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- GovTech
Less Bureaucracy, More Business: Ukraine’s Digital Transformation
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- 7 min
Ukraine’s efforts to reduce bureaucracy and improve the business climate are focused on digital transformation, simplifying administrative processes, reducing corruption, and creating a more transparent environment for both domestic and foreign entrepreneurs.
Regulatory component
The main source of legal regulation of business activities in Ukraine is the Constitution of Ukraine, which establishes general principles for doing business in the country, in particular, regarding the right to entrepreneurial activity and the protection of property rights.
Additionally, the activities of enterprises are regulated by a number of special laws and codes: The Civil Code of Ukraine regulates the foundations of civil legal relations, including contracts, obligations and other legal issues; The Tax Code of Ukraine determines the taxation procedure, rules for tax authorities and requirements for entrepreneurs to pay taxes; The Law of Ukraine «On Entrepreneurship» establishes general rules for registering and conducting entrepreneurial activity, regulates the rights and obligations of entrepreneurs.
In 2015, the Law of Ukraine «On Electronic Commerce» was adopted, which regulates relations arising during electronic commerce, determines the rights and obligations of participants in the electronic market, and also establishes the rules for concluding electronic contracts.
In 2020, the Law of Ukraine «On Electronic Communications» was adopted, which defines the legal framework of state policy in the areas of electronic communications, as well as the rights, obligations and responsibilities of individuals and legal entities participating in or using electronic communication services.
In 2021, the Law of Ukraine «On Payment Services» was adopted, which defines the rules for the provision of payment services, the creation of electronic money and the use of payment systems in Ukraine, which is important for businesses operating in the field of financial technologies (FinTech). The same year the Law of Ukraine «On Financial Services and Financial Companies» was adopted. It contains rules regulating the provision of financial services in digital format, in particular services provided via the Internet, mobile platforms and electronic payment systems.
In 2022, the Law of Ukraine «On Cloud Services» was adopted, regarding ensuring legal and technical conditions for the use of cloud technologies in Ukraine. In 2023, the Law of Ukraine «On Digital Content and Digital Services» was adopted, which defines the civil law principles for the provision of digital content and/or digital services on the basis of a contract and the protection of consumer rights in this area.
Digitalization of public services for business — quick registration of an individual entrepreneur, tax reporting, e-Entrepreneur
During the first three decades of Ukrainian independence, in order to register a business, submit reports, pay taxes or obtain licenses, it was necessary to go through complex and lengthy procedures in government agencies. The time spent visiting numerous institutions, collecting necessary documents and waiting in lines created significant stress for entrepreneurs, and also increased the costs of business administration.
However, over time, the situation has changed significantly due to the introduction of digital tools and services. Now, processes that previously took several days or weeks can be completed online in a few minutes.
Using the Diia platform, entrepreneurs can register an individual entrepreneur or legal entity online for free and quickly. Since 2020, registering an individual entrepreneur online takes no more than 10-20 minutes. Previously, this process could take several weeks. In addition, the platform allows you to quickly file tax returns, pay taxes, and receive all necessary documents.
Ukraine is not the only country where entrepreneurs can register a business through online platforms. Examples of these are e-Business Register in Estonia, Companies House in Britain, BizFile+ in Singapore, Business Registration Online in Canada, Australian Business Register. But the Diia platform is one of the most modern and convenient in the world for registering individual entrepreneurs.
One of the important aspects of Ukraine’s tax policy is the presence of a simplified taxation system, which allows individual entrepreneurs (mainly small businesses) to work under the Single Tax. Individual entrepreneurs of groups 1 and 2 pay less than $100 in taxes per month. Individual entrepreneurs of group 3 — 6% of income. This system allows you to reduce administrative costs and simplify the reporting process. There are 1.707 million individual entrepreneurs in Ukraine as of January 1, 2025.
Number of individual entrepreneurs in Ukraine | Taxes of individual entrepreneurs |
1.707 million | groups 1 and 2 — less than $100 per month group 3 — 6% of income |
Also, in June 2024, the e-Entrepreneur service appeared on the Diia platform to simplify doing business. From now on, you can apply for 10 services online with one application in 15-40 minutes.
