of illegal trade and illegal licenses will be taken into account.
In addition, today at the meeting of the Interdepartmental Working Group on Deregulation, it was decided to additionally work out the expediency of drawing up acts of completed works for entrepreneurs.
Previously, the practice, unique only to post-Soviet countries, caused inconvenience in document circulation with foreign countries and required expenses for the preparation of redundant documentation. According to CASE Ukraine estimates for 2021, our economy lost up to UAH 34 billion or 0.6% of GDP due to this requirement every year.
This was the first meeting of the IWG regarding the consideration of regulatory instruments that are under the care of the Ministry of Finance. Some of the permits and licenses will be processed at the next meeting. In particular, the question will be raised regarding:
1. Reduction of excise duty by 50%;
2. Cancellation of compulsory licensing of wholesale beer trade for small producers;
3. Establishment of an unlimited term of validity of the license, etc.
We would like to remind you that BRDO’s “Regulatory Policy” sector studied the market of Ukrainian fermented beverages in 2020, and also held numerous consultations with brewers. Based on the results of the analysis, we created the Green Paper “Analysis of the Market of Fermented Alcoholic Beverages”.
If you also represent a business that has specific initiatives, the adoption of which will facilitate the development of entrepreneurship in your industry, please fill out the form on the website https://deregulation.me.gov.ua. The government needs feedback from business in order to implement deregulation reform more effectively.
In total, 45 regulatory instruments in the sphere of competence of the Ministry of Finance were reviewed today at the meeting of the working group. 30 of them decided to optimize.
In just 5 months of the deregulation reform, the Government reviewed more than 800 instruments for regulating business operations. The IWG, created in January 2023, includes, in particular, representatives of the ministries of the economy, digital transformation, protection of the environment and natural resources, justice, finance, and the regulatory service.
With the support of the USAID Program “Competitive Economy of Ukraine”, BRDO prepares analytics on the feasibility of maintaining or canceling regulations, participates in meetings of the IWG and the development of relevant regulatory and legal acts.
On June 19, in London, the conference on Securing the Integrity and Resilience of Ukraine’s Financial System took place, co-organised by the Centre for Financial Crime and Security Studies (CFCS) at RUSI, RUSI Europe, the Better Regulation Delivery Office (BRDO).
The event took place on the eve of the Ukraine Recovery Conference in June 2023 co-hosted by the UK and Ukrainian governments.
The conference gathered over 170 leading voices, in person and online. It included participants from the finance sector as well as representatives from civil society and high-profile Ukrainian, UK and EU policymakers. There were two main panel events, seven one-on-one discussions and two presentations.
Based on the discussions, RUSI prepared a report which summarises the main findings of the discussions related to the integrity and resilience of Ukraine’s financial system.
Oleksii Dorogan, CEO of the BRDO, participated in the conference and presented the Digital Restoration Ecosystem for Accountable Management (DREAM).
“Restoration is a very complex and multi-component process, which is difficult to manage and monitor what happens at each individual stage. And the risks, in particular corruption, are huge. In order to minimise them, the DREAM system is created. It is built on the principle of “everyone sees everything” and is a digital basis, a skeleton for the process of rebuilding Ukraine,” said Oleksii.
DREAM is the state electronic ecosystem of Ukraine, which will provide a single digital route for all reconstruction projects. And will also collect all project data online, display them in the form of convenient tables, graphs and charts and ensure the publication of open data in accordance with the global Open Contracting Data Standard.
“For several years now, Ukraine has been a leader in digital transformation and digital technologies that ensure transparency, in particular in the public sector. We have such services as Diia, Prozorro, Prozorro.Sales, eHealth, Single State Register, etc. They, together with the Register of Damaged and Destroyed Property, the Geo-Information System (GIS), the Branch Management System for Infrastructure Reconstruction, the Unified State Electronic System in the Field of Construction (EDESSB) are the foundation, the first level, on which the DREAM system is built,” added Oleksii Dorogan.
The second level is an “umbrella” system that provides data collection from all first-level systems at each stage of the project, provides open access to them and management and control tools.
