The Ministry of Defense has submitted a new set of legislative initiatives to the Cabinet of Ministers aimed at implementing a special legal regime known as Defence City starting January 5, 2026. This was announced by the head of the defense agency, Denys Shmyhal.
According to him, Defence City will serve as a modern tool for the development of the defense industry, enabling quicker responses to frontline needs and attracting international investments.
"The core idea is simple: tax support in exchange for production development, modernization, new technologies, and research," stated the defense minister.
The defense agency anticipates that the introduction of this regime will foster the growth of leading Ukrainian defense enterprises and create conditions for joint ventures with international partners and technology transfer.
"We expect the relevant decisions to be made at the upcoming government meeting," added Shmyhal.
Earlier reports indicated that the Defence City regime includes tax exemptions on profits contingent upon reinvestment, as well as exemptions from land, property, and environmental taxes, along with simplified customs procedures and international transfer of defense products.
At the beginning of September, the defense minister reported that Ukrainian President Volodymyr Zelensky signed laws to initiate Defence City.
On August 21, lawmakers voted for 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."