Denys Shmyhal: We are creating favorable conditions for Ukrainian arms manufacturers

The Parliament backed key draft laws on Defence City, a special legal regime designed to support domestic defense industry enterprises. 

The purpose of this special legal regime is to boost the production of modern Ukrainian weapons and military equipment, foster the development of advanced technologies, attract investment in the sector, and strengthen the capabilities of the Defence Forces.

“Our key objective is to fully equip the Defence Forces with everything they need, to develop and improve Ukraine’s own weapons and military equipment, and to ensure the state’s future security through a strong and capable army,” said Minister of Defence of Ukraine Denys Shmyhal.

Participation in Defence City is open to defense industry companies that are strategically important for national defense, comply with transparency requirements and other established criteria, and have no ties to the aggressor state.

The key rule is that the majority of a company’s income must come from defense production: at least 75% of qualified income (50% of qualified income in the case of the aircraft industry).

“We are creating even more favorable conditions for our weapons manufacturers, enabling them to scale up, operate securely, and rapidly and efficiently supply the Defence Forces of Ukraine with the weapons and military equipment they need,” said Anna Gvozdiar, Deputy Minister of Defence of Ukraine. 

Defence City residents will be granted a number of advantages, such as exemption from income tax until 2036, land and property tax, and environmental tax, along with simplified customs procedures during martial law and for one year thereafter, a streamlined framework for the international transfer of defense products, etc.

A detailed clarification of the benefits and restrictions will be made available in due course.