UKRAINE Trends and Developments Contributed by: lllya Tkachuk, Igor Krasovskiy and Inna Kostrytska, INTEGRITES
the customer from the risk of losing the most important developers after the completion of the deal. IT market transformation Historically, the Ukrainian IT market uses the model of private entrepreneurs for structuring the relations with IT specialists by concluding services agreements with them. This model bears a number of benefits, mostly from the tax perspective. Since the IT market has significant- ly grown in Ukraine over the past decade, the government tried to change this model several times. In 2022, Ukraine launched the new initiative called Diia City which was specifically devel- oped for IT businesses. A company which cor- responds with all criteria can become a resident of Diia City. The residency regime provides IT companies with many benefits. In particular, the companies engaged in the following types of activities may become Diia City residents: • software development and testing, including GameDev; • publishing and distribution of software, in par- ticular SaaS; • e-sports; • training in computer literacy, programming, testing and technical support of software; • cybersecurity; • R&D in IT and telecommunications; • digital marketing and ads using software developed by residents;
• supply of services related to the circulation of virtual assets; • robotics; • development, implementation and support of products of international card payment systems; • development of technological products in defence, industrial, and domestic manufac- turing sectors; • Cloud data centres; and • design, production of UAVs, their mainte- nance and repair, and UAV control training services. Diia City aims at solving several important issues, including the following. • It provides for a smooth transfer from the private entrepreneur model to a mixed model combining both service agreements and spe- cial form employment agreements (so-called GIG contracts). • It introduces many important instruments specifically for the residents of Diia City, namely, convertible loans, liquidation prefer- ences, options and employee stock owner- ship plans, warranties and indemnities, and liquidated damages. Considering the above, Diia City may turn out to become a start-up incubator and a booster for the whole technology sector in Ukraine.
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