By the end of 2025, the government must develop the full bylaw framework for "Defence City" — UkrArmoTech CEO Hennadii Khirhii
While the media continues to highlight Tomahawks, Rafale jets and other major defence capabilities, an equally important aspect of Ukraine’s security receives far less attention: the practical rollout of the special legal regime for defence manufacturers, known as "Defence City". The corresponding legislative package was passed by Parliament in August, signed by the President in September, and came into force in October 2025. UKRARMOTECH CEO Hennadii Khirhii wrote about this in his column for UP.
According to Khirhii, the initial operational readiness of the regime depends on how quickly the Ministry of Defence and the Government can prepare and implement the bylaw "roadmap" by the end of December 2025. This requires drafting a series of critically important acts, including:
– procedures for monitoring reinvested profit,
– the template for annual reporting,
– regulations for maintaining the official register, and more.
In addition, by the end of 2025 the Ministry of Defence must launch an electronic cabinet for residents and establish a system for interaction with registered companies.
"The key deadline for Defence City is the end of 2025. By that time, the Government must finalise the entire bylaw framework. If all necessary documents are adopted on time, and if the resident e-cabinet and verification commission are launched as scheduled, the first companies may be registered as residents in January 2026," Khirhii emphasised.
One of the central elements of the regime is the establishment of an official register of defence-industry residents, overseen by the Ministry of Defence. Resident status grants substantial tax incentives: exemption from corporate income tax (provided that profit is reinvested into production), as well as exemption from land tax, environmental tax and property tax. According to forecasts, these incentives will encourage companies to intensify investment in expanding and modernising their production capacities.
Residents will also benefit from simplified customs procedures, a special currency-regulation regime, and clear financial criteria for entering the register — at least 75% qualified income (related to defence-sector activities). For aerospace manufacturers, the threshold is set at 50%.
UKRARMOTECH is a manufacturer of armoured vehicles for the needs of the Armed Forces of Ukraine, the State Border Guard Service, the Ministry of Internal Affairs, and specialised security units within the national defence and security sector. The company provides a full production cycle: from laser cutting of armour steel and all types of mechanical processing to full assembly and testing of finished vehicles.