9% on Dividends, Not Profit: The Corporate Tax Diia City Companies Can Choose

Ukraine’s basic corporate profit tax rate is 18%. However, a company that has joined the Diia City legal regime can choose an alternative to this tax on profit: a 9% tax on “withdrawn capital.” Under this approach, profit is not taxed while it stays inside the company, but is taxed once it is paid out to shareholders, as a dividend or otherwise.

Diia City is a legal regime created by Law No. 1667-IX of July 15, 2021, “On Stimulating the Development of the Digital Economy in Ukraine.” The tax special regime was set out by Law No. 1946-IX of December 14, 2021, which amended the Tax Code, and took effect on January 1, 2022. The staffing and remuneration requirements for becoming a resident company, the forms of contract with workers (such as gig contracts), and the treatment of intellectual property are covered in Before Contracting with a Ukrainian Engineer. This article focuses on tax.

The Company’s Tax: 18% on Profit, or 9% on “Withdrawn Capital”?

Article 136.8 of the Tax Code sets the rate for a resident company that is a “taxpayer under special conditions” at 9% of the tax base. A resident company that does not choose this approach is taxed as an ordinary taxpayer, at 18% on profit under Article 136.1.

Under the 9% regime, what is taxed is not the company’s profit itself but specified kinds of payments. Article 141.9-1 of the Tax Code lists the transactions covered. Examples include:

• Payment of dividends to shareholders (except where the recipient is another resident company under the same regime)
• Returning a contribution or paying money to a shareholder who is withdrawing, on liquidation of the company, or on a buyback of its own shares
• Certain interest, as set out in the provision, paid to a counterparty that is not a resident company under the same regime

The list continues further, broadly covering transactions through which value moves outside the company. There is also a rule that, where the price of a transaction with a related party departs from the price between independent parties (the so-called arm’s-length price), the departed portion is taxed at the basic rate under Article 136.1 rather than at 9% (Article 141.9-1.3).

Diia City’s official site introduces the two approaches as “9% on ‘‘withdrawn capital’’, or 18% on profit.”

Tax on Workers: 5% Income Tax up to 240,000 Euros a Year

People working for a resident company are offered a lighter tax rate. Under Tax Code Article 170.14-1, the following income paid by a resident company to a “resident company specialist” is taxed at the 5% income-tax rate (Article 167.2):

• Salary
• Remuneration under a gig contract (including payment for a commissioned copyrighted work and for the transfer of its rights)
• Payment for creating a work of authorship in the course of duties and transferring its rights

Three conditions apply. First, timing: the 5% rate is available only from the month after the one in which the company obtained resident status; for the month the status was obtained, the ordinary 18% applies. Second, an amount limit: the 5% provision applies only up to the point where annual salary and remuneration reach the equivalent of 240,000 euros, converted at the National Bank of Ukraine’s official rate on January 1 of that year. Third, an amendment added in 2025 (Law No. 4577-IX of August 21, 2025): income paid by a company that is also a member of Defense City, a separate regime for the defense industry, is excluded from this 5% treatment.

Diia City’s official site (accessed September 24, 2026) displays the burden on workers as “5% income tax, 5% military tax, and a Unified Social Contribution of 22% of the minimum wage.” The Unified Social Contribution (ЄСВ) corresponds to Japan’s social insurance premiums.

Dividends Received by Individual Shareholders

There is also a special treatment for individual shareholders’ income tax on dividends they receive from a resident company under the 9% regime. Tax Code Article 170.5.5 provides that dividends paid by such a company are not included in the individual’s taxable income. The condition is that the company “has not paid dividends for two consecutive calendar years.” Where this condition is not met, the tax rate on dividends received from a company that is a Ukrainian profit-tax payer is, as usual, 5% (Article 167.5.2).

A 25-Year Guarantee

Article 3 of Law No. 1667-IX provides that the Diia City legal regime is to continue “indefinitely, but for at least 25 years from the date the first resident company is registered,” and that during those 25 years the state guarantees the stability of the regime’s effect and conditions. The same article also provides that, if a law establishes more favorable conditions during that period, those more favorable conditions apply to resident companies and their workers.

That said, the actual tax rate figures have already been rewritten by other laws. Law No. 4113-IX of December 4, 2024, rewrote part of Article 170.14-1, which governs workers’ income tax. When estimating a company’s or a person’s actual tax burden, it is necessary to check the Tax Code’s provisions and the State Tax Service’s guidance as they stand at that point in time.