On 31 July 2014 Verkhovna Rada approved Law #4309a "On amendments to Tax Code of Ukraine and other legislative acts (on improvement of certain provisions)" (Law).
The law was signed by the President on 1 August 2014 and officially published on 2 August 2014. The amendments envisaged by the Law come in force on 4 August 2014 (except for some provisions coming in force later).
Below we list the most important changes.
Corporate profit tax
- 10% tax rate on transactions with securities is abolished. Such transactions will be taxed at statutory 18% rate.
- Profit exemption has been abolished for:
- qualified companies operating in the hotel business
- companies producing energy solely from renewable sources
- Interest income of investment funds accrued on its assets will be taxed at 18% rate (currently exempted).
- Threshold for obligatory VAT registration increased to 1,000,000 UAH (now - 300,000 UAH).
- Law crucially changed the determination of the VAT base:
- for goods/services - not lower than the purchase price of goods/services
- for fixed assets - not lower than book value (as of the beginning of the reporting period) or usual price (in case of absence of accounting)
- The moment for recognition of VAT credit upon import of services has been changed. The right for VAT credit under reverse-charge will arise from the moment of the registration of VAT invoice in the Unified register of VAT invoices (i.e. within the same reporting period with the recognition of VAT liabilities).
- Electronic VAT administration system is introduced:
- all taxpayers shall submit tax reports electronically
- all VAT invoices are subject to obligatory registration in the Unified register of VAT invoices, in electronic form (hard copies are no longer used)
- the register of the issued and received tax invoices shall be maintained and submitted in electronic form only
- the tax invoice may be issued by a seller only within the amount calculated by a special formula.
- Special accounts within the electronic administration system are introduced for the purpose of VAT payments ("VAT accounts"):
- VAT accounts are opened automatically based on the register sent by the tax authorities, in the bank to be yet determined by the Cabinet of Ministers
- the mode of VAT account implies that funds are used solely for the purposes of remittance of respective amounts of VAT due to the budget and on a special account of the agricultural enterprises working on a special tax regime. In fact, funds in the VAT accounts are withdrawn from the taxpayers' turnover
- the VAT due shall be remitted automatically from the VAT account based on the register to be sent by the tax authority to the authorized bank.
- VAT budgetary refund procedure is significantly simplified:
- tax audits of the budgetary refunds are cancelled
- criteria for the automatic budgetary refund are optimized and simplified, in particular, it can be applied not only by the exporters, but also by those who invested in fixed assets more than UAH 3,000,000 during last 12 months
- the right for VAT refund can now be claimed in the same reporting month where excess of VAT input arises, i.e. based on the VAT return of the reporting period.
- The indicated amendments re VAT shall come in force from 1 January 2015.
- Excise rates for the range of goods have been increased:
- raw tobacco and tobacco waste
- cigarettes with filters and without filters
- tobacco and tobacco substitutes.
- The excise duty on alternative motor fuel is introduced until 1 January 2015.
Natural resources duty
- The reduced rates for the product sharing agreements on oil and condensate are abolished.
- As a temporary measure, until 1 January 2015 the rates of the natural resources duty for the extraction of certain mineral resources, namely, ferrous, nonferrous and alloying metals, oil and condensates, natural gas, are increased.
- Temporarily, until 1 January 2015 the new obligatory payment is introduced - the military duty.
- The rate of the duty is 1,5%.
- The tax base:
- other compensatory or incentive payments and remunerations accrued to the taxpayer in connection with employment and under civil law agreements
- winning in state or non-state lottery
- winnings in gambling.
- The duty is imposed on individuals being:
- residents, and
- non-residents who receive income from sources in Ukraine which is subject to military duty.
- Persons responsible for the calculation and withholding of the duty:
- tax agent (employer), or
- individual himself/herself - in case income is received not from the tax agent (for example, from a non-resident).