Taxation in Ukraine
The organization responsible for tax policy in Ukraine is the State Fiscal Service, operating under the Ministry of Finance of Ukraine. Taxation is legally regulated by the Taxation Code of Ukraine.[1] The calendar year serves as a fiscal year in Ukraine.[2] The most important sources of tax revenue in Ukraine are unified social security contributions, value added tax, individual income tax. In 2017 taxes collected formed 23% of GDP at 969,654 million UAH.[3]
Types of taxes
Individual Income tax
Individual Income Tax is derived from income of Ukraine citizens and other individuals living in the country. Liability to personal income tax is mainly determined by criterion of residency. A person who is tax resident in Ukraine is required to pay personal income tax from his worldwide income, which is also called unlimited liability. Tax residency is determined by several factors, if an individual carries out one of them, they are considered tax resident. The conditions are following: residency in Ukraine, permanent residency in Ukraine in case of living in another country, location of centre of vital interest in case of having permanent residency in more than one country and location, where individual resides at least 183 days in a year, in case none of the above is applicable. A person who is not considered resident, have only limited liability, so they have to pay taxes only from their incomes in Ukraine. Individual income tax in Ukraine is proportional tax. It can be 0%, 5%, 9%, 18% and it depends on type of income. For example tax rate for employment income is 18%. In some cases rate of the tax depends on status of the taxpayer. For instance income from selling real estate, is taxed at a rate of 5% for residents and 18% for non-residents. In addition, on every individual’s income, which is taxable by Individual Income Tax, there is also imposed military tax, whose tax rate is 1.5%.[4]
Inheritance and Gift Tax
The rates of inheritance and gift tax in Ukraine depends on tax residency status of testate/giver and inheritor/recipient. In the case of gift tax, there are 4 options. If the recipient is a resident of Ukraine and first civil degree relative of giver, who is also resident of the country, the tax rate is 0%. If the recipient is resident and giver is resident and anyone but first civil degree relative, the tax rate is 5%. If the recipient is resident and giver is non-resident, the tax rate is 18%. If recipient is non-resident and receives some possession in Ukraine, the tax rate is also 18%. In every case recipient also have to pay military tax, which is at 1.5%, as on every other taxable income.[4]
Corporate Income Tax
In case of Corporate Income Tax, taxation again depends on residency status. To be considered resident, legal entity must be registered in Ukraine and it must operate under Ukrainian laws. If these conditions are met, the legal entity is considered resident and their tax base for Corporate Income Tax is their worldwide income. Non-residents pay the tax only from income with origin in Ukraine, but not every kind of income is subject to the tax. Permanent establishment of non-residents are considered separate entity. Tax rate differs between these categories. For residents the tax rate is 18% with few exceptions. For example, insurance companies have to pay 0 to 3% of their income as a special corporate tax, that lowers taxable profit.[5]
Value added tax
Value added tax is levied on production and import of goods and services and the exports. There are 3 rates, at which the tax is paid. The tax rate of most common of them, standard rate, is 20%. There are also two special rates. First of them is 7 % and is levied on pharmaceutics and other healthcare products. The second one is 0% and it is levied on exports and auxiliary services.[6]
Excise duty
Excise duty in Ukraine is mainly imposed on alcohol, tobacco products, motor vehicles and different types of fuels and electricity. For some goods the tax is counted as a percentage of price, in other cases as a price per unit. Sometimes both options can be combined.[6]
Withholding taxes
There also several withholding taxes in Ukraine. The tax rate for dividends, royalties and dividends paid to non-residents, both companies and individuals, is 15%. The unified social security contribution that are companies obliged to pay for their employees is equal to 22% of employee’s salary.[6]
Real Estate Tax
Real Estate Tax is composed of 3 parts: land fee, immovable property tax and transport tax. Land fee can be further divided into land tax and land rent. Taxpayers of land tax are owners or users of land, both companies and individuals. Taxpayers of land rent, are renters of the land from state or communities. Land tax rate ranges between 1% and 5% of value of the land. Land rent can be at most 12% of the normative monetary value. Immovable property tax is levied on real estate, both commercial and residential, and it is paid by both companies and individuals. The land is excluded from the tax. The tax rate can be set at most at 1.5% of minimum wage for every square meter of the property. Owners of the cars, the value of which is more than 1.2 million UAH and which are used less than 5 years, are required to pay transport tax. The cost is 25 000 UAH for one car.[6]
Other Taxes
Other taxes collected in Ukraine include customs taxes, different types of rental duty and environmental tax. Customs taxes are mainly levied on imports and the rates mainly vary between 0% and 10%, although in some cases they can be higher. Rental duty taxes natural resources. Within its scope falls for instance extraction of mineral resources or using of radio sequences. Environmental tax taxes pollutants leaked into water and air and disposal of waste. The rates differ, depending on many different factors.[6]
References
- ↑ "Tax Code of Ukraine" (PDF). Retrieved 11 May 2018.
- ↑ "Article 3 of Budgetary code of Ukraine". Budgetary code of Ukraine. Retrieved 11 May 2018.
- ↑ "Government Revenue in Ukraine". Retrieved 11 May 2018.
- 1 2 "Individual Income Tax in Ukraine". Retrieved 11 May 2018.
- ↑ "Corporate Income Tax in Ukraine". Retrieved 11 May 2018.
- 1 2 3 4 5 "Taxation and Investment in Ukraine 2017" (PDF). Deloitte. Retrieved 11 May 2018.