The law on e-residency came into force. The project will soon be tested for government agencies. And after the approval of all the necessary additional regulatory framework, foreign IT specialists will be able to become entrepreneurs in Ukraine and pay taxes to the state budget. And this is all online.
Currently, the team of the Ministry of Digital Transformation, together with the NBU, the Ministry of Foreign Affairs, the Ministry of Justice, the Ministry of Internal Affairs, the Security Service of Ukraine and the State Tax Service, is working on the regulatory framework that will allow the project to be fully launched. In addition, the authorities will test a service that will allow foreigners to apply for e-residency status.
“After the testing is completed, we plan to attract about 1000 e-residents. We are waiting for the final approval from the NBU, which will help us launch the project in full. It is about the possibility for e-residents to transfer funds to their own account abroad in foreign currency. The project will bring additional revenue to the Ukrainian budget. It will also contribute to the popularization of Ukraine as a global IT brand and the growth of our position in international rankings, including Doing Business,” said Oleksandr Borniakov, Deputy Minister of Digital Transformation for IT Development.
The launch of the e-residency project will allow foreigners for the following:
According to the law, entrepreneurs who have income in Ukraine cannot become e-residents. This means that e-residents will provide services exclusively to other foreigners.
Citizens of russia and countries on the FATF “gray and black” list will not be able to become e-residents.
This sounds like an interesting project. I don’t think highly of the Estonian e-residency program, let’s see how this will go. 5% taxes is something that looks good on paper. E-Residency is a special status for foreign nationals that will allow them to do business in Ukraine without a physical presence, or rather online.
Who will not be able to obtain e-resident status?
• Citizens of Ukraine
• foreigners who have the right to permanent residence in Ukraine or are tax residents of Ukraine
• stateless persons
• persons receiving income originating from Ukraine for goods, works, services (except for passive income)
E-residency is a system in Ukraine that allows foreign entrepreneurs to conduct business online in the country without the need for physical presence. E-residents can:
• Obtain resident status;
• Register as a sole proprietor of the 3rd group without physical presence in the country
• Pay income tax at a rate of 5%
• Open an online bank account to conduct business
The information currently available is contradictory. It seems that this e-residency program might lead to resident status, if desired but the special tax regime is only for e-residents and not for residents. Biggest problem is often to open bank accounts. I am not sure how useful an Ukrainian bank account is in international business and if you are allowed to maintain accounts in foreign currencies (e.g. USD, Euros etc.). Ukrainian Banks use the IBAN system (International Bank Account Number) that may be convenient if you deal mainly in Europe. The 5% income tax is likely only for the corporation and while not zero, still a pretty good deal. But your personal income has to be taxed too and this might cause problems. Most important thing: Ukraine is an active war zone. We will keep you updated.
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