The Government of Ukraine has approved a set of regulatory decisions introducing Defence City, a...Читати далі
The Defence City legal regime, provided by Law of Ukraine No. 4577-IX dated August 21, 2025, is a special mechanism of state support for enterprises of the defense-industrial complex of Ukraine and provides for the application of tax, customs and regulatory incentives to companies engaged in the production, development, repair or supply of defense-related products.
Obtaining and maintaining the status of a Defence City resident is possible only upon submission of a Compliance Report, confirmed by an independent auditor’s report. The report is part of the Defence City program of the defense industry complex of Ukraine and provides for the application of tax, customs and regulatory incentives to companies engaged in the production, development, repair or supply of defense-related products.
The requirements for submitting and reviewing the Compliance Report and the independent auditor’s report are established by the Law of Ukraine On National Security of Ukraine and internal regulations of the Cabinet of Ministers of Ukraine, which introduced the Defence City legal regime (in particular, by Resolutions of the Cabinet of Ministers of Ukraine No. 1745 and No. 1746 dated December 17, 2025).
The Ministry of Defence of Ukraine has been designated as the authority responsible for maintaining the Defence City Register and supervising the residents.
submit an auditor’s report annually along with the annual Compliance Report to confirm and maintain status.
Kreston Ukraine has the required authority and experience to audit the initial and annual Compliance Reports of the Defence City residents and prepare independent auditor’s reports accepted by the Ministry of Defense of Ukraine. Send a request.
compliance with the criterion of the share of income from activities in the defense-industrial complex is assessed:
• at least 75% of total income;
• or not less than 50% for aircraft manufacturing enterprises, in accordance with the requirements of the law and the methodology for calculating qualified income.
it is audited whether the actual activities of an enterprise correspond to the declared defense-related activities (production, R&D, repair, supply of components, dual-use products, etc.).
the compliance of financial reporting and primary documents with the requirements of Law No. 996-XIV On Accounting and Financial Reporting in Ukraine is analyzed, as well as the consistency of this data with the Compliance Report.
the targeted use of tax-exempt profits for legally permitted purposes (production, development, research and development, protection and relocation of production facilities, etc.) is audited.
A properly prepared independent auditor’s report is a key element of:
confirmation of compliance with the requirements of the special legal regime;
prevention of loss of resident status and additional tax charges;
ensuring transparency for government agencies, investors and partners.
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