Defence City – an opportunity not to lose aviation: the Verkhovna Rada is working to support the industry

The Verkhovna Rada continues preparations for the second reading of draft laws on the creation of Defence City – a special legal regime to support enterprises of the defense-industrial complex. Parliament representatives call for extending its benefits to the aviation industry, which plays a critical role in wartime, UNN writes.

Undoubtedly, the aviation industry, especially during martial law, should enjoy all the benefits that other representatives of the military-industrial sector do. I am surprised why it took so long, but finally both the committee (Committee of the Verkhovna Rada of Ukraine on Finance, Tax and Customs Policy – ed.) and the government paid attention to the need to support the aviation industry. It’s not too late, but the decisions are definitely belated 

According to Tsymbalyuk, the Verkhovna Rada of Ukraine will adopt the Defence City draft laws as a whole at its next meeting, taking another step to support the domestic aviation industry, which traditionally ranks among the world leaders. The MP emphasized that state support is important for enterprises of all forms of ownership, as it is in synergy that they are able to restore Ukraine’s power in aircraft manufacturing.

To ensure the continued viability and development of Ukrainian aviation, before the second reading of the Defence City draft laws, MPs submitted a number of amendments. Among the key aspects was the reduction of the minimum share of qualified income of a Defence City resident, which the Committee of the Verkhovna Rada of Ukraine on Finance, Tax and Customs Policy has already taken into account, lowering the corresponding threshold for aviation to 50%. At the same time, other aspects remain no less important, namely:

• expand the list of residents to include aircraft manufacturing entities covered by the Law “On the Development of the Aircraft Manufacturing Industry,” which will allow officially including aviation enterprises in Defence City that were previously designated by the Cabinet of Ministers as critically important for the economy and defense capability of the state;
• take into account not only quarterly but also annual income in the share of qualified income of residents, and also include activities in the field of aircraft manufacturing, maintenance of aviation equipment, engines, and components;
• include in the list of defense-industrial complex enterprises that participate in international contracts for the export of military or dual-use technologies;
• considering the conditions of the wartime economy and security risks (shelling, relocation, supply disruptions, and other circumstances), in case enterprises have tax debt, overdue defense contracts, or dividend payments, allow them to enter Defence City provided that debts are repaid within three years;
• extend the effect of tax benefits to the aircraft manufacturing sector – provided that funds are reinvested;
• provide customs preferences for critically important imports, and also introduce state guarantees and insurance of export contracts as tools to support exports;
• to ensure flexible administration, stipulate that in case an enterprise is excluded from the relevant lists of preferential taxation, sanctions should not be applied retroactively;
• direct released funds exclusively to development – in particular, to the production base, modernization of facilities, research and development work, implementation of new technologies, personnel training, and acquisition of intellectual property rights in the field of aircraft manufacturing.

The proposed changes indeed cover a wide range of issues and correspond to the specifics of the industry, which is one of the most complex, resource- and labor-intensive. Similar support tools are traditionally used in the aviation sector of leading countries. Moreover, even in peacetime, the state plays a key role in preserving and developing aircraft manufacturing, and in conditions of war and new challenges that Ukrainian enterprises successfully cope with, such steps are a critically necessary “lifeline.”

No aircraft manufacturing, no full defense: why aviation should be in Defence City10.07.25, 16:59 • 169317 views

According to People’s Deputy Bohdan Kytsak, the proposals concerning the aviation industry are timely and should be taken into account.

These proposals are relevant. We will support them during the vote on amendments in parliament. I am convinced that the deputies who will present these amendments will provide sufficient argumentation to gather enough votes for their inclusion in the body of the draft law 

In turn, MP Oleksiy Leonov from “Servant of the People” emphasizes that even after the adoption of the necessary changes, only those aviation enterprises that meet the established requirements will be able to take advantage of the provided benefits and preferences.

The Ministry of Defense will consider the issue and decide whether a particular enterprise falls under all relevant frameworks established by legislation and government regulations 

Justifying his support for the Defence City draft laws in the first reading, Oleksiy Leonov noted that these initiatives will contribute to meeting the needs of the front. According to him, today Ukraine produces 40-50% of the necessary goods and services in the field of weapons, equipment, and other military equipment. In his opinion, in order for this work to remain operational, have the opportunity for development, and not experience undue pressure from the state, the adoption of relevant changes is necessary.

RecallEarlier, UNN reported that Ukraine’s aviation industry was facing a systemic crisis amid the full-scale war. Due to equipment wear and tear, loss of tax benefits, and difficulties with importing spare parts from abroad, one of the main challenges became the need for import substitution of Soviet components. Experts emphasized that without state support, production modernization, and the establishment of legally transparent procedures, the industry would not be able to ensure either combat readiness or strategic stability in the long term. In particular, the commander of the Army Aviation of the Armed Forces of Ukraine, Pavlo Bardakov, stated that a significant part of Ukraine’s aircraft fleet is still based on Soviet equipment, for which spare parts are no longer produced, which jeopardizes the performance of combat missions, including medical evacuation and frontline support.