The IT Ukraine association notes the high resilience of the in the conditions of the active phase of hostilities.
“According to our new data, already during the war, 77% of IT companies attracted new customers, and 56% of them expect growth of 5-30% this year,” IT Ukraine Executive Director Kostiantyn Vasiuk said.
IT Ukraine stressed that in the new military realities, the industry managed to consolidate and quickly reformat thanks to anti-crisis business plans.
“Most companies have retained customers and the volume of their contracts. Thanks to this, the industry remains financially stable, provides regular foreign exchange earnings to the Ukrainian economy and the state budget, and pays taxes in advance,” the association notes.
Thus, according to the data provided by IT Ukraine (with reference to the NBU data), in March 2022, the Ukrainian IT industry retained 96% of the volume of exports of computer services ($522 million) compared to the same period last year ($546 million).
“The war-driven decline in foreign exchange earnings in March by only 38% compared to the record growth rate in February ($839 million), as well as the 50-60% fall in other export industries, demonstrates, in fact, the margin of stability of the IT industry,” the association said.
IT Ukraine also noted that, according to the National Bank of Ukraine, the export IT industry provided a record $2 billion in revenue for the first quarter of 2022, despite martial law, mobilization, forced relocation of businesses and teams.
The same indicator in 2021 amounted to $1.44 billion. In fact, the volume of IT exports increased by 28%.
Co-founder of the Ukrainian multi-gaming e-sports organization Natus Vincere (NAVI) Oleksandr Kokhanovsky said that he supports the creation of a special legal regime for IT companies – Diia City.
As Kokhanovsky said during the presentation of Diia City on Monday, his plans are to raise at least $100 million investments in projects in which he is involved, while he noted that the conditions of Diia City would mean fewer risks for foreign investors.
According to him, the reduced tax rate, which will operate within Diia City, will allow Ukrainian companies to compete more successfully with foreign ones, and the strengthening of legislation in the field of intellectual property will improve the country’s image in the eyes of international investors.
“Our goal is to make Kyiv a core of e-sports in Europe. And I am very glad that now we have an ally that will speed up this process at times,” he said during the presentation.
Earlier, Deputy Chairman of the Verkhovna Rada Committee on Digital Transformation Yehor Chernev said that he hopes to adopt a legislative framework for the launch of a special legal regime Diia City by mid-summer.
The Ministry of Digital Transformation of Ukraine expects that the tax system for companies in the Diia City mode will help reduce the tax burden 5-fold.
According to Fedorov, thanks to Diia City, the income of the IT industry in Ukraine by 2025 may grow to $16.5 billion, and the number of jobs in this industry is planned to be increased to 450,000.
Ukrainian IT companies received $571 million in investments by the end of 2020, which is $27 million more than in 2019.
The relevant data was published in the annual study of investments in the Ukrainian IT sector DealBook of Ukraine: 2021 from the investment fund AVentures Capital.
Some 62% of the total amount was attracted by four global companies with Ukrainian roots – GitLab, Creatio, Restream and airSlate.
GitLab became the first multi-billion dollar company established in Ukraine. It was estimated at $6 billion.
According to the study, 2020 was a record year for financing at an early stage – in seed and A-rounds, it was possible to attract $161 million, most of which from international investors, and this is 3.5 times more than in 2019.
The fastest growing startup in 2020 is Reface.ai application, which lets one swap faces in videos. Since its launch in January, the application has been downloaded 70 million times.
The rating of companies with the highest international income includes Jooble, Genesis, Grammarly, airSlate, Creatio and others.
As of 2020, some 26,500 IT specialists work in Lviv, 80% of whom are technical specialists, according to the IT Research 5.0 industry study conducted by the Fama research agency at the request of Lviv IT Cluster.
According to the study, as of 2020, some 492 IT companies operate in Lviv, which is 7% more than a year earlier (461 companies). At the same time, 45 IT companies closed their offices in 2020.
At the same time, the number of Lviv IT specialists in the current year has also increased – up to 26,500 (24,000-25,000 in 2019) despite the fact that 16.7% of IT companies laid off part of technical workers in the first half of 2020, and 38.9% laid off part of non-technical workers.
The average wage of an IT specialist in Lviv in 2020, according to the study, was $ 2,080, despite the fact that 44% of IT companies reduced income of their employees in the first half of 2020.
