Value-Added Tax

TAXATION SYSTEM IN UKRAINE

A tax (from the Latin taxo; "I estimate") is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many administrative divisions. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.

In Ukraine all taxes or levies are national or local. Tax collection procedures and tax incentives may be established only by law. According to the Tax Code in Ukraine now exist 23 taxes and levies, 18 of which are national and 5 local.

The main taxes and payments are:

• Corporate Income Tax (CIT) (also known as Corporate profits tax-CPT);
• Value-Added Tax (VAT);
• Single contribution to mandatory social security fund;
• Employer contributions.

Other principal taxes include Personal Income Tax (PIT), land tax, royalties for the extraction of oil, natural gas and gas condensate, and the charge for using local symbols.

Corporate profit taxation

Ukrainian entities as well as foreign entities doing business in Ukraine are liable for corporate profit tax. Currently, the standard rate is 23% from the clean income (i.e. gross income). However, small legal entities in Ukraine may choose the simplified taxation.

Note: Simplified taxation is impossible for non-residents.

Legal entities incorporated and operating under Ukrainian law (even with 100% of foreign capital) and which carry out business in Ukraine are considered as domestic companies and treated as tax residents. In that case they are taxable on their worldwide income.
Legal entities that are incorporated abroad and operating under the laws of another country are foreign tax residents and are taxable on two sources of income:

• Income from carrying out business activities on the territory of Ukraine through a permanent establishment (PE);
• Profit from sources in Ukraine (the profit arises from activities performed or property located in Ukraine, in case of royalties, interest, dividends and other passive income, the income is paid by a resident of Ukraine).

Separate tax rules apply to insurance companies, operations with securities and agricultural enterprises.

Value-Added Tax

In Ukraine value-added tax (VAT) is known as podatok na dodanu vartist (PDV). According to the Ukrainian legislation, VAT is levied at a rate of 20% and is imposed on:

• Domestic sales of goods and/or services,
• Imported goods or services.

The general rule is that the taxable amount is defined on the basis of the contractual value of the goods or services supplied.

Note: Currently, for exported goods or services the VAT rate is zero.

The model of VAT in Ukraine is the input-output one. VAT-registered persons deduct the VAT paid on their inputs from the VAT charged on their sales and account for the difference to the tax authorities.

Дата добавления: 2015-11-14