Programmers work at their desks in one of the buildings of Unit.City, a tech hub that hosts information technology startups, in Kyiv. A new bill recently submitted to parliament would allow anyone identified as a “startupper” to avoid paying income taxes for nine months. The bill defines “startups” as newly created legal entities and private entrepreneurs that “have not yet decided on their form of taxation and have limited resources.”
Ukrainian lawmakers have proposed reducing the tax burden on startups in the country by introducing a special category of taxpayers.
A new bill recently submitted to parliament would allow anyone identified as a “startupper” to avoid paying income taxes for nine months.
By introducing the bill, the lawmakers want to develop the information technology industry in Ukraine and encourage young tech entrepreneurs to start new companies.
“To date, there has been no governmental support for innovative entrepreneurs in terms of tax benefits,” the bill’s explanatory note reads.
Currently, most tech businesspeople are registered as “individual entrepreneurs” and pay a simple, low tax rate of 5% on their work income. If the draft bill is passed, that 5% will turn into 0%.
First, however, entrepreneurs will have to prove they run a startup. The bill defines “startups” as newly created legal entities and private entrepreneurs that “have not yet decided on their form of taxation and have limited resources.”
The exemption from taxes, however, will be a one-time offer – an entrepreneur won’t be able to apply for the 0% tax rate for another nine months after the first nine pass.
Additionally, the tech entrepreneurs will have to earn under $12,245 during the nine months, $1,360 a month. Once they earn more than that, they will automatically be subject to the 5% tax.
In order for the state to be able to see their income, the startups will be obliged to use electronic cash registers.
When nine months pass, or if the entrepreneur’s income exceeds $12,245, the startuppers will have to return to the 5% income tax rate.
In order for this bill to become a law, the Rada will have to include it in its agenda, pass it through two readings and hand a refined draft bill to Ukrainian President Volodymyr Zelensky for his signature.
However, Ukraine’s parliament is currently reviewing 4,018 amendments for the adoption of a historic bill to lift the moratorium on buying and selling Ukraine’s farmland, a process that may take weeks or even months, officials say.
Oleksandr Kornienko, chairman of Zelensky’s Servant of the People party, said that the parliament won’t review any other bill before it passes the one on farmland sales.