In addition, according to Oleksii Dorogan, a very important element in the DREAM system is digital record keeping – that is, every document, every report on spent funds will be available in the system, which will prevent the risks of international money laundering. This is the transparency and accountability that creates the conditions for attracting large amounts of international funding, which will be needed for the large-scale and unprecedented in the peaceful history of Ukraine reconstruction process.
Thanks to DREAM, international investors (both public and private) will be able to choose which project to finance, and will also be able to control the use of their funds. Local authorities, communities that will need financing for restoration projects will be able to find international donors and attract such financing by placing their projects in the system.
Attracting private funds to Ukraine is a process in which international partners need to participate already, in addition to providing military support, believes Bob Seeley, a member of the British Parliament, with whom Oleksii Dorogan spoke during the conference. After all, despite the sanctions, the economy of the Russian Federation does not feel bad in isolation, on the other hand, Ukraine is critically dependent on the financial assistance of Western countries. Some “military insurance” is needed from the US, EU and UK governments to enable private investment, according to Mr Seeley. This requires the trust of Ukraine’s international partners, which is achieved, in particular, thanks to transparency.
Within the framework of the same event, the head of the BRDO IT&Telecom sector, Ihor Samohodskyi, together with the head of the Open Data Association, Nataliia Chornohub, discussed the importance of open data in the context of the future reconstruction of Ukraine and resistance to Russian aggression, particularly in the economic space.
“Open data is not just information available on the Internet. This is a broad concept that involves the availability of data in a machine-readable format, proactive publication of data, as well as the principle of openness by default”, notes Ihor Samohodskyii. “Many services work on the basis of open data. In Ukraine, there is a whole ecosystem of players who use open data, including journalists, entrepreneurs, and ordinary users. We at BRDO in 2021 researched that 5 to 7 million Ukrainians used open data every month.”
Since the beginning of the full-scale invasion of the Russian Federation into Ukraine, all sets have been closed for security reasons, because they can be used by the enemy. Access is now gradually being restored. According to Nataliia Chornohub, open data should be available now, because it will help, first of all, Ukrainian businesses to check their counterparts at the time of their potential connections with the Russian Federation and whether they are under sanctions as companies sponsoring terrorism. And citizens should be able to see the beneficial owners of the businesses whose services they use to protect themselves from the funding of the aggressor country.
“Open data is, first of all, about trust. Citizens’ trust in the state, and our international partners – in us as an ally and recipient of international aid. Accordingly, all future reconstruction systems must be transparent, all state and local authorities must function transparently, and this can be ensured with the help of open data,” added Ihor Samohodskyii.
The event is part of the Supervising and Monitoring Ukraine’s Reconstruction Funds (SMURF) Project, a CFCS-led initiative in partnership with BRDO in Ukraine. SMURF aims to empower Ukraine’s ‘second line of defence’, civil society, to gather the expertise and tools that will enable it to monitor the proper allocation of funds and discourage kleptocracy and corruption. The project was launched in November 2022 and is supported by the NED. Video recording of the conference is available here.
Today, the Verkhovna Rada of Ukraine adopted draft law No. 7029 “On Amendments to Some Laws of Ukraine on Simplifying the Management of Apartment Buildings” as a whole. The BRDO team participated in finalising the draft law for the second reading.
Almost 39,000 associations of co-owners of multi-apartment buildings that have already been created clearly confirm the effectiveness of the residents’ management of their own houses as an alternative to the outdated system of ZHEKs or management companies with an extortionate policy from developers. However, until that moment, the process of creating condominiums and making decisions was too bureaucratised. In particular, the number of votes needed to make any decisions was a significant obstacle to the effective management of the house – it was unjustifiably overstated. A small number of neighbours could block important decisions for co-residents about, for example, thermal modernisation of the house, current or capital repairs of elevators, organisation of security or garbage sorting, not to mention the creation of the condominium itself.
Thanks to the adoption of draft law No. 7029, the creation and operation of apartment buildings become easier and make it possible to ensure the comfort of residents of multi-apartment buildings much more efficiently. To this end, the draft law adopted today provides for:
Along with simplifications that make condominium operations more efficient, the draft law clarifies the rights of co-owners to get acquainted with documents of condominium meetings and provides for responsibility for the loss, destruction, or failure to provide access to condominium participants to meeting materials, contract survey letters, etc.
