All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Ukraine: Ukrainian government embarks on a tax offensive trying to boost collections

kotenko.jpg

kalyta.jpg

Vladimir Kotenko


Iryna Kalyta

The Ukrainian government announced preparation for a series of tax reforms, including a dramatic decrease of the number of taxes and an overhaul of the major taxes. In the meantime, temporary measures are introduced to boost tax collections:

Ukraine introduces a temporary 1.5% military levy on payroll

From August 2014 to January 1 2015, a temporary military levy of 1.5% will be imposed on salaries of employees, remuneration under civil agreements and income of individuals from prizes and lottery wins. This levy is expected to work as an extra payroll tax.

Resource taxes and excise tax rates increased

From August 2014 to January 1 2015, production royalties will reach up to:

  • 55% for natural gas (previously 15%-28%)

  • 45% for oil and condensate (previously 18%-42%)

  • 8% for iron ore (previously 5%);

Ukraine has also decided to increase tobacco excises by 5% starting September 2014, as well as to apply excise tax to alternative fuels and food products containing more than 8.5% of ethyl alcohol.

Abolition of certain tax incentives

Effective August 3 2014, a number of tax incentives have been abolished, including:

  • Corporate income tax exemptions for the hotel industry;

  • Corporate income tax exemptions for producers of electric energy from renewable sources;

  • 10% corporate income tax rate for transactions with securities and derivatives; and

  • Privileged VAT regime for companies engaged in timber procurement, deforestation, and production of industrial and fuel wood.

VAT administration overhaul expected to be effective January 2015

The parliament passed a government-induced law overhauling the VAT administration system. VAT changes are supposed to take effect in January 2015, but more changes are expected, as the proposed rules raise concerns among the business community.

  • VAT accounts, a system of electronic administration of VAT, are supposed to be implemented. The main stated purpose of this system is to counter tax evasion based on the use of fictitious companies. However, the viability of this system raises concerns, as a similar system works only in Azerbaijan. Bulgaria also attempted to implement such system, but abolished it shortly thereafter.

  • VAT refund eligibility conditions will become more stringent. The range of companies eligible to VAT refund is expected to decrease significantly.

  • Threshold for mandatory registration as a VAT payer is increased from UAH 300,000 to UAH 1 million ($80,000).

  • The rules for calculating VAT change slightly, as a minimum tax basis is introduced for loss-making supplies of goods and services.

  • VAT reporting and issuance of VAT invoices to customers should be done exclusively in the electronic form. All VAT invoices and adjustments will have to be registered in a special state register.

Vladimir Kotenko (Vladimir.Kotenko@ua.ey.com), Iryna Kalyta (Iryna.Kalyta@ua.ey.com)

EY

Tel: +380 44 490 3000

Fax: +380 44 490 3030

Website: www.ey.com/ua

more across site & bottom lb ros

More from across our site

Vikas Garg talks to reporter Siqalane Taho about how regulation, technology and the goods and services tax has affected the manufacturing company.
A major shift is underway in tax as the profession transitions from a mostly accounting and finance sector to a hybrid industry that requires significant IT skills, say tax experts.
The Biden administration is about to give $80 billion to the Internal Revenue Service to enhance the tax authority’s enforcement processes and IT systems.
Audi, Porsche, and Kia say their US clients will face higher prices under the Inflation Reduction Act after the legislation axes an important tax credit for electric vehicle production.
This week Brazil’s former President Luiz Inacio Lula da Silva came out in support of uniting Brazil’s consumption taxes into one VAT regime, while the US Senate approved a corporate minimum tax rate.
The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree