Parliament adopted three out of four Defence City bills in principle: what does this mean?

The Verkhovna Rada of Ukraine, at its session on July 16, adopted in the first reading three out of four draft laws that are part of the package on the creation of a special legal regime for Defence City, writes UNN.

Details

This refers to draft laws No. 13420, No. 13421, and No. 13422-1, which provide for amendments to the Tax, Customs, and Budget Codes, respectively, and are aimed at stimulating the development of the defense industry. 

The documents provide for the creation of a list of resident enterprises of Defence City. Residents will have tax benefits until January 1, 2036. This includes, among other things, exemption from corporate income tax provided that profits are reinvested, abolition of land, environmental taxes, and real estate tax, simplification of customs clearance and export control.

Draft law No. 13420 was supported by 283 people's deputies, No. 13421 by 284 deputies, and No. 13422-1 by 281 people's deputies.

The fourth draft law — No. 13423, which provides for amendments to the Criminal and Criminal Procedure Codes and caused the most debate, was not considered by the deputies.

Recall

Despite the general approval of the initiative, experts emphasize an important aspect that has not yet been taken into account in the texts of the draft laws. The aircraft manufacturing industry, which provides for the repair and modernization of aircraft and helicopters, which are used, among other things, at the front, currently does not fall under the criteria of Defence City.

As explained by the Aerospace Association of Ukraine, none of the specialized enterprises — in particular "Antonov" or "Motor Sich" - meet the proposed inclusion criteria, as they are not purely defense enterprises, but are aircraft manufacturing entities that are engaged not only in scientific, scientific-technical developments, engineering, manufacturing of parts, but also in servicing civil aviation. The Association proposes to include enterprises from the already existing government list of aircraft manufacturing entities, which undergo strict verification, in the list of Defence City residents.

From January 1, 2025, tax and other benefits for aircraft manufacturing enterprises in Ukraine ceased to be valid, and currently the industry operates without any mechanisms of state support. Therefore, representatives of the Aerospace Association warn that without changes to the draft laws or the adoption of a separate law, the country risks losing one of its key high-tech industries.