|Vladimir Kotenko||Iryna Kalyta|
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.