We welcome this decision of the Verkhovna Rada of Ukraine, which will enable co-owners to more effectively manage their own home. We are also sure that the norms of the draft law will help to increase the number of condominiums, which will be guaranteed to meet the needs of the co-owners of the house and will rationally use the resources of citizens.
In recent years, BRDO, together with other NGOs and entrepreneurs, demanded the publication of financial statements of enterprises in the form of open data. As a result, in March 2023, the State Statistics Service of Ukraine finally published the information submitted by companies for 2022. Using these data, the BRDO IT&Telecom sector team prepared an overview of the situation on the Ukrainian IT market.
Before that, for similar studies, we relied on generalised information, surveys, and expert assessments. The release of the financial statements allowed BRDO to analyse the industry in more detail. When working on the review, the BRDO team used data from the State Statistics Service, aggregated by the analytical service YouControl.
Which of the Ukrainian IT companies earn the most?
The most profitable on the Ukrainian market are product companies. They often work at the intersection of IT and other sectors: banking (LLC “Fintech Band”), payment processing (LLC “Ukrainian Processing Center” and “Visa Ukraine”) and online retail (LLC “Uaprom”). Among the service companies, the market leader Epam Systems LLC has the highest margin.
The highest profits in absolute terms are at large service companies EPAM Systems LLC and GlobalLogic Ukraine LLC and at the product company Fintech Band LLC.
The dominant model on the market is still contracting by individual entrepreneurs. But some companies prefer official hiring of employees.
Of the 10 largest official IT employers, 7 are residents of Diia.City. Residency allows labor taxation at lower rates and will limit work under the PE model in the future. It is expected that companies that already employ employees under labor contracts will have more motivation to acquire residency. It is also possible that companies create separate legal entities specifically to obtain this status.
With this material, we continue the series of publications dedicated to the review of the largest Ukrainian IT companies in 2022 by the amount of net income. The full version of the document, which provides information on the top 30 companies, is available at the link. The previous material of the series is here.
Today the Verkhovna Rada adopted draft law 7457 on regulating the circulation of cannabis plants, in particular for medical and industrial purposes.
BRDO welcomes this decision, as we have supported initiatives related to the legalisation of these crops since 2020. Since 2020, our team of analysts and lawyers has been working on a study of the technical hemp market in Ukraine, which resulted in the Green Paper “Technical Hemp Market” and work on deregulation legislative initiatives.
Settlement of the issue of medical cannabis is definitely an important step for Ukraine.
Equally significant is the regulation of industrial hemp, which is not and should not be defined as a drug. It is a common agricultural crop whose cultivation and processing cannot be subject to strict regulatory instruments. Paper for currency notes, the strongest ropes and gunpowder are made from technical hemp. The world market of technical hemp is currently estimated by experts at more than $4 billion and has a high potential for development.
It is promising not only for farmers, but also for Ukrainian industry in general, especially in wartime conditions. The market for technical hemp is highly profitable, and the products of hemp cultivation usually have a high value.
The text of project 7457 will still be finalised before the second reading in the Verkhovna Rada.
The experts of the Office will also prepare their proposals for maximum relief from the regulatory burden of the industrial hemp market in Ukraine.
We call on elected representatives to vote for this draft law in the second reading as well, in order to finally successfully end the long history of legalising medical and technical cannabis in Ukraine.
The RISE Ukraine coalition demands public access to the Unified State Register of Assets Seized in Criminal Proceedings (the Register), in particular through publication in the form of open data. The corresponding appeal was published on the website of the coalition, which also includes the Office of Effective Regulation of BRDO.
What is this Register about?
The Unified State Register of Assets Seized in Criminal Proceedings records seized assets in all criminal proceedings in Ukraine. The register is administered by the Agency for Search and Asset Management. It contains, in particular, a description and value of the entire portfolio of assets under the management of ARMA, information about the income received from the management of these assets, the duration of the property management agreement and any actions with them. It also contains information about courts and law enforcement agencies involved in the process of making relevant arrest decisions.
What is the problem?
The Agency for Tracing and Management of Assets (ARMA) hides information about existing seized assets. This does not allow monitoring the effectiveness of the management of seized property transferred to the Agency. Transparent management of seized assets is important for preventing abuses and controlling the filling of the state budget from which reconstruction is financed. The availability of information on seized assets also allows for more effective monitoring of the status of criminal cases related to corruption.
