The Defence City legal regime was introduced to provide comprehensive support to enterprises in Ukraine’s defence and defence-industrial complex, stimulate investment, foster the development of dual-use technologies, and promote the localisation of production under wartime and post‑war conditions. The requirements applicable to Defence City residents are set out in Article 37 of the Law of Ukraine dated 21 June 2018 No. 2469‑VIII “On National Security of Ukraine”.
The legal framework for the operation of this regime is established by the Law of Ukraine dated 21 August 2025 No. 4577‑IX, which introduced amendments to the Tax Code of Ukraine and other legislative acts to support defence‑industrial enterprises. The Law provides for the application of the Defence City regime until 1 January 2036 or until Ukraine’s accession to the European Union, whichever occurs earlier.
One of the key requirements for Defence City residents is the annual submission of a Defence City Resident Compliance Report confirming compliance with the established criteria. An integral part of this report is an auditor’s opinion prepared by an audit firm authorised to perform statutory audits of financial statements of public‑interest entities.
A Defence City resident is required to submit the Compliance Report to the Ministry of Defence of Ukraine annually, no later than 1 June of the year following the reporting year, covering the period from 1 January to 31 December of the preceding calendar year, in accordance with Article 37 of the Law.
Audit Company “Aksonova & Associates”, a member of Geneva Group International, as a licensed audit firm, is authorised to perform audit procedures to provide assurance on the assertions included in the Defence City Resident Compliance Report.
PURPOSE AND SCOPE OF THE AUDIT OF A DEFENCE CITY RESIDENT
The purpose of the audit is to provide independent assurance on the reliability of the Defence City Resident Compliance Report – an official document confirming that the enterprise continues to meet the statutory requirements for maintaining its status as a resident of the special legal regime.
As part of the audit engagement, the auditor assesses:
- The financial statements of the Defence City resident for the relevant reporting year.
- The correctness of the calculation and the documentary support of the qualified income.
- Contract compliance and business transactions affect the determination of qualified income.
- The completeness, accuracy, and internal consistency of the Defence City Resident Compliance Report.
- compliance of the reporting and audit procedures with the requirements of applicable Ukrainian legislation, including the Law of Ukraine “On Audit of Financial Statements and Auditing Activities”.
The audit outcome is an auditor’s opinion, which the resident may use to meet regulatory requirements and confirm its status under the Defence City regime.
In preparing the auditor’s report, the applicable international standard governing assurance engagements is applied, namely:
- International Standard on Assurance Engagements (ISAE) 3000 “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”.
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