Diia.City — 3 Years: How the New Tax Space is Transforming Ukraine’s IT Industry

In February 2022, the Ukrainian government introduced a special legal and tax framework for the country’s technology sector. The idea was to establish clear and transparent rules for the industry, aligned with the best global practices. This framework covered taxation, employee regulations, and other bureaucratic aspects. For a country that had operated under a different set of rules for decades, this was a tectonic shift in supporting the industry.

In February 2025, Ukraine’s Minister of Digital Transformation, who spearheaded the initiative under the government and president’s directive, reviewed the results of three years of Diia.City. The program now has over 1,555 resident companies. Estimates suggest Ukraine has just over 2,000 IT companies, meaning up to 70% of the industry is part of Diia.City—an indicator of its significance and impact.

Companies participating in Diia.City paid 18 billion UAH (over $425 million) in taxes in 2024, double the $200 million collected the previous year. While this figure may seem modest at first glance, it represents a major shift for Ukraine’s tech sector, which previously operated under less formalized rules, making tax contributions harder to track. This change is a step forward, providing clear regulations for market participants.

The IT sector currently employs between 250,000 and 300,000 people. This number could be higher, but many specialists have been mobilized for the war effort or relocated abroad due to Russia’s military aggression. One in three industry professionals works under the Diia.City initiative.

Why is Diia.City important?

Clearly defined tax and legal regulations enable foreign companies to establish a presence in Ukraine with transparent, low taxes, a clear legal framework, industry associations supporting their interests, and a dedicated government ministry improving business conditions. Ukraine’s tax regime for IT is among the most competitive in Europe and even globally. More importantly, it provides access to a large pool of skilled professionals.

The Ukrainian government aims to create conditions where the tech industry becomes a catalyst for economic growth and transformation. Today, the IT sector has contributed to the emergence of a strong middle class, which plays a role in building a stable democratic society. Once a small industry a decade ago, IT is now one of Ukraine’s largest export sectors. While the country remains a global leader in agricultural exports, the tech industry is rapidly advancing. Ukraine is home to globally recognized companies such as Grammarly, Ajax, GitHub, Preply, AirSlate, and Genesis. It also boasts one of the world’s most digitalized banking systems.

Since the full-scale invasion, Ukraine has also developed a defense-tech cluster within the broader technology sector, advancing AI solutions and cutting-edge military technologies. Ukraine pioneered the development of naval drones and has now announced the creation of an AI center focused on artificial intelligence research, attracting international companies to establish R&D hubs in the country.

The government plans to continue supporting these changes, recognizing the tech sector as a driver of progress, reducing corruption, and improving people’s lives.