“Among the companies surveyed, absolutely all switched to remote work in the first half of 2020, of which 22% partially and 78% fully. Moreover, 78% of companies as of November 2020 partially returned workers to their offices,” the report says.
According to IT Research 5.0, in 2020 the average age of developers in Lviv is 29 years, while last year the figure was less – 28 years. According to the qualification level, the distribution is as follows: the share of Junior specialists – 24%, Middle – 38% and Senior – 38%.
The IT Research 5.0 study was conducted by the Fama research agency based on a survey of IT professionals and companies about the impact of the coronavirus on their activities and costs, expert interviews with the top managers of Lviv IT companies and statistical data.
Dozens of Belarusian IT companies have already moved to Ukraine thanks to the IT Relocate Belarus project, which is being implemented by the team of the Ministry of Digital Transformation with the support of President Volodymyr Zelensky, Deputy Minister of Digital Transformation Oleksandr Borniakov has said.
“We have created IT Relocate for those who want to relocate themselves or move their team from Belarus to Ukraine, and are ready to provide support in the future. As the AIN.UA source said, Wargaming has moved hundreds of employees to Ukraine. The company is the developer of the world famous online games World of Tanks, World of Warships and World of Warplanes,” he wrote on his Facebook page.
According to him, another Belarusian IT company, PandaDoc, is opening its office in Kyiv. Founder Nikita Mikado notes the talents of Ukrainian specialists, favorable tax conditions and the actions of the Ukrainian government in supporting the IT industry in Belarus.
“Ukraine is rapidly digitalizing, becoming a global IT hub and creating comfortable conditions for the development of the IT industry. Ukraine is ready to provide Belarusian specialists with opportunities to work on a simplified registration system,” Borniakov said.
The IT Relocate Belarus project offers 90 days of continuous stay for 180 days without obtaining a visa, an average salary of $2,000, 4G in all major cities, more than 5,600 service and technology companies, affordable housing and office rent.
The Ministry of Digital Transformation of Ukraine together with the relevant committee of the Verkhovna Rada are working on the preparation of a tax reform for the IT industry, which provides for the establishment of a single tax at the level of 4-7% of the companies’ turnover. Deputy Minister of Digital Transformation Oleksandr Bornyakov gave this information on his Facebook page.
“We propose discussing a single tax for legal entities without a turnover limit and setting it at 4-7%… According to this regime, a legal entity-exporter of services will pay a single tax and will be a tax agent for an employee, paying two single social security contributions and a military tax,” Bornyakov said.
He also said that the following requirements for those who join this taxation regime are being discussed: staff of more than 10 employees; the share of exports in profit and the share of the salary fund in the cost of production being more than 75%; and the average salary being at least five minimum wages.
According to the Ministry of Digital Transformation, this will create legal working environment for the industry, make it more attractive for investment, creating a transparent and understandable corporate structure. In addition, this will create equal competitive working conditions in the industry, as well as conditions for the export of other services.
“At the same time, the model preserves the mechanism for ensuring social guarantees for employees and does not increase the tax burden and administration. After all, on the one hand, tax and reporting are introduced for IT companies, and on the other, we cancel a number of taxes for employees,” the deputy minister said.
He also cited statistics according to which in the first half of 2019, according to the Ministry of Digital Transformation, 158,000 IT private entrepreneurs with income of UAH 52.3 billion worked in Ukraine. At the same time, in Ukraine, there are only about 60,000 officially employed employees of IT companies, whose payroll amounted to about UAH 6.5 billion in the first half of last year.
“And no, we are not sure that this is the only right decision. But, after spending hours of analysis, we consider it to be the best idea that will literally create an industry where not 200,000 legally unrelated private entrepreneurs will work, but fully-featured transparent companies,” Bornyakov said.
He also recalled that the previously formulated idea to create a fifth group of private entrepreneurs for IT specialists was criticized because it violated the principles of equality of taxpayers and did not eliminate any risks in the system.
As reported, previously a group of 20 deputies of the Servant of the People parliamentary faction proposed to the parliament to exempt startups from taxes for a period of nine months from the moment of their registration, making appropriate changes to the Tax Code of Ukraine.
For this purpose, it was planned to introduce an additional fifth single tax group, which will include startups using exclusively cash registers and/or cash settlement software and which income during the first nine months of activity does not exceed UAH 300,000.
