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Ukraine: Ukraine tax code changes taking effect from January 1 2016

01 February 2016

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Nadiya Omelchuk

On November 30 2015, the Ministry of Finance published a draft Law which includes proposed amendments to the country's tax code. The draft Law was also submitted to the Parliament.

The Bill No 3688 was adopted by the members of Parliament; therefore the new tax rates have become applicable as of January 1 2016.

Among others, the following changes have been introduced:

  • Improvement of VAT refund procedures by providing the same requirements and rights for all taxpayers;
  • Prohibition of supervisory authorities to cancel the amount of tax on formal grounds and also establishment of a mechanism for preventing the use of artificially created tax credit(s);
  • As of January 2017, the agricultural sector will undergo a VAT transition period during which companies will need to deposit a certain percentage of the VAT in a special account and pay the rest to the budget. For plant manufacturers, the ratio will be 15% to the special account and 85% to the budget, for pig and poultry industries it has been set at 50% – 50%, whereas for cattle industries the ratio is set at 80% and 20%. Additionally, as of January 2016 the right to refund of VAT to all exporters of grain and industrial crops has been restored;
  • An increase in the excise tax on alcohol, distillates and alcoholic drinks to 50% on beer and 100% on wines with the exception of natural grape wine;
  • Specific excise tax on tobacco products, tobacco and manufactured tobacco substitutes, with the minimum excise tax burden increased by 40% as well as an ad valorem rate increase of 3%; and
  • Definition of the minimum wholesale and retail prices for tobacco products, tobacco and manufactured tobacco by the Cabinet of Ministers.

The new Law maintains the simplified taxation system, except for the ceiling revenue level for the third group of taxpayers which is reduced to UAH 5 million ($218,000).

The above changes represent selected highlights from the long list of amendments that the new legislation has introduced. After the Bill's adoption, budget revenues are expected to increase.

Nadiya Omelchuk (
Tel: +380 445021068

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