"Conditions need to be eased": Hetmantsev announces changes to Defence City law
Drone Industry
The government must prepare amendments to the legislation regulating the operation of the separate legal regime of Defence City.
This was announced on Telegram by Danylo Hetmantsev ("Servant of the People"), Chair of the Verkhovna Rada Committee on Finance, Tax and Customs Policy.
"As one of the authors of the idea, I am closely monitoring what is happening with Defence City, a special economic activity regime that started on 1 January and was supposed to lay the groundwork over the next 10 years for the systemic development of the domestic defence industry. Unfortunately, I do not see that so far," the lawmaker wrote.
He noted that the final version of the law created not only incentives but also difficulties for businesses. In particular, the conditions for using the special regime are fairly strict.
"I supported the idea that this regime should not become another loophole for those who have no connection at all or only a minimal connection to the defence industry but would receive privileges... But I also do not support the opposite extreme, when the entry barrier becomes insurmountable or unaffordable for more than 90% of real arms manufacturers," Hetmantsev noted.
The committee chairman added that, at the same time, the incentives for defence companies to move into Defence City are rather weak.
For example, relocation may be of interest only to a limited number of large giant enterprises dating back to the Soviet era, while for new companies, the relocation opportunities may not be as attractive, the lawmaker noted.
And the possibility of obtaining a simplified arms export permit provided for by the law will only start working after relevant international treaties are concluded and ratified with allied countries, Hetmantsev added. According to him, when this will happen is unknown, but "it is definitely not a matter of the coming months".
"Business, its representatives, and the legal community working with companies in the sector are clearly sending a signal that the conditions need to be eased and the incentives need to be made more practical and useful. I believe the government should urgently hold the necessary consultations to draft the required amendments and make the framework of state support for the defence industry effective and results-driven, rather than declarative," Hetmantsev concluded.
As reported, last September, President Volodymyr Zelenskyy signed key laws introducing tax breaks for defence industry enterprises that join the separate legal regime of Defence City.
In December 2025, the Cabinet of Ministers approved the subordinate legislation necessary to launch the separate legal regime of Defence City. The Ministry of Defence noted that these decisions allowed Defence City to be launched from 5 January 2026.
Read more in the Business Censor article: Defence City: Boost for defence industry or closed club for chosen few?
