Defence industry enterprises with Defence City resident status have been given the option to lease state property without holding an auction. This was reported by the press service of the Ministry of Defence.
The Cabinet of Ministers of Ukraine approved the relevant amendments to Resolution No. 634 of 27 May 2022, which regulates the rules for leasing property during martial law, following a proposal from the Ministry of Defence.
The defence ministry notes that whereas previously a company had to meet three criteria simultaneously, it is now sufficient to meet at least one of four:
- be designated by the Ministry of Defence as a critically important enterprise in the defence industry or for meeting the needs of the Armed Forces of Ukraine and other military formations;
- be included in the electronic register of selection participants and state contract performers;
- be a manufacturer of unmanned systems, electronic warfare equipment, passive countermeasures against technical reconnaissance, a serial manufacturer of missile systems, a developer of new or modernised missile weapons, or a manufacturer of military explosives;
- hold Defence City resident status.
To lease state or municipal property without an auction, a company must submit a written application to the lessor requesting that the relevant asset be included in the list of property that may be leased without an auction.
The application must include information confirming that the company meets one of the criteria: a reference to the Ministry of Defence decision granting critically important status; a decision on inclusion in the register of selection participants and state contract performers; a Ministry of Defence letter confirming compliance with the criterion relating to the production of the relevant defence products; or information confirming Defence City resident status.
Within five working days of receiving the application, the Ministry sends the lessor confirmation that the applicant meets at least one of the criteria, or notifies them that the applicant does not meet any of them.
“We are developing Defence City as an environment with greater opportunities. Simplified access to state property is another practical tool for this. The less time a manufacturer spends searching for and obtaining the necessary infrastructure, the faster it can direct resources straight into scaling up production,” said Deputy Minister of Defence of Ukraine Hanna Hvozdiar.
The government has also expanded the list of defence-sector enterprises that can use the mechanism for leasing property without an auction. It now includes manufacturers of unmanned systems and equipment for active (electronic warfare) and passive countermeasures against technical reconnaissance.
In addition, the option to lease municipal property without an auction has been extended as well — previously, under this mechanism, defence enterprises could lease only state property. Local authorities are recommended to set the rent at 8% of the assessed value per year.
Defence City is a special legal regime for enterprises in Ukraine’s defence industry, introduced in 2025. It provides tax, customs and other regulatory incentives for companies that have obtained Defence City resident status. Under Law No. 13420, the regime is set to remain in force until 1 January 2036 or until Ukraine joins the EU.
In particular, residents may be exempt from corporate income tax provided it is reinvested, as well as from land tax, property tax and environmental tax. Simplified customs procedures and specific arrangements in the area of currency and export controls are also предусмотрені for them. Since the project was launched, the number of residents among weapons and military equipment manufacturers has already exceeded 50.