Ukraine has introduced a new initiative called “Defence City,” aimed at bolstering the nation’s defense manufacturing sector. This comprehensive legal and industrial framework is designed to foster production growth, attract investment, and enhance oversight to meet the country’s national security requirements.
Following the initiative’s launch, Kyiv officially designated a prominent Ukrainian firm, recognized as one of the largest manufacturers of drones in the country, as the first resident of Defence City. This designation allows the firm to operate under the newly established legal framework. The company is well-known for its production of advanced drone models, including the Vampire and Shrike, as well as interceptors aimed at countering Shahed-type systems.
Ukrainian Defense Minister Denys Shmyhal emphasized the importance of this initiative, inviting local manufacturers to join Defence City and contribute to a robust industrial ecosystem that enhances the state’s defense capabilities.
The launch of this initiative comes at a time when diplomatic efforts to halt the ongoing conflict with Russia continue without significant progress. In response to this uncertainty, Kyiv is proactive in strengthening its domestic defense infrastructure.
To achieve resident status within Defence City, companies must submit an application to the Ministry of Defense, which includes a comprehensive documentation package. This package must demonstrate compliance with relevant legislation, provide financial and audit statements, and confirm participation in state defense contracts.
Once approved, companies are formally entered into the Defence City register, gaining access to a range of provisions designed to support their production operations. Notably, these provisions include an exemption from corporate income tax for reinvested profits, relief from land, property, and environmental taxes, and access to streamlined customs procedures.
Moreover, the framework offers robust protections for sensitive information and data, and it provides state support for relocating facilities and securing production sites when necessary. This initiative represents a significant step in Ukraine’s ongoing effort to enhance its defense manufacturing capabilities amid challenging geopolitical conditions.
