How defense manufacturers can obtain Defence City resident status and the key benefits of such status

The Ministry of Defence of Ukraine outlines the procedure for obtaining Defence City resident status for defense industry companies and highlights the key advantages of this legal framework. This includes a phased document submission procedure, eligibility requirements, review timelines, and the opportunities offered by residency — ranging from tax incentives and enhanced protection of production facilities to relocation support and limitations on access to sensitive information in public registers.

 Defence City constitutes a special legal framework for state support of defense industry companies. Its core goal is to develop the sector into a high-tech, resilient, and competitive cluster capable of expanding the production of weapons and military equipment. The framework is available to companies that are strategically important for national defense and meet defined criteria.

Obtaining resident status:

Step 1. Conducting an internal audit to assess eligibility for Defence City

At this stage, companies are recommended to carry out an internal audit to verify compliance with the requirements set out in Article 37 of the Law of Ukraine “On National Security of Ukraine” and, based on the findings, determine the feasibility of acquiring resident status and preparing the necessary documentation.

Step 2. Submitting an application to the Ministry of Defence for Defence City resident status

At this stage, the company prepares and submits the following documents to the Ministry of Defence as required by law:

1) An application for Defence City resident status, which must include:

• the full legal name of the applicant, the applicant’s identification code in the Unified State Register of Enterprises and Organizations of Ukraine, place of registration, and contact details (email address and telephone number);
• the last name, first name, and patronymic (where applicable), date and place of birth, taxpayer identification number (where applicable), and the series and number of the Ukrainian passport (or another identity document permitted under Ukrainian law for use in Ukraine when concluding legal transactions) of the applicant’s authorized official, namely the head, a member of the executive body, the chief accountant, or another individual responsible for accounting (if such duties are not performed directly by the head);
• a list of business activities carried out by the applicant;
• information confirming compliance with the requirements set out in part five of Article 37 of the Law of Ukraine “On National Security of Ukraine”;
• information on the performance of state defense procurement contracts during the previous calendar year, as well as participation in the performance of such contracts as a co-executor or subcontractor for the purposes of calculating qualified income;

2) a primary compliance report;

3) annexes to the compliance report, including the annual financial statements of the Defence City resident for the reporting year, prepared in accordance with applicable legislation, and the auditor’s report on the results of the audit of the compliance report, issued by an auditor authorized under the Law of Ukraine “On Audit of Financial Statements and Auditing Activities” to carry out mandatory audits of financial statements of entities of public interest;

4) a certificate confirming the absence of arrears in payments overseen by supervisory authorities, or an extract from the information system of the State Tax Service on the status of the taxpayer’s settlements with the state budget and earmarked funds, duly certified by the applicant’s head;

5) a power of attorney or its duly certified copy, where the application is submitted on behalf of the applicant by a representative acting under a power of attorney.

Documents may be submitted as follows:

1) Electronically, with an electronic signature of the head, a person authorized to act on behalf of the applicant as indicated in the Unified State Register, or an authorized representative acting under a power of attorney, to [email protected]

 or

2) In hard copy, signed by the head, a person authorized to act on behalf of the applicant as indicated in the Unified State Register, or an authorized representative acting under a power of attorney, and sent by post to 6 Povitrianykh Syl Ukrainy Avenue, Kyiv, 03049, Ukraine.

Once the documents are received, the Ministry of Defence either accepts them for consideration or returns them without consideration. If an application is returned without consideration under part five of Article 38 of the Law of Ukraine “On National Security of Ukraine,” the applicant is notified within five working days.

Step 3. Review of documents by the Ministry of Defence

At this stage, the application and the compliance report are reviewed, including through the use of the Methodology for Calculating Qualified Income.

The review covers:

1) Compliance with the requirements established in part five of Article 37 of the Law of Ukraine “On National Security of Ukraine”;

2) Verification of the truthfulness of the information submitted;

3) Assessment of the absence of grounds for refusal.

Following the review, the Ministry of Defence adopts one of the following decisions:

1) To grant Defence City resident status;

or

2) To refuse to grant Defence City resident status.

