31 in May, 63 now: Ukraine’s arms makers pile into a regime of tax breaks and shielded data

Defence City, Ukraine’s special support regime for arms makers, now has 63 member companies, the Defense Ministry said in a 19 October release. That is more than double the late-May count, and Euromaidan Press calculations show the newcomers are, on average, much smaller firms.

Ukraine already buys most of its weapons at home. More than 75% of its 2025 weapons procurement budget went to domestic manufacturers. Most new weapons models cleared for military use are Ukrainian too: 892 of the 1,000 authorized from the start of 2026 to mid-June. Defence City is meant to turn that demand into more production capacity, and our calculations suggest it is now reaching smaller producers too.

Who is joining

Each resident’s figure in the ministry’s count is its qualified income, meaning revenue from selling weapons and military equipment. Applicants file details of their defense contracts for the previous calendar year with their application, the ministry’s guide shows. So the combined total changes as members join. It does not track month-to-month sales.

The 63 current residents have a combined qualified income of nearly $2.47 billion. At the end of May, 31 residents had $2 billion, the ministry reported. By July, 45 residents had over $2.07 billion, it added.

By Euromaidan Press calculations, the 32 companies added since May bring about $15 million each on average. The first 31 averaged about $64 million each. The math assumes all 31 early members remain, with unchanged figures. If they do, the newcomers are smaller producers on average, because each figure reflects a firm’s own prior-year weapons sales.

What residents get

The profit-tax break comes with a condition. Residents choose where their untaxed profit goes, but it must go to purposes the tax code allows, the ministry explained. If the money goes elsewhere, the break does not apply.

Residents also get customs incentives and state support to relocate plants and better protect production sites. They can rent state property without an auction. They can also ask to restrict access to sensitive information about them in public registries. Some defense export procedures are simplified too.

Resident status also makes a company eligible to be designated critically important to the defense industry. That lets it defer up to 100% of its staff liable for military service from the draft, the ministry noted.

To join, a company must confirm it meets the legal requirements and file an application with supporting documents. By law, the ministry has 10 working days to decide. If approved, a ministerial order grants the status, and the company enters the Defence City register.