Tax Laws of Ukraine

VAT. Basic tax rates remain unchanged – imports of domestic goods and supplies are subject to 20% VAT, while export transactions are subject to a 0% tax. The VAT refund procedure also remains largely unchanged. Important legislative changes concern grain supplies (the VAT exemption for domestic supplies of cereals and their export will be abolished) and the special VAT regime for agricultural producers (the amount of VAT collected now depends on the specialisation of the company). In the case of corporation tax, taxation again depends on residence status. To be considered resident, the legal entity must be registered in Ukraine and operate in accordance with Ukrainian law. If these conditions are met, the corporation is considered resident and its corporate tax base is its worldwide income. Non-residents pay tax only from income originating in Ukraine, but not all types of income are subject to tax. Permanent establishments of non-residents are treated as a separate entity. The tax rate differs between these categories. For residents, the tax rate is 18%, with a few exceptions. For example, insurance companies have to pay 0-3% of their income in the form of a special corporate income tax, which reduces taxable profit.

[5] Ukraine operates according to a civil law system based on a Pandect system, in which the main sources of legislation are codified laws. It also has a well-structured hierarchy of normative actions. In general, the precedents of Ukrainian courts are used for practical interpretations of Ukrainian legislation, but they are not recognized as a source of law. In addition, Ukrainian courts may issue different opinions, decisions and interpretations of the same law. In addition, Ukrainian courts lack extensive experience in comprehensive cross-border settlement of commercial disputes. Many of the procedural remedies to enforce and protect legal claims typically found in Western jurisdictions are not available in Ukraine. For 2022, the corporate tax rate on general active business income is 18%. As a general rule, all expenses are deductible if they represent expenses according to accounting principles, unless they are defined as limited deductibility expenses under the tax code. Some adjustments may also be required in accordance with transfer pricing laws. Expenses are tax deductible in accordance with Ukrainian Accounting Standards (UAS) or International Financial Reporting Standards (IFRS). A SARL is a company constituted by one or more persons (legal or natural persons) with statutory capital, which is divided into participations (without issue of shares) according to its articles of association. The founding capital of the LLC is formed by its founders or members in cash, securities or other assets contributed during the first six months from the date of registration of the State, unless otherwise provided by law or the articles of association of the LLC.

There are no restrictions on the amount of contributions from founders/members of the LLC and no restriction on the number of founders/members. In general, Ukraine has not yet adopted tax laws for the economic approach of the employer. The commentaries on the OECD Model Convention have no legal status in Ukraine. This year, a number of changes to Ukraine`s tax laws entered into force. Despite heated discussions on several versions of Ukraine`s tax reform, the adopted law did not fundamentally change the basic tax rules. As of January 1, 2022, foreign legal entities established under the laws of other countries, but with an effective administrative seat in Ukraine, will generally be recognized as taxpaying companies in Ukraine. Is there a quota, system or labour market test? Is there an expedited procedure that could speed up obtaining a visa or work permit? In case of immigration violation, a Ukrainian company may find it difficult to obtain other TRPs for future foreign specialists. A person could receive penalties and/or be deported/restricted for a period of time. A special tax rate is set for freight income (6%). Dividends – A 15% withholding tax is levied on dividends paid to non-residents, unless the rate is reduced by a tax treaty.

Interest – A 15% withholding tax is levied on interest paid to non-residents, unless the rate is reduced by a tax treaty. Royalties – A 15% withholding tax is levied on royalties paid to non-residents, unless the rate is reduced by a tax treaty. Tax on Branch Settlement Transfers – Although the Ukrainian Corporate Income Tax Law does not explicitly require a tax on branch transfers, Ukrainian tax authorities tend to require the payment of a 15% tax on the repatriation of branch gains after tax (unless treaty protection is available). Foreigners are not allowed to work in Ukraine until the Ukrainian entity/representative office has obtained the appropriate work permit (WP)/service card. Non-profit transactions carried out by civil society associations and/or non-profit organisations in 2022 will not be taken into account in the mandatory registration as a taxpayer. For VAT purposes, the tax base should be determined on the basis of market value, taking into account all mandatory State taxes. In some cases, the tax base should be determined on the basis of normal prices, residual value, etc. A service shall be considered to be provided on the territory of Ukraine if i.) the telecommunications provider is based in Ukraine and/or ii.) the customer is identified by the mobile SIM card code of a Ukrainian telecommunications operator (+380); and/or iii.) the means of communication are located in Ukraine; and/or iv.) Ukrainian payment address, details of a Ukrainian bank account, etc. are provided. What happens if the transferee enters the land or jurisdiction before the assignment begins? c) The maximum number of days that business travelers are allowed to spend in Ukraine is limited by the same rules that apply to tourists with similar national passports. How are estimates/upfront payments/withholding taxes processed in your country/jurisdiction? Example: Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), etc. Can a short-term permit/business visa be transferred to a long-term permit in Ukraine? The property tax consists of 3 parts: property tax, property tax and transport tax.

The basic fee can be divided into property tax and basic pension. Property taxpayers are owners or users of land, both businesses and individuals. Property rent taxpayers are tenants of Crown or municipal land. The property tax rate is between 1% and 5% of the value of the property. The floor rent can be up to a maximum of 12% of the normative monetary value. Property taxes are levied on real estate, commercial and residential property, and are paid by businesses and individuals. Property is excluded from tax. The tax rate can be set at a maximum of 1.5% of the minimum wage for each square meter of the property. Owners of cars worth more than UAH 1.2 million and which are used for less than 5 years, must pay the transport tax. The cost is 25,000 UAH for one car.

[7] Under Ukrainian law, companies may be incorporated in one of the following forms: If a third party resident in Ukraine who is also appointed as a statutory administrator in connection with his or her employment in a group company (i.e. Member of the Board of Directors of a group company domiciled in Ukraine), trigger a personal tax liability in Ukraine, Although no separate remuneration/remuneration is paid for his work as a member of the board of directors? Stamp duty – No property tax – A property tax of up to 1% is levied on the appraised value of the property (or on a fixed amount per hectare if the value cannot be correctly estimated). Property taxes are levied based on the location of the property and how it is used. Social security contributions – The salary or similar allowance paid to domestic workers is subject to the following social security taxes: Social Security Fund (1.4%); unemployment fund (1.6%); pension funds (33.2%); and insurance against accidents at work and occupational diseases (0.66/13.6%). Transfer tax – No, but see “Other” below for government levies and mandatory contributions to pension funds triggered by real estate or vehicle transfers. Other – Businesses are subject to licensing and patent fees, as well as local taxes. Corporate employers must pay an annual municipal tax, which is limited to UAH 1.7 per employee per month (provided that the tax does not exceed 10% of the annual wage fund). The disposal of real estate (1%) and vehicles (5%) is subject to a state levy, while compulsory pension fund contributions of 1% (land and buildings) and 3% (vehicles) apply. The purchase of foreign currency on the interbank foreign exchange market is subject to a contribution of 0.5% to the Ukrainian pension fund. Under Ukrainian law, a representative office does not have an independent legal status separate from its foreign sponsor or parent company.

It can be considered an “arm” of the parent company, and the parent company is responsible for the obligations of its representative office.

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