During 2022, ARMA handed over assets worth 7 billion hryvnias to managers, while revenues to the budget from the management of ARMA assets for the past year amounted to only 34 million hryvnias. Public activists are recording signs of possible embezzlement of the arrested enterprises that ARMA has taken over. In some cases, arrested companies are idle for many months and accumulate debts as a result of the long time spent searching for a manager. According to the results of the meeting of the Temporary Investigative Commission of the Verkhovna Rada of Ukraine, it became known about possible signs of sale of seized goods at reduced prices, delay in seizure of assets and sale of assets in a non-transparent manner.
The openness of the Register is provided for in Part 1 of Art. 25 of the profile Law of Ukraine “On the National Agency of Ukraine on Identification, Search and Management of Assets Obtained from Corruption and Other Crimes”; The data of the Register are also included in the List of data sets to be made public in the form of open data. Despite this, ARMA did not provide public access to the data of the Register.
The RISE UA coalition demands that the data of the Register be made public in a format that will allow convenient analysis of the contents of this register. This is necessary to combat corruption in Ukraine and ensure transparent and accountable reconstruction of our state.
We will remind that earlier this year the RISE Ukraine Coalition already appealed to the state with a demand to ensure the availability of open data in Ukraine.
Paper for currency notes, the strongest ropes and gunpowder are made from technical hemp. Their global market is currently estimated by experts at more than $4 billion and has a high potential for development. It is promising not only for farmers, but also for Ukrainian industry in general, especially in wartime conditions.
BRDO supports initiatives related to the legalization of these crops and emphasizes the importance of legalizing medical and technical cannabis.
What is the problem with the technical hemp market?
Currently, the production of hemp in Ukraine urgently needs deregulation and updating of the legal framework. This was emphasized by the President of Ukraine Volodymyr Zelenskyi during his last speech in the Verkhovna Rada of Ukraine.
What will help the market of technical hemp in Ukraine to develop?
Technical cannabis is not a drug.
It is a common agricultural crop whose cultivation and processing cannot be subject to strict regulatory instruments.
Farmers’ interest in this market is due to the high profitability and price of hemp products. Revision of state regulatory instruments will make this market attractive for investment in Ukraine.
Since 2020, BRDO has been working on a study of the technical hemp market in Ukraine, which resulted in the Green Paper “Technical Hemp Market” and work on deregulation legislative initiatives.
We continue to develop regulatory changes designed to minimiіe pressure on this market. Preserving traditional Ukrainian production, using innovative approaches, is more relevant today than ever. We call to restore the domestic economy together, in particular, through the development of entrepreneurship in the countryside and the production of products with high added value, in particular from technical hemp.
Ukraine criminalizes the distribution of pornography, citing a 100-year-old document.
Currently, Ukraine continues to follow the Soviet legacy regarding criminal liability for the distribution of pornographic materials that do not pose a public danger. At a time when erotic content has already collected more than 31 million hryvnias for the defense of our country, the production and circulation of porn in Ukraine is completely prohibited by law. The maximum sanction is imprisonment for 7 years.
Thousands of people are prosecuted under the relevant article every year. The reason for this is usually the need for Ukraine to “implement” the International Convention on the Prevention of Circulation and Trade in Pornographic Publications. We suggest you figure out what kind of contract it is.
What is the International Convention on the Prevention of Circulation and Trade in Pornographic Publications?
The document was signed in Geneva in September 1923, that is, almost 100 years ago. One of the participants of the convention at that time was the USSR.
According to the UN Secretariat (letter of the Ministry of Foreign Affairs of January 13, 2023 N 72/14-612-4714), independent Ukraine is not a party to the UN Convention on the Suppression of Circulation and Trade in Pornographic Publications.
At the same time, the Ukrainian courts in the judgments under Article 301 of the Criminal Code (Import, manufacture, sale and distribution of pornographic objects) indicate a violation of this International Convention. Scientists refer to it as a basis for the introduction of criminal liability for the distribution of any pornographic materials.
It is unacceptable to spend the funds of the state budget and the power of law enforcement agencies and courts to bring criminal responsibility for actions that are not socially dangerous and have a significant level of prevalence in society. Especially during the war.
