The Ministry of Defense has submitted a package of legislative acts for consideration by the Cabinet of Ministers, proposing the establishment of a special legal regime called Defence City, effective from January 5, 2026. This was announced by Defense Minister Denis Shmyhal.
According to him, the Defence City initiative represents a modern approach to developing the defense industry, allowing for quicker responses to military needs and attracting international investments.
"The core idea is straightforward: tax support in exchange for production development, modernization, new technologies, and research", – the minister stated.
The ministry anticipates that implementing this regime will foster the growth of leading Ukrainian defense enterprises and create conditions for launching joint ventures with international partners and technology transfers.
"We expect the relevant decisions to be made at the upcoming Government meeting", – added Shmyhal.
Earlier reports indicated that the Defence City regime would include exemptions from profit tax contingent upon reinvestment, as well as exemptions from land, property taxes, and environmental fees, along with simplified customs procedures for defense products.
At the beginning of September, the Defense Minister reported that President Volodymyr Zelensky had signed the laws initiating Defence City.
Prior, on August 21, members of parliament voted in favor of two documents: No. 13420 "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine regarding Support for Defense Industry Enterprises" and No. 13421 "On Amendments to Section XXI "Final and Transitional Provisions" of the Customs Code of Ukraine regarding Support for Defense Industry Enterprises".