The Verkhovna Rada of Ukraine has urgently adopted several laws relating to taxation on March 2, 2015. However, significant changes to the draft laws were introduced in the voting process, and the final text of the laws passed by the Verkhovna Rada of Ukraine is not yet officially available. However, given the significant impact that these laws have on business, we draw your attention to key points arising from the published texts of the draft laws or from reports in the press.

All newly adopted laws must be signed by the President of Ukraine and officially published.

Increased rates of rent for the use of mineral resources

The Draft Law on Amendments to articles 165 and 252 of the Tax Code of Ukraine, registered by the Verkhovna Rada of Ukraine under number 2213.

The Draft Law includes the following main changes:

  • The increase of rent payment from 20% to 70% for the extraction of natural gas extracted from deposits of up to 5000 meters sold by NJSC “Naftogas Ukraine” for the needs of the population. This means that changes shall not influence the private extractors selling extracted natural gas to companies other than NJSC “Naftogas Ukraine” and for other purposes. Their rent rate will remain at 55%;
  • Ability to use adjustment coefficient of 0.55 for rent payment with respect to the extraction of natural gas produced not for the needs of the population, including during the pilot operation (geological studies), which is listed in the State Register of oil and gas wells after August 1, 2014 (for two years after the date of entering such wells to said Register). It should be noted that the adjustment coefficient is applied regardless of the form of ownership of extractor, customers or consumers.

It is envisaged that these changes will take effect from the date the Law is published.

Changes to the State Budget for 2015

The Draft Law on amending the Law of Ukraine on State budget for 2015, registered by the Verkhovna Rada of Ukraine under number 2147.

With the Draft Law, in particular, budget revenues of Ukraine increased compared to the previous version of the state budget by 4.6%, while expenses of the state budget of Ukraine increased by 6.6%. The Draft Law also provides for a reduction of GDP in 2015 to 5.5% with inflation at 26.5%.

Reducing the amount of single social contribution

Draft Law on Amendments to Chapter VIII “Transitional Provisions” of the Law of Ukraine “On the collection and accounting of a single contribution for obligatory state social insurance” (to reduce the burden on the payroll), registered by the Verkhovna Rada of Ukraine under number 1863.

The Draft Law, in particular, specifies criteria for the possibility of reducing the rates of single social contribution in the calculation of wages (income) to individuals and/or in the calculation of remuneration under the civil contracts by applying the reduction coefficient of 0.4 in 2015, provided the taxpayer has simultaneously fulfilled certain conditions:

  • The accrual base of the single contribution per one insured person in the reporting month increased by 20 percent or more compared with average monthly accrual base of the single contribution for 2014 per one insured person.
  • After applying the coefficient for the average payment per insured person in the reporting month it will be not less than the average payment per insured person in 2014.
  • The number of insured persons in the reporting month does not exceed 200% of the average number of insured persons in 2014.

The Draft Law also provides for the use of a coefficient of 0.6 as of January 1, 2016 in the calculation of wages (income) to individuals and/or in the calculation of remuneration under the civil contracts to single social contribution rates established by the Law of Ukraine “On the collection and accounting of a single contribution for obligatory state social insurance,” with certain restrictions.

Thus, in comparison with the previous attempt to reduce the size of a single social contribution by applying the reduction coefficient, which was introduced by the Law on “Reform of Compulsory State Social Insurance and Legalization of Payroll” №77 of December 28, 2014, the Draft Law provides for amendments to special laws governing the collection and accounting of a single social contribution which prevents competition by the provisions of the laws. Additionally, it should be noted that the Draft Law introduced a formula to calculate the coefficient by the taxpayers independently, something that was missing in the previous version changes.