The Ministry of Defence of Ukraine reviews an application for Defence City resident status within ten working days from the date of its receipt and decides whether to grant or refuse Defence City resident status, provided that no grounds specified in this Article for returning the application without consideration are identified during its review.

Step 4. Entering information on the resident into the Defence City Register

If the company’s documents comply with the established requirements, the decision to grant Defence City resident status is formalized by an order of the Ministry of Defence of Ukraine, and a corresponding entry is made in the Defence City Register. Following this stage, the order and an extract from the Defence City Register are sent to the applicant, the Defence City resident. From the date the Ministry of Defence adopts the decision and an entry is made in the Defence City Register, the company acquires Defence City resident status.

Rights and options associated with inclusion in the Defence City Register:

Use of incentive measures

A company that has acquired Defence City resident status independently directs profits that are exempt from taxation to permitted purposes when using tax incentives. The use of tax incentives is optional. If profits are directed to purposes not provided for under tax legislation, the tax incentive shall not apply.

Restrictions on access to public electronic registers

Where necessary, a resident may, at its discretion, decide to restrict access to information contained in public registers and submit a corresponding application to the Ministry of Defence by email at [email protected]. Following its consideration, the Ministry of Defence sends the relevant notification to the holders of such registers in accordance with the established procedure. In such cases, access to information relating to the resident in the selected registers is restricted for the duration of the residency.

Relocation and measures to strengthen the protection of residents’ production capacities

A Defence City resident intending to relocate a legal entity and/or its separate subdivisions, or to implement measures to enhance the protection of production facilities, may submit a relevant application to the Ministry of Defence of Ukraine to arrange coordination and obtain support (including financial support) for the implementation of such measures under the coordination of the Ministry of Defence.

Following consideration of the application, if it complies with the established requirements and the Ministry of Defence adopts a decision approving the relocation and/or the implementation of protection-enhancement measures, the Ministry of Defence:

• notifies the applicant of the adopted decision;
• sends information and a copy of the decision to regional state administrations (military administrations), local self-government bodies, and other relevant authorities to ensure coordination, facilitation, and support for the implementation of the measures.

The detailed procedure for submitting and reviewing applications, the list of required documents, the applicable conditions, as well as the forms of coordination and support will be provided (published) additionally.

Submission of an annual compliance report

A resident is required to annually submit to the Ministry of Defence a compliance report, financial statements, and an audit report issued by an auditor authorized, in accordance with the Law of Ukraine “On Audit of Financial Statements and Auditing Activities,” to conduct mandatory audits of financial statements of entities of public interest. Following submission, the Ministry of Defence either accepts the report or returns it without consideration in cases where annexes or mandatory information are missing.

Analysis of the annual report by the Ministry of Defence

Based on the results of the review of the compliance report, the Ministry of Defence confirms compliance and continues resident status, or, where indications of non-compliance are detected, launches a corrective procedure.

Monitoring the use of tax-exempt profits

By analyzing information received from the State Tax Service or from the resident, the Ministry of Defence monitors the use of tax-exempt profits and may determine either the absence of violations or the presence of indications of non-targeted use. As a result of this stage, the Ministry of Defence either takes no action or initiates the procedure for the loss of resident status.

Procedure for responding to violations

The Ministry of Defence may request explanations from residents. As a result of this stage, either the violations are remedied, or a decision on the loss of resident status is prepared.

Exit from the Defence City framework:

Termination or loss of resident status

In cases of voluntary withdrawal by the company or as a result of a review that reveals deficiencies or violations, the Ministry of Defence adopts a decision to terminate resident status at the company’s initiative or to revoke resident status due to non-compliance with the legal requirements for maintaining residency. As a result of this stage, the entity is removed from the framework, and incentive measures are terminated.

Regulatory and legal framework:

Resolution of the Cabinet of Ministers of Ukraine dated 17 December 2025 No. 1745 “On Certain Issues of the Defence City Legal Framework”

Resolution of the Cabinet of Ministers of Ukraine dated 17 December 2025 No. 1746 “On Approving the Procedure for Relocation and Protection-Enhancement Measures for Production Facilities of Defence City Residents”