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| Photo from
http://hdwallpaperszon.com
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Co-author Andriy Kuleba
(junior
associate of Lavrynovych and Partners Law Firm)
Dear
readers,
take our warmest wishes for upcoming New Year and Christmas!
Below
is a brief account of what will be expected since 1 January 2014
in the area of Ukrainian taxation (so-called New Year Tax Gifts 2014).
Tax Novelties since 1 January 2014
No
|
After
Novelties Take Effect
|
Before
Novelties Take Effect
|
Possible
Consequences
|
VAT
|
|||
1
|
The
rate of VAT lowers to 17%*.
*-
It
is expected by some commentators that the Ukrainian Parliament
will change the law so as to avoid the reduction of the current
20% VAT rate in 2014.
|
The
rate of VAT constituted 20%.
|
Favorable
implications. Theoretically, it can cause the prices for VAT
taxable goods and services to fall down by 2.5% with the resulting
increase of total demand.
|
2
|
No
requirement on the indication of the details of a customs
declaration in the VAT invoice issued with regard to imported
goods.
|
A
VAT invoice issued in respect of imported goods must include
the details of the relevant customs declaration.
|
The
simplification of the procedure.
|
3
|
The
supplies of grain crops (wheat, rye, barley, oats, corn, rice,
sorgo, buckwheat, panic grass) and industrial crops (seeds of rape
and sunflower) become VAT taxable.
|
Temporary
exemption from VAT.
|
The
exporters of the grain will run into a “headache” called
“VAT refund”.
|
4
|
The
supplies and imports of waste and scrap of ferrous and non-ferrous
metals and the wood (certain items) become VAT taxable.
|
Temporary
exemption from VAT.
|
Slightly
forgotten problems for the exporters of metallurgical products
related to the refund of VAT paid to the suppliers of the scrap
and waste metals. It is not a rare occasion that the latter resort
to non-transparent chains of supply in which the tax authorities
are keen to discover “fake nature” deals.
|
5
|
Possibility
to file for VAT registration by means of electronic communication
(provided that there is an agreement executed between the
taxable person and the tax authority on the recognition of the
electronic documents).
|
No
such possibility.
|
The
simplification of the VAT registration.
|
6
|
The
introduction of 5 calendar days term for the carrying out of
in-office (cameral) audits of tax returns of VAT taxable persons
with positive tax history for the purposes of automatic VAT
refund.
To
have the positive tax history means to meet a number of
criteria over 36 successive months.
|
In-office
(cameral) audits for the purposes of the automatic VAT refund were
to be carried out within 20 calendar days.
|
The
acceleration of the VAT refund procedure for the taxable persons
having positive tax history.
|
7
|
The
cessation of the possibility of receiving VAT refund through the
issue of financial treasury bills.
|
VAT
refund was possible through the issue of financial treasury bills.
|
The
VAT taxable persons lose the alternative way of VAT refund.
|
Corporate
Income Tax
|
|||
8
|
The
rate of corporate income tax lowers to 16%*.
*- It
is expected by some commentators that the Ukrainian Parliament
will change the law so as to avoid the reduction of the current
19% corporate income tax rate in 2014.
|
The
rate of corporate income tax constituted 19%.
|
Positive
implications. Reduced tax burden for enterprises.
|
Excise
Tax
|
|||
9
|
The
rate of excise tax increases to UAH 32 for 1 liter of
100% spirits.
|
The
rate of excise tax constituted UAH 29 for 1 liter of 100%
spirits.
|
The
increase in prices of alcoholic drinks.
|
10
|
The
specific rate of excise tax for non-filtered cigarettes rises to
UAH 77.50 per 1 thousand pieces, and for filtered
cigarettes – to UAH 173.20.
|
The
specific rate of excise tax for non-filtered cigarettes
constituted UAH 72.70 per 1 thousand pieces, and for
filtered cigarettes – UAH 162.60.
|
The
increase in prices of cigarettes.
|
Administration
|
|||
11
|
The
introduction of documental unscheduled electronic audits for
taxpayers using simplified tax system.
Such
audits are carried out exclusively at the instance of the taxpayer
with the minor level of tax risk. The audits are called
“electronic” considering that the documents for the audits are
provided in the electronic form.
|
No
such possibility.
|
This
brings the unique possibility of having your tax calculations
audited on a free-of-charge basis. The taxpayer applies to the tax
authority and provides it with all required documents for the
purposes of such an audit. The tax authority carries out the
audit. Should tax irregularities be detected, the notice of
assessment is not immediately issued. The taxpayer is given a time
during which he is able to made the required adjustments himself
(self-correction) without the imposition of 25 (50)% fine. At
the same time, this does not exempt him from paying a 3 (5)%
fine (for the self-correction of tax mistakes) as well as daily
default penalty. If the taxpayer fails to correct the mistakes,
the separate tax audit can be carried out with the resulting
notice of assessment.
|
12
|
The
Methodology of the Accounting of Temporary and Permanent Tax
Differences comes into force (Accounting Standard “Tax
Differences” approved by the order of the Ministry of Finance of
Ukraine No. 27 dated 25 January 2011).
|
No
such Methodology.
|
Additional
requirements to the financial statements. Financial statements for
accounting periods of 2014 should be prepared with the
consideration of tax differences.
|
13
|
The
applications on the voluntary VAT registration and on the
selection of the simplified tax system regime may be filed
directly with the Registrar of Companies at the moment of the
state registration of a legal entity or a sole proprietor.
|
No
such possibility.
|
More
facile procedure for VAT registration and accession to simplified
tax system regime.
|
Other
Issues
|
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14
|
The
actual rates of ecological tax equal to 100% of the rates
stipulated by the Tax Code of Ukraine.
|
The
actual rates of ecological tax constituted 75% of the rates
stipulated by the Tax Code of Ukraine.
|
Additional
tax burden for ecological tax payers.
|
15
|
Renewal
of real estate tax for individuals.
|
The
real estate tax has already come into effect for individuals and
legal entities. Nevertheless, since August 2013 the
application of the tax to individuals has been suspended.
|
Additional
tax burden for individuals holding residential real estate.
|
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