Ukraine set to introduce special legal regime to boost arms industry
Photo: Ministry of Defense

The Head of the Tax Committee, Danylo Hetmantsev, announced on Monday that a special tax regime for Ukraine’s defense industry will be proposed to the Verkhovna Rada.

"My team and I are currently working on a set of legislative initiatives to effectively establish this regime," he said in a TikTok video.

Hetmantsev noted that four decades ago, Ukraine had a highly developed defense industry, with specialized industrial clusters across the country: rocket and space technologies in Dnipro, shipbuilding in Mykolaiv, and armored vehicle production in Kharkiv.

"The ill-considered economic reforms of the 1990s led many of these enterprises to bankruptcy or forced them to shift to non-military production. As a result, Ukraine entered the full-scale invasion unprepared, with the Armed Forces lacking both advanced technologies and sufficient weaponry," he added.

Since 2022, arms production in Ukraine has been recovering rapidly, and Hetmantsev believes this momentum should be supported.

"We expect a well-reasoned and timely decision from the Cabinet of Ministers on permitting the export of our military products. Additionally, I believe we must establish a dedicated legal and tax framework to support our defense enterprises," Hetmantsev stated.

He pledged to present the details of the proposed regime in the near future.

  • In 2021, the Verkhovna Rada launched the Diia.City legal framework for IT companies, which offers reduced tax rates and a flexible employment model tailored to the sector.