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The study defines that digital transformation must encompass all spheres of life in most countries within the next few years. This is linked to the development of an innovative information society, where the digital economy will become the main component. Attention is drawn to the definition of «information technologies». It is noted that the IT sector combines private law and public law relations, reflecting its complex nature in the modern legal system. It is emphasized that this, in turn, will contribute to the effective functioning of business entities in the information technology sector, helping to avoid negative consequences that may arise from deficiencies in legal regulation. IT is one of the leading industries in the Ukrainian economy at present, with its volumes growing each year. Statistics show that the IT sector is one of the few industries in the national economy that can respond more quickly to sharp changes in Ukraine's external environment. The main taxation systems for business entities in the IT sector and tax rates are outlined. Attention is focused on the legal regime of Diia City, where IT sector entities can become residents. It is noted that the Diia City regime should provide not only favorable and flexible conditions for doing business, including attracting Ukrainian IT specialists, but also advantageous taxation. It is emphasized that Diia City, together with gig contracts, is designed to reduce the practice of registering employees as individual entrepreneurs. Companies that opt for the Diia City regime are offered nearly identical taxation in relation to employees and enhanced control over them. The advantages and disadvantages of gig contracts for the Ukrainian IT sector are discussed. At the same time, it is pointed out that effective legal regulation, taking into account the peculiarities of wartime, is critically important for ensuring the stable operation of Diia City resident companies. In conclusion, it is emphasized that the legal regime of Diia City, introduced to stimulate the digital economy in Ukraine, has become an important tool for regulating the IT sector since its launch in 2022. The further development of the Diia City legal regime should aim at supporting the stability of the IT sector, ensuring the retention of skilled personnel in Ukraine, as well as creating conditions for achieving a swift peace and the recovery of the economy after the war. [ABSTRACT FROM AUTHOR]