The draft “Law on Amendments to the Tax Code of Ukraine and Some Other Legislative Acts of Ukraine” was registered by the Verkhovna Rada of Ukraine on 22 July 2014 under number 4309а.
The draft Law provides for the following major changes to the taxation laws, specifically:
With respect to corporate income tax:
- to limit assessment of corporate income tax on joint investment institutes at preferential rates;
- to abolish taxation of income earned from operations with securities and derivatives at a reduced rate (10 percent);
- to abolish income tax exemption for entities carrying out hotel activities; electric power enterprises generating electricity exclusively from renewable energy sources;
- to abolish income tax exemption for fuel and energy enterprises and economic entities dealing with water and heat supply and water drainage within the amount of actual costs provided for by the investment programs.
With respect to value added tax:
- to limit the number of agricultural producers that may enjoy a special value added tax regime to agricultural producers having a volume of transactions not exceeding UAH 20 million and an area of agricultural land less than one thousand hectares;
- to establish that the agricultural producers enjoying a special value added tax regime must pay 20 percent of the value added tax amount to the State Budget of Ukraine; at the same time 80 percent of the value added tax amount will not be payable to the State Budget of Ukraine and will be accumulated by agricultural producers in order to reimburse tax amounts paid (assessed) on the cost of production factors to suppliers;
- to apply the general value added taxation regime to major agricultural producers from 1 January 2015;
- to extend VAT exemption regime on export of grain and industrial crops until 1 January 2015;
- to abolish VAT exemption regime on supplies of timber, fuel wood, and wood waste;
- to abolish a zero tax rate on passenger transportation by Intercity+ high-speed trains.
With respect to excise tax:
- to assign beverages classified under codes UKT ZED 2103903000 and 210690, and containing 8.5 percent and higher ethanol, to alcoholic beverages; to set the excise tax rate equal to the rate applied to vodka– UAH 70.53 per one liter of 100 percent alcohol for such beverages and to label such beverages with excise stamps;
- to introduce tax on alternative fuels at the rate of €139 per 1000 kg.
With respect to payment for the use of subsoil:
- to change the tax base for natural gas sold not for the needs of the population, namely to establish that the tax base is not the average customs value of imported natural gas as it is now, but the ceiling (maximum) level price for natural gas sold to industrial customers which is set by the NERC;
- to change the procedure for assessing tax liabilities on payment for the use of subsoil for mining purposes;
- to increase the rate of payment for subsoil use for natural gas sold not for the needs of the population up to 70%, regardless of its extraction depth (instead of 28% for gas from the deposits lying at a depth of up to 5 km, and 15% - from the deposits lying at a depth of more than 5 km);
- to change the terms of assessing payment for subsoil use on oil and gas condensate, namely to set the rates of payment expressed in value (monetary) terms - UAH 5,261 per ton and UAH 2,160 per ton respectively (instead of interest rates of 18%, 39 % and 42% depending on the depth of deposits), and to introduce the adjusting factor to such rates (which will take into account the change in the average price of one barrel of Urals oil established at the close of oil trading session on the London Stock Exchange as compared with a reference oil price).
With respect to fixed agricultural tax:
- to exclude major agricultural producers (agricultural producers having a volume of transactions exceeding UAH 20 million and an area of agricultural land exceeding one thousand hectares) from the list of fixed agricultural tax payers.