The Prime Window for Investment: The Evolution of Ukrainian IT in 2026

There’s no doubt that the war remains the greatest risk for business though, at the same time, it has provided impetus for the implementation of innovations in almost all industries. The year 2026 has every chance of becoming the most successful for investment, as the Ukrainian tech sector has transformed itself from an outsourcing hub into an incubator for IT products that are tested on a daily basis and literally in combat conditions. For an investor, this is an opportunity to invest in a product with a real track record; and for a start-up it is an opportunity to grow faster.

DefenseTech

Ukraine has rapidly transformed itself into a premier global R&D hub for defense tech and artificial intelligence, driven by the immediate need to counter superior enemy numbers with innovation. Battlefield insights are integrated within weeks, creating a unique “lab-in-the-field” for drones, AI, and Electronic Warfare technologies.

Ukraine is currently the global epicenter of military innovation. What takes years to develop in large defense corporations is tested and improved in Ukraine within weeks based on real feedback from the military. Ukrainian drones demonstrate an asymmetrical advantage the destruction of expensive enemy equipment using means that are low-cost but high-tech.

The legal regime of Defense City was established by the Law of Ukraine On Amending the Tax Code of Ukraine and Other Laws of Ukraine Regarding Support for Enterprises of the Defense-Industrial Complex of 21 August 2025 which amended the Law of Ukraine On National Security of Ukraine of 21 June, 2018.

To obtain the status of a Defense City resident, a taxpayer must meet the requirements regarding the share of qualified income for the previous calendar year.

Profits exempted from taxation must be directed toward the development of the Defense City resident’s activities no later than 31 December of the calendar year following the tax (reporting) year, and exclusively for limited purposes. For example, the creation or re-equipment of the material and technical base, improvement of technological and production processes, implementation of the latest technologies, or the acquisition of rights to intellectual property objects. Directing tax-exempt profits toward the payment of dividends is considered a misappropriation of tax-exempt profits.

Cybersecurity

According to a study by DataDriven, the cybersecurity market in Ukraine reached $138 million in 2024. Every day, Ukraine repels the most massive and sophisticated cyber attacks in the world, making its experts the most experienced in the market. Investors gain access to technologies built on the analysis of real threats to critical infrastructure and state systems. Investments are focused on cloud security, endpoint protection, and network solutions, while businesses allocate approximately 9% of their IT budgets to protection.

The Law of Ukraine On Amending Certain Laws of Ukraine Regarding Information Protection and Cyber Defense of State Information Resources and Critical Information Infrastructure Objects of 27 March, 2025 introduces mandatory and systematic cyber-hygiene training for a wide range of civil servants and employees. Compliance with this provision will be verified within the framework of assessing the cyber defense status of state authorities. Mandatory training applies to a broad circle of officials, such as Members of Parliament, civil servants of all levels, as well as employees of bodies of local self-government, military personnel, and law-enforcement officers.

This Law provides for the creation of a national system for responding to cyber incidents, cyber attacks, and cyber threats. The launch of a system for exchanging information about such threats at national level is planned. The Law also obliges state bodies and critical infrastructure facilities to introduce staff positions for cybersecurity specialists; their work is intended to become part of a systemic approach to information protection in the public sector.

The Law provides businesses with the opportunity, on a contractual basis, to train civil servants and military personnel, build protection systems for state bodies and critical infrastructure, assess their reliability, and respond to cyber incidents at the sectoral or state level as private response teams. Business can provide such services by utilizing the advantages of Diia.City. The features of Diia.City, as a special legal and tax regime, include:

• Low Tax Rates: Corporate income tax of 9% on distributed capital or 18% on profit, depending on the chosen regime; personal income tax – 5%; unified social contribution for mandatory state social insurance – 22% of the minimum wage; military tax – 5%.
• Alternative Hiring Model: The ability to hire employees, work with individual entrepreneurs (FOPs), or conclude gig-contracts, which are available only to Diia.City residents.
• Predictability of the Legal and Tax Regime: The legal regime of Diia.City is established for at least 25 years from the date that the first resident was entered into the Diia.City register.

