Ukraine: Ukraine enacts a package of anti-crisis tax changes
In an effort to fire-fight the treasury crisis, on March 27 2014 the Ukrainian Parliament passed law No. 4576 increasing tax rates and abolishing a number of tax exemptions. The majority of changes introduced by this law are supposed to take effect from April 1 2014. The new rules include:
Freezing the corporate profit tax rate and the VAT rate at their current level (18% and 20% respectively), instead of the initially planned gradual reduction to 16% and 17% respectively by 2016).
Introduction of 7% VAT on supply of pharmaceuticals and selected medical products (as opposed to existing VAT exemption). Tax treatment of importation of pharmaceuticals and medical products remains unclear (7% was apparently meant but poor wording of the law creates a risk of 20% VAT upon importation).
Re-introduction of a special purpose pension fund levy of 0.5% to be imposed on legal entities and individuals upon purchase of foreign currency.
Increase of rates of the following taxes and charges:
Excise tax on alcohol, tobacco, oil products and vehicles;
Air emission tax and waste dumping tax;
Radio frequency charge;
Special water use charge;
Land tax; and
Rates of subsoil duty.
Introduction of progressive personal income tax (PIT) rates of 15%, 17%, 20% and 25% on passive income of individuals (dividends, interest, and royalties). This rule will take effect starting July 2014.
More changes in tax regulations are expected, including those abolishing other tax exemptions.
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