How to fix the situation?
Last year, Ukrainian public organisations jointly advocated the decriminalization of the creation, import and distribution of pornographic products (except for images of violent acts, acts that threaten human life, and sexual acts with the participation of animals).
The initiative was supported by more than twenty public organizations and more than 70 people who signed the corresponding appeal posted on the BRDO website.
We emphasize that we do NOT propose to decriminalize:
A group of public organizations, with the participation of BRDO, developed proposals for the draft law “On Amendments to the Criminal Code of Ukraine on Ensuring Freedom from Interference in a Person’s Private Life.”
We call on people’s deputies, representatives of public organisations and all concerned citizens to support the amendments to the legislation developed by us, which are based on the experience of EU countries, modern international conventions and common sense.
During his last speech in the Verkhovna Rada, the President of Ukraine Volodymyr Zelenskyi emphasized the need to regulate the legal use of cannabis plants on the territory of our state.
BRDO supports initiatives related to the legalization of these crops and emphasizes the importance of legalizing not only medical, but also technical cannabis.
In addition, Ukraine should simplify the conditions for the development of entrepreneurship in this area as much as possible, because our farmers are interested in the development of cultivation and processing of technical hemp. This is due to the high profitability and price of hemp products.
The world market of technical hemp is estimated by experts to be more than $4 billion and has a high potential for development. Review of state regulatory instruments (licensing conditions, quotas, etc.) will make it attractive for investment in Ukraine.
What is the problem of the technical hemp market?
How should it be?
Technical cannabis is not a drug.
It is a common agricultural crop whose cultivation and processing cannot be subject to strict regulatory instruments.
Since 2020, BRDO has been working on a study of the technical hemp market in Ukraine, which resulted in the Green Paper “Technical Hemp Market” and work on deregulation legislative initiatives.
We continue to develop regulatory changes designed to minimize pressure on this market.
Preserving traditional Ukrainian production, using innovative approaches, is more relevant today than ever. We call to restore the domestic economy together, in particular, through the development of entrepreneurship in the countryside and the production of products with high added value, in particular from technical hemp.
We continue to introduce you to promising technologies for the batteries of the future and what place Ukraine can occupy in this process.
“Batteries of the future” will be based on new technologies currently being developed that have the potential to be the next generation of commercial batteries for electric vehicles. Among such promising technologies are:
Lithium-ion silicon (Li-Si) batteries are a type of lithium-ion battery with a theoretical anode capacity of about 4200 A·h/kg, which is about 10 times higher than some commercial lithium-ion batteries with graphite anodes. The production of highly efficient nanostructured silicon materials is expensive and unstable. Despite this, there are commercially viable large-scale productions using nanocoating technologies and manufacturing process developments.
A new anode material can be created on the basis of silicon – several layers of carbon are applied to the surface of silicon nanoparticles. Thanks to this, a higher specific capacity of the battery is achieved, as well as its life expectancy – up to 80% of the battery is saved after the 100th discharge cycle.
Silicon-based material is another promising anode material for Li-ion batteries due to its high performance and high prevalence in the Earth’s crust.
According to data from open sources, the most interesting of the four deposits that are on the state mineral balance sheet of Ukraine is in the Sumy region. This is the Banitske deposit, where there are sandstones of the highest quality with a silicon content of more than 99%. In February 2023, it was nationalised.
The potential of the Ukrainian industry is high – we can provide a full production cycle from the extraction of silicon raw materials to the manufacture of pure silicon and products from it. In 2008, the Concept of the development of the silicon industry was developed, which needs to be updated taking into account nowadays realities, as well as involve Europe in this process – which is trying to diversify its supply chains of critical raw materials, including silicon. Ukraine can and should occupy its niche in the silicon sphere.
Experts of the EU Project “New Code of Ukraine on the Subsoil” are preparing an analytical review of advanced battery technologies in Ukraine, which will also explore the connections and potential value chains between the needs of battery manufacturers in the EU and the corresponding raw materials in Ukraine. To ensure you don’t miss a research publication to find out which companies and startups are working on the development of battery production in Ukraine, follow the information resources of the BRDO or subscribe to the monthly digest.
The project is financed by the European Union and implemented by the Consortium consisting of experts from Projekt-Consult (Germany), MinPol (Austria) and the Better Regulation Delivery Office (Ukraine). This publication reflects the position of the Project and does not necessarily coincide with the position of the European Commission.
In recent years, BRDO, together with other NGOs and entrepreneurs, demanded the publication of financial statements of enterprises in the form of open data. As a result, in March 2023, the State Statistics Service of Ukraine finally published the information submitted by companies for 2022. Using these data, the BRDO IT&Telecom sector team prepared an overview of the situation on the Ukrainian IT market.
Before that, for similar studies, we relied on generalised information, surveys, and expert assessments. The release of the financial statements allowed BRDO to analyse the industry in more detail. When working on the review, the BRDO team used data from the State Statistics Service, aggregated by the analytical service YouControl.
Which IT companies added the most to the state budget with income tax in 2022?
The largest payer of income tax was the largest service company “Epam Systems” LLC: they paid more than the next five combined. In the second place is the global service company Globallogic Ukraine LLC; in the third place is the product company Fintech Band LLC.
Income tax is 18%, but not all companies pay exactly that much due to accounting features. For example, Persha Studio Development LLC – the developer of the World of Tanks video game – paid income tax at an effective rate of 23.6%. Ukrainian service company “Softserve Industry” LLC – at a rate of 23.1%. At the same time, there are companies that pay less: “Epam Digital” LLC and “Metinvest Digital” LLC paid at rates of 1.2% and 1.3%, respectively.
The difference between the nominal income tax rate and the effective rate can be explained by the peculiarities of the company’s accounting policies, the existence of tax credits or liabilities, the application of special tax regimes, etc.
In 2022, a special tax regime began to apply for IT companies within the Diya.City residency. It allows you to choose special conditions of taxation with income tax, namely the exit capital tax at the rate of 9%. Companies could use this opportunity only starting from the second quarter of 2022. According to the plan, the exit tax should reduce the tax burden on companies.
In fact, the companies that became residents of Diia.City changed the effective tax rate in 2022 in different ways. At least three Ukrainian food companies have significantly reduced it: LLC “Fintech Band”, “Uaprom” and “Netcracker”. At the same time, it has not changed for other residents, and for some it has even increased.
With this material, we continue the series of publications dedicated to the review of the largest Ukrainian IT companies in 2022 by the amount of net income. The full version of the document, which provides information on the top 30 companies, is available at the link. The previous material of the series is here.
During the Ukraine Recovery Conference (URC) 2023 in London, the MVP presentation of the public module of the digital restoration management ecosystem – Digital Restoration Ecosystem for Accountable Management (DREAM) took place. It was presented by the Prime Minister of Ukraine Denys Shmyhal and the Minister of Community Development, Territories and Infrastructure Oleksandr Kubrakov.
The concept of the electronic reconstruction management system was developed by the BRDO team together with the Open Contracting Partnership and Transparency International Ukraine. As a result of many months of preparation, today we have the first version of an effective tool for the implementation of a project of unprecedented scale and complexity – the reconstruction of Ukraine.
Why is the DREAM public module MVP needed?
The public module of the ecosystem will become a tool for coordination and ensuring a smart and transparent reconstruction for the donor platform. It is available at https://dream.gov.ua/ in English and allows you to view data by project by sector, community and region. In addition, data on investment projects and public-private partnership projects became available in DREAM. The Ukrainian-language version will be presented in July 2023.
Since November 2022, the industry system has been operating in pilot mode, and during this time representatives of communities and regions, central authorities have already contributed more than 2,000 projects and project ideas to DREAM simultaneously with the launch on June 21, which were published via .
The creation of DREAM was jointly initiated by the Ministry of Community Development, Territories and Infrastructure and the RISE Ukraine Coalition in the summer of 2022 and is carried out by the Open Contracting Partnership, Transparency International Ukraine and the BRDO Effective Regulation Office with the support of the British Government. Since June 2023, the DREAM Project Office has been working on the development and implementation of the ecosystem. As in the case of the launch of such state systems as Prozorro and Prozorro.Sales, after the completion of development, the system will be transferred to the ownership of the state in the form of the Ministry of Reconstruction.