Diia integration
Digital signatures available through Diia integration provide legal force to electronic documents and allow entrepreneurs to manage documents online, without the need to visit government institutions. 48+ million times Ukrainians used Diia.Digital Signature as of the beginning of October 2024. The Ministry of Digital Transformation plans to launch Diia.Digital Signature for legal entities in the near future.
In November 2022, the Government of Ukraine approved the procedure for conducting a pilot project on mutual recognition of electronic signatures between Ukraine and the European Union. Ukraine became the first and so far the only country outside the European Union to receive this opportunity.
In July 2024, the Schrift electronic document management system introduced a function that allows the use of both Ukrainian and European qualified electronic signatures (QES) on one platform. These electronic signatures have legal force both in Ukraine and in the European Union.
Transparency and the fight against corruption
Thanks to the introduction of the latest technologies, Ukraine has significantly increased the level of transparency in doing business. In particular:
Prozorro is a system for conducting public tenders and procurements, which allows to reduce corruption risks and ensure fair competition.
OpenDataBot and YouControl are services for monitoring and analyzing legal entities, which allow businesses to check counterparties and minimize the risks of cooperation with unreliable partners.
Other services that help entrepreneurs:
The portal of electronic services of the Ministry of Economy of Ukraine is an important tool for entrepreneurs, providing access to various state reports, norms, permits and other services online and ensuring greater transparency and convenience in interaction with the authorities.
Pulse is a platform for collecting feedback from businesses on interaction with the state to improve the quality of public services. Allows you to record and promptly solve problems that entrepreneurs encounter in the process of doing business.
The State Employment Service of Ukraine app significantly simplifies the interaction between entrepreneurs and the State Employment Service, and also facilitates the process of hiring employees and their social security. In 2021, the unemployment rate in Ukraine was 10.3%. In 2022, due to the russian invasion, the economic and social problems that it provoked, the unemployment rate was, according to various sources, from 21% to 30%. According to the latest data from the Info Sapiens study, in the 4th quarter of 2024, the unemployment rate was 14.2%.
E-licenses are electronic permits to carry out certain types of activities that allow entrepreneurs to obtain the necessary permits without the need to visit government agencies.
eDeclaration is a service that operates exclusively during martial law. Thanks to it, you can submit a declaration of business activity. If your business needs a license or permits, you can submit one e-Declaration and receive the necessary license, certificate, identification, decision, conclusion or permit.
The Tax payer’s E-Cabinet is a tool for uploading tax reports, paying taxes, tracking the status of payments to the budget and other statuses of entrepreneurs.
Strategy of Recovery, Sustainable Development, and Digital Transformation of Small and Medium-Sized Enterprises in Ukraine
The government strategy outlines four key areas of activity:
1. Restoration and simplification of business processes. Facilitating access to financing, reducing regulatory pressure and introducing new support instruments. This will be facilitated by the state policy programs «Made in Ukraine», grants for processing enterprises, «Affordable loans 5-7-9», insurance options against war risks.
2. Innovative development, digital transformation and «green transition». The strategy proposes the creation of industry clusters and science parks to stimulate investment and regional development. It is planned to introduce artificial intelligence technologies, electronic invoicing and instant payment systems.
3. Development of human capital and entrepreneurship. The strategy provides for the implementation of dual education programs and special initiatives to support women, veterans and people with disabilities in business. It is also planned to expand the network of regional offices «Made in Ukraine» to support micro and small enterprises.
4. Increasing competitiveness and increasing exports. The strategy provides for cooperation with international organizations, such as Enterprise Europe Network and Erasmus for Young Entrepreneurs. It is planned to further develop the «Made in Ukraine» brand, provide support in finding partners and conducting international negotiations, as well as expand the activities of the Export Credit Agency.
Conclusions
Digitalization and the accompanying deregulation have become an important factor in improving the conditions for doing business in Ukraine. Thanks to the state’s active introduction of the latest technologies, entrepreneurs are able to significantly reduce time and resource costs, as well as gain access to modern tools for business management. Such a transformation of the interaction of the state with business contributes to the development of entrepreneurship, strengthening economic stability and the country’s recovery after the war.
The article was prepared by the Kyiv Global Government Technology Centre Team. The Centre is supported by the World Economic Forum, the Ministry of Digital Transformation of Ukraine, and Switzerland under EGAP Program, implemented by East Europe Foundation.
