Diia.City stands today as a flagship initiative transforming Ukraine from a regional tech hub into a global digital state for future societies. This special legal and tax regime for IT and tech companies fosters innovation, entrepreneurship, and defense-tech growth, all within a supportive virtual economic zone. From robust tax incentives to legal frameworks aligned with international standards, Diia City has quickly driven Ukraine’s tech industry to new heights.
Diia City in Numbers: Growth Trajectory & Scale
Since its launch, Diia.City has witnessed exceptional growth. By March 2025, over 1,640 companies had joined the initiative, a dramatic increase from approximately 600 companies in mid-2023. The year 2024 alone welcomed nearly 889 new residents, effectively doubling the existing pool of participating firms. A noteworthy trend emerged in the defense-tech sector, where companies like Scrintec, Techavtofart Pivden, and UKRSPECSYSTEMS rose to the forefront, with Scrintec reporting a revenue of UAH 6.5 billion. In terms of tax contributions, Diia City residents paid a remarkable UAH 8.5 billion in 2023, a significant rise from UAH 4 billion in 2022. As of early 2024, around 62,000 specialists were employed within the ecosystem, marking it as a cornerstone of Ukraine’s digital economy.
Why Tech Firms Join Diia.City: Main Incentives
Companies are drawn to Diia City due to its highly favorable operating conditions, designed specifically to stimulate tech sector growth and global competitiveness. The regime’s most attractive features include a combination of tax advantages, legal flexibility, and scalable operational structures.
Key Incentives for Tech Firms:
1) Ultra-Low Taxation
- Only 5% flat personal income tax on employee and contractor earnings.
- 9% corporate tax on distributed profits (compared to the standard 18%).
- 1.5% military levy; temporary but minimal, keeping overall tax rates highly competitive.
2) Internationally Aligned Legal Framework
- Optional use of English law in contracts and corporate structuring
- Enhanced IP protection suitable for both Ukrainian and international investors
- Simplified M&A and venture investment structures that comply with global standards
3) Innovative Employment Flexibility
- GIG contract system allows companies to avoid rigid labor code restrictions
- Stock-option plans permitted for employee incentivization and retention
- No mandatory social contributions for GIG contractors, easing hiring costs
4) Expansion into Defense-Tech and UAV Sectors (2023)
- Legal amendments now allow drone manufacturers, cybersecurity firms, and military-tech startups to join
- Companies like Scrintec and UKRSPECSYSTEMS became top contributors in revenue under Diia City
5) Virtual Economic Zone Benefits
- No physical office requirements; companies can operate fully remotely
- Simplified online registration and compliance through the Diia platform
- Access to grants and innovation funding, including from state-backed Brave1 initiatives
These strategic advantages make Diia.City especially appealing to startups, R&D centers, and global tech firms seeking a stable, investor-friendly, and scalable operating environment, one uniquely resilient even in times of geopolitical instability.
Stakeholder Satisfaction: Real Feedback
Feedback from stakeholders involved in Diia City has been overwhelmingly positive. Research indicates a 98% satisfaction rate among member companies, with over half expressing full satisfaction and another 46% reporting they are fairly satisfied. One of the key advantages cited is the ability to reinvest profits into development initiatives rather than funneling large sums into taxes. Both startups and established businesses find value in Diia.City’s model, with the system empowering a wide range of enterprises across different stages of growth.
Economic & Industrial Impact
Diia City is not just reshaping the tech landscape; it is redefining Ukraine’s broader economic framework. The IT sector’s contribution to GDP is steadily increasing, projected to reach approximately 10% from a previous 4%. Revenue from the tech industry is expected to near USD 16.5 billion, underscoring its critical role in national growth. ICT services now account for nearly 40% of all service exports, with forecasts suggesting that Ukraine’s IT export earnings will approach USD 10 billion by 2025. With a workforce exceeding 340,000 specialists, of which more than 300,000 contribute to exports, Diia City is undeniably a driving force behind Ukraine’s global digital presence.
Geographical Reach: Regional Tech Density
Kyiv remains the epicenter of Diia.City, housing approximately 761 residents and contributing 69% of the regime’s total revenue. However, other regions are also beginning to emerge as significant tech hubs. Lviv hosts around 204 companies, followed by Dnipropetrovsk with 69, Kharkiv with 61, and Kyiv oblast with 40. This regional diversification not only boosts local economies but also strengthens the overall resilience and reach of Ukraine’s tech sector.
Future Projections & Tech Strategy
1) Financial Forecasts
The global IT market is on an upward trajectory, projected to grow from USD 8.5 trillion in 2023 to USD 12 trillion by 2027. Ukraine’s tech industry is well-positioned to ride this wave, with export earnings expected to hit USD 10 billion by 2025, despite the challenges posed by ongoing geopolitical tensions.
2) Institutional Strategy
On the policy front, the Ukrainian government aims to digitize 100% of its public services by 2030. This ambition is closely linked with the Diia ecosystem, which includes the Brave1 cluster, a collaboration between the state and private sector focused on defense-tech innovation. Additionally, the Diia model is gaining international recognition, with countries like Estonia exploring its open-source replication.
Strategic Benefits & Resilience
Diia City has proven to be a vital component of Ukraine’s resilience during wartime. It has provided continuity for the tech sector and helped sustain economic momentum. The initiative’s clear legal framework and transparent tax policies have attracted considerable Western investment, bolstering confidence in Ukraine’s capacity for innovation. Importantly, its integration of defense-tech firms showcases its strategic importance in national defense and innovation.
Despite its many strengths, Diia City faces challenges. Regulatory stability remains a concern, as any shifts could impact business confidence. There are also discussions around the impact on micro-operators and sole proprietors, who may find themselves disadvantaged in the new regime. Maintaining competitiveness with EU alternatives is another priority, ensuring that Ukraine remains an attractive destination for global tech investment.
Ecosystem Integration & Policy Linkage
Diia City does not operate in isolation; it is intricately linked with other national digital platforms. The Diia mobile app, used by over 21 million Ukrainians, provides access to more than 140 government services and serves as the foundation of Ukraine’s digital governance. Diia City United, a coalition of leading tech companies such as MacPaw, Ajax, and Preply, works collaboratively to influence policy and promote Ukraine’s tech agenda globally. This synergy between public infrastructure and private innovation amplifies the initiative’s impact.
Diia City exemplifies how carefully structured legal and economic environments can drive digital state innovation. Its success story offers a blueprint for nations facing crises, demonstrating how to build resilient and globally competitive tech ecosystems. Analysts from platforms such as rh.org.ru have explored how this model could be adapted by other emerging digital economies. The initiative’s integration of public and private actors also sets a new standard for governance in the digital age.
For IT CEOs and startup founders, Diia City presents a compelling case for incorporation. The tax incentives and legal flexibility make it an ideal launchpad for global ventures. Policy analysts should study its implications for GDP growth and export dynamics, while foreign governments might consider adopting similar frameworks to stimulate their own digital economies.
Conclusion: A Digital Platform for Future Societies
With nearly 70% of Ukraine’s 2,000 IT companies now enrolled in Diia.City and contributing over UAH 8.5 billion annually in taxes, this initiative is more than a regulatory framework. It is the cornerstone of Ukraine’s digital sovereignty and future-ready society. As the country advances its digital transformation, Diia City will continue to be instrumental in shaping a modern, resilient, and globally integrated tech ecosystem.
For those seeking deeper insights, be sure to explore the Diia.City website.
