1
April 2014 is the effective date of the Law of Ukraine «On
Prevention of Financial Catastrophe and Creating Preconditions for
Economic Growth in Ukraine». Please see below a brief account of
main amendments brought by this law in the area of tax.
- PIT*
-
The taxation of deposits (to the extent to which the annual interest
exceeds 17 living wages**);
-
The taxation of pensions (to the extent to which a monthly pension
exceeds UAH 10,000);
-
The introduction of a new progressive tax system:
- No.Rate
Yearly taxable band in living wages 1. 15% Less than 204 2. 20% 204-3963. 25% More than 396
A
tax agent (payer of income) withholds 15% tax on passive income at
source. The rest of the tax is payable by the taxpayer himself upon
the submission of the annual tax return.
- Corporate income tax
-
The 18% rate becomes permanent. The transitions to the 17% rate in
2015 and the 16% rate in 2016 are abolished.
- VAT
-
The rate of 20 % becomes permanent. The transition to the 17% rate in
2015 is abolished;
-
The introduction of the reduced rate of 7% for pharmaceuticals and
medical products (not taxable in the past).
As
a
result
of
the
inaccuracies
of
the
law,
there
is a risk of the importation of pharmaceuticals and medical products
being subject to 20%, not 7% rate;
-
Reducing the tax-free threshold from 300 to 150 euros for the import
of goods transferred via international mail;
-
Limitation till 1 October, 2014 for (i) first-tier
intermediaries (buying cereal crops directly from the manufacturers)
and (ii) manufactures cultivating leased land in their right to cash
refund related to the exportation of cereal crops (by virtue of
a tax exemption covering certain transactions).
- Pension duty***
-
The levying of pension duty on currency purchases made either in cash
and non-cash form by both individuals and legal entities. The duty
rate will be 0.5% of the amount of the transaction. The duty is
supposed to be calculated and withheld by banks conducting relevant
transactions.
- Other
-
Increasing the rates of excise duty on alcoholic beverages, beer,
tobacco products, vehicles, etc.;
-
Increasing the rates of land tax for the land plots in respect of
which governmental (normative monetary) evaluation has not been
carried out;
-
Extending the application of real estate tax by changing the basis of
assessment from the living area of dwelling to its total area;
-
Increasing the rates of radio frequency use charge and subsoil use
charge.
The
majority of the aforementioned amendments has been already in effect
since 1 April 2014. The amendments related to PIT taxation will
come into force on 1 July 2014.
**
- as of January 1, 2014, a living wage for an able-bodied person
amounts to UAH 1,218;
***
- duty on state mandatory pension insurance.
Photo
from http://www.kyivpost.com
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