Ukraine Business Roundup — Ukraine launches e-residency for foreigners
Ukraine launched an e-residency program this past week, giving some foreigners remote access to services in the country, mainly the ability to open a business and bank account and pay taxes at a favorable rate.
The move is part of the country’s wider digitalization efforts to counter both bureaucratic difficulties and corruption launched after President Volodymyr’s election in 2019 and the creation of the Digital Transformation Ministry.
Much of the inspiration for the program, called uResidency in Ukraine, comes from the success of a similar program in Estonia — a pioneer of digital government services — which made 64.3 million euros in tax revenue last year. Ukraine is hoping to attract $1 million in tax revenue with 1,000 residents in the first year.
It’s also about showing the world Ukraine’s digital transformation. “Now foreign entrepreneurs can experience firsthand the digital services that have long made Ukrainians’ lives easier,” Oleksandr Bornyakov, deputy minister of digital transformation on IT industry development told the Kyiv Independent.
“With uResidency, we aim to share our innovative solutions with the world, enhancing the comfort and convenience of doing business for people everywhere.”
To obtain e-residency status, foreigners don’t need to travel to Ukraine — which for the unfortunate reason of Russia’s war is dangerous and difficult. Those eligible just have to go to their local Ukrainian consulate to verify their documents.
So who can and would want to become an e-resident? So far only citizens of India, Pakistan, Thailand, and Slovenia can become e-residents in Ukraine.
The program is mostly a good fit for smaller businesses in the IT, gaming, and digital technology sectors, as well as online services in the creative economy like marketing, sales, web design, project management, marketing, and media.
Why only these four countries? Slovenia for the simple reason that this country never experienced a significant influx of Ukrainian refugees as the result of Russia’s war so their consular services are free to take on some extra requests, the ministry told me.
Regarding India, Pakistan, and Thailand, the ministry said that according to their research, there’s a strong demand for e-residency in these countries, especially as it gives them closer access to European markets. It’s also part of a broader move in Ukraine to reach Asian markets, the ministry said.
What are some of the benefits of becoming an e-resident? For one, e-residents can open bank accounts from their phones, with the only in-person involvement the verification step at a consulate.
At this stage, e-residency is free. There are no hidden fees, or fees for accounting, and e-residents don’t have to pay for accounting through the partner bank, the ministry said. The only costs incurred are taxes and a small fee for banking services.
Speaking of taxes, e-residents will pay a tax rate of 5% on an annual income up to 180,000 euros. If they exceed this limit, the tax increases to 15%.
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