Cancellation of the Military Tax on Currency Exchange Transactions

On 12 May 2015 the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Tax Code of Ukraine in Respect of the Military Tax” which took effect as of 11 June 2015.

The Law abolishes the military tax on sale and purchase of foreign currency by individuals.

Court Fee Increased

On 22 May 2015 the Verkhovna Rada of Ukraine adopted the draft Law “On Introduction of Amendments to Certain Legislative Acts of Ukraine in Respect of Court Fee Payment.” It has been submitted to the President of Ukraine for signature, and it will take effect as of 1 September 2015, after it is signed and officially promulgated. 

In particular, the draft Law suggests:

  • Using a common approach to the determination of court fee rates in all court jurisdictions that equates courts of general, commercial and administrative jurisdictions in their financial accessibility for claimants;
  • Introducing a common system of differentiation of court fee rates only based on two criteria only:
    • Depending on whether the claimant (applicant) is a legal entity or an individual (at this point, a much lower court fee rate is set for individuals to ensure their access to justice);
    • Depending on the nature of a dispute (property or non-property dispute) that provides for a single and clear approach to the determination of court fee rates;
  • Excluding state authorities from entities exempt from court fees.

Specifically, the draft Law sets much lower court fees for individuals as compared to legal entities or individual entrepreneurs. It also significantly increases court fee rates to apply to each higher court. For example, the court fee for filing an appeal against a court decision has been increased more than twice, and the court fee for filing a cassation appeal against a court decision has been increased almost twice.

Transfer Pricing Legislation

The Cabinet of Ministers of Ukraine approved the list of countries (territories) that meet the criteria set forth in paragraph 39.2.1.2 of subsection 39.2.1 of section 39.2 of Article 39 of the Tax Code of Ukraine (the “List”), i.e. the countries in which the rate of corporate income tax 5 and more percentage points lower than in Ukraine and in which the access to information is complicated.

The List includes 76 countries and territories.

As compared to the previous list of countries (territories), in which income tax (corporate tax) rates 5 and more percentage points lower than in Ukraine (Order No.1042-p dated 25 December 2013), the list does not include Albania. Instead, such countries as Austria, Special Administrative Region of China Hong Kong, Niue and Turkmenistan have been added to the list.

Change in the Procedure for Individual Income Taxation

The draft Law of Ukraine “On Amendments to the Tax Code of Ukraine in Respect of Fair Individual Income Taxation within the Range from 10 to 17 Minimal Wages” was adopted by the Verkhovna Rada on 19 May 2015. It has been submitted to the President of Ukraine for signature, and it will take effect after it is signed and officially promulgated.

Thus, the draft Law suggests:

  • Increasing the taxable base, to which a 15 percent individual income tax rate is applied, from 10 to 17 minimal wages (presently from UAH 12,180 to UAH 20,706).  The income in excess of 17 minimal wages will be taxed at the rate of 20 percent, as it is now;
  • Determining that the payroll cap, to which the uniform social tax is applied, will depend not on the subsistence minimum  for able-bodied persons at the moment the tax is assessed (presently UAH 1,218), but on the minimum wages as of 1 January of the reporting year (presently UAH 1,218);
  • Introducing the decreasing coefficient to determine the amount of the unified social tax as 1 January 2016 to be equal to 0,4 of the unified social tax rate, which amounts to  36.76 – 49.7 percent depending on the on the class of professional production risk.

Exemption from Taxation of Income Received by Foreign Investors from Transactions in Government and Municipal Securities

On 22 May 2015 the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Introduction of Amendments to Tax Code of Ukraine in Respect of Taxation of Income Received by Non-Residents under Debt Obligations,” which took effect as of 27 May 2015.

The Law restores the relevant rules of the Tax Code of Ukraine prescribing that revenues received by non-residents as interest or income (discount) for government securities or municipal bonds or debt securities secured by government or municipal guarantees shall be, under certain conditions, exempt from taxation. 

Business Simplification

On 21 May 2015 the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Introduction of Amendments to Article 69 of the Tax Code of Ukraine Regarding Simplification of Doing Business,” which took effect as of 14 May 2015.

The Law provides for the principle of tacit consent to tax relations when registering a taxpayer’s account with supervisory authorities.   

Exemption from Taxation of Some Medications and Medical Products

On 9 April 2015 the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Introduction of Amendments to Tax Code of Ukraine in Respect of Exemption from Taxation of Some Medications and Medical Products,” which entered into force as of 7 May 2015.

The Law provides for temporary, until  31 March 2019, granting an exemption from value added tax (VAT) on transactions involving (1) importation to the customs territory of Ukraine, (2) the first supply by the manufacturer in the customs territory of Ukraine of medicines entered in the State Register of Medicines, medical products entered in the State Register of medical equipment and medical products and/or those put into circulation in accordance with the technical regulation and conformity assessment legislation, and (3) transactions involving supply (transfer) of medicines and medical products imported and/or supplied on the customs territory of Ukraine in accordance with this Clause, within the framework of the healthcare system. Such exemptions are applicable provided the importation and/or supply of medicines and medical products are made under agreements with specialized procurement organizations listed in the Law of Ukraine “On Public Procurement.”

Concerning the Restructuring of Loan Obligations from Foreign Currency into Hryvnia

On 9 April 2015 the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Introduction of Amendments to Tax Code of Ukraine Concerning Loan Obligations,” which took effect as of 7 May 2015.
The Law stipulates that revenues received by an individual borrower when the creditor cancels (forgives) a portion of debt in the amount of the difference between the principal amount of debt under the financial loan in foreign currency, as determined on the basis of the official exchange rate set by the National Bank of Ukraine as of the day the currency of such loan obligation is converted from foreign currency into Hryvnia, and the amount of such debt as determined on the basis of the official exchange rate set by the National Bank of Ukraine as of 1 January 2014, shall be exempt from individual income tax.