The President signed laws on Defence City: will new prospects open up for the Ukrainian defense industry and aviation?

Ukrainian President Volodymyr Zelenskyy signed laws that provide for amendments to the Tax and Customs Codes and create a special legal regime in Ukraine called Defence City to support enterprises of the defense-industrial complex and stimulate the development of key industries. The initiative partially took into account the position of the aviation industry, but experts emphasize: for truly effective support, a comprehensive state policy is needed, writes UNN.

DetailsDefence City residents will receive a number of support tools: tax benefits (exemption from income tax provided that it is reinvested, as well as from land, real estate, and environmental taxes), simplified customs procedures and export control of military goods, special conditions for currency supervision by the NBU, as well as state support for relocation and increased security of production facilities.

The head of the parliamentary committee on finance, tax and customs policy, Danylo Hetmantsev, noted https://t.me/getmantsevdanil/9926 that the draft laws were significantly revised for the second reading together with the Ministry of Defense and business. Now it’s up to the implementation of the initiative in practice.

In practical terms, one of the key decisions was to reduce the threshold of defense income for aircraft manufacturing enterprises to 50% (for other industries, it is 75%). Viktor Popov, President of the Aerospace Association of Ukraine, emphasized that this is an important signal for the market, but it should be considered only as one of the elements of systemic state support.

The aviation industry in general and aircraft manufacturing in particular is a real locomotive of the economy, which launches the development of dozens of related sectors. Every investment here is multiplied three to four times, and every job created opens up new opportunities in science, education, and industry. Tax benefits of UAH 9.3 billion allowed enterprises in the industry not only to work, but also to pay UAH 22.9 billion to the budget – 2.5 times more. This is a clear example of how state support turns into a winning investment. Moreover, the funds released thanks to the preferences are directed to production modernization, scientific research, personnel training, and the creation of new jobs

In addition, the President of the Aerospace Association emphasized that only in 2017-2023, leading enterprises in the industry invested more than UAH 13.9 billion in modernization – one and a half times more than the amount of benefits provided.

These are new technologies, automation, digitalization of production, creation of innovative aviation systems, new generation engines, and finally the possibility of working on the An-178 transport aircraft, which we are all so proud of

Viktor Popov is convinced that the aviation industry can become one of the locomotives of Ukraine’s economic recovery. But for this, partial benefits within the framework of a general initiative are not enough.

New program documents aimed at supporting aviation are needed – with the restoration of tax preferences and incentives that were in effect until 2025, and their extension until at least 2035. At the same time, it is necessary to expand state orders, support research and development work, and consider the possibility of integrating Ukrainian aircraft manufacturing into European and world programs for the creation of modern aircraft. Otherwise, the country risks losing not only economic potential, but also competencies accumulated over the years and in demand worldwide

RecallThe Aerospace Association of Ukraine reported that the aviation industry is a strategic industry in Ukraine, which ensures defense capability, provides jobs for more than 40,000 people, and creates a multiplier effect for dozens of related sectors.

Aviation enterprises ensure the technical readiness of aircraft of Army Aviation, Air Force, and other units that use aviation daily in confrontation with the enemy. They modernize weapons, implement communication and defense systems, manufacture components, and ensure the technical readiness of aircraft and helicopters that perform combat and evacuation missions.