On 31 July Verkhovna Rada (Parliament) of Ukraine adopted the Law “On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine” (hereinafter - the "New Law").
What the Law says
The New Law, among other legislative updates, introduces a new tax which is designed to raise additional money for Ukrainian defense needs (hereinafter - the "Defense Tax"). The measure is set to last until 1 January 2015.
According to the New Law, the Defense Tax will be established at the rate of 1.5% and will apply only to the income of individual taxpayers in the form of salary payments, other earnings under civil and labor contracts, prizes and winnings.
Additionally, on 24 July 2014 Verkhovna Rada (Parliament) of Ukraine has also registered the Draft Law “On Amendments to the Tax Code of Ukraine Regarding Tax on the Gross Income of Large Enterprises to Ensure the Defense Capacity of Ukraine” (hereinafter - the "Draft Law") that proposes introducing the Defense Tax for large enterprises.
According to the Draft Law the Defense Tax would be established at 0.25% of the received gross income of a legal entity if the following two criteria are met simultaneously:
- more than 250 people are employed by the legal entity and
- the annual income of the legal entity exceeds EUR 50 mln.
The legal entity registered as a payer of the Defense Tax would be subject to monthly reporting and payment obligations.