AgriTech

Ukraine remains the breadbasket of the world, but now it is also becoming high-tech. AgriTech offers new approaches to crop cultivation, where efficiency and safety are combined thanks to IT and modern engineering. This includes the use of agricultural technologies for crop monitoring, precision farming, and, what is especially relevant, the automated demining of territories.

In February 2025, the Ministry of Digital Transformation of Ukraine presented the AgriTech development strategy, according to which Ukraine will concentrate a number of R&D hubs. These hubs will conduct research and its commercialization in the direction of AgroTech, provide support to start-ups in launching and scaling innovative solutions, and become a platform for exchanging experience with international organizations and companies.

A portion of manufacturers who worked in the military segment are adapting their developments for civilian needs. Platforms, navigation modules, stabilization algorithms, and data transmission systems are already being actively used in the agricultural sector, and exported to other countries too. All of this creates a new segment in the market—agrodrones—and it’s actively growing.

Flexible Investment Methods

It’s worth considering several of the most flexible ways to invest in IT:

First: Creation of a Corporate Investment Fund (CIF) A CIF is formed as a joint-stock company and exclusively carries out collective investment activities. Collective investment activities can be conducted from the moment the CIF is entered into the Unified State Register of Collective Investment Institutions. Participants of a corporate fund can be legal entities and individuals. Both residents and non-residents are able to purchase CIF shares.

According to the provisions of the Tax Code, collective investment funds are exempt from taxation, namely: funds contributed by the founders of the corporate fund, funds and other assets attracted from ICI (Institutional Collective Investment) participants, income from operations with ICI assets, income accrued on ICI assets, and other income from ICI activities (interest on loans, rental/leasing payments, royalties, etc.). ICI assets are understood to be the aggregate of property, corporate rights, real estate, property rights, claims, and other assets formed (paid for) through collective investment funds, as provided by the laws and regulations of the National Securities and Stock Market Commission.

Unlike ordinary companies, a CIF is not a payer of corporate income tax, and the accounting of income is carried out at the level of investors at the time of profit distribution. This allows for a significant reduction in the tax burden with proper tax planning, as well as the structuring of income from various assets. In the process of creating a CIF, it is important to determine the optimal size of the authorized capital that will correspond to the chosen investment strategy and regulatory requirements, specifying its size in the CIF emission prospectus.

Second: Operating through a Limited Liability Company (LLC) The main advantages are simplicity in creation and administration, the absence of requirements for the size of the authorized capital, the possibility of concluding a corporate agreement, and the creation of branches and representative offices. An LLC can operate under various tax regimes: the general taxation system, the simplified system (unified tax), or as a resident of Diia.City. Each option has its pros and cons. Creating an LLC provides legal certainty in relations between co-owners and lays the foundation for effective corporate governance. Furthermore, a legal entity has broader opportunities for attracting capital and entering the B2B market, as such status is a significant factor of trust for investors and partners.

Third: Using both CIF and LLC in Building an IT Company’s Corporate Structure This makes it possible to take advantage of each organizational and legal form, attracting investment both through intra-group financial mechanisms and by attracting new investors through the sale of shares. A CIF can own stakes in an LLC to invest funds, receive dividends, and increase the value of assets. Such investments are often made by venture funds to finance businesses, whereby the CIF can control anywhere from a few percent to 100% of the LLC’s authorized capital.

The Ukrainian IT sector has reached a unique point of maturity, combining high technological expertise with unprecedented resilience, tempered by years of work in extreme conditions. Thanks to the legal regimes of Diia.City and Defense City, investors receive the most favorable tax conditions. Ukraine has transformed into a global hub for developments in the fields of DefenseTech and Cybersecurity. The country’s expected accession to the EU creates a window of opportunity to enter the market at a relatively low asset valuation before the projected rapid growth in their value takes place.