Vat refund

The procedure for calculating refundable VAT amounts remained mainly intact. For calculation purposes, clarifications were provided with regard to the inclusion of VAT amounts paid to the government and in case of imported services in the claimed VAT refund. A part of refundable VAT amount may be set off against future tax liabilities, as may be requested by tax payers. Please note that:

- The VAT refund may be suspended in case the VAT amounts claimed for refund are challenged in administrative or court proceedings;

- The state’s liability for failure to timely refund VAT is introduced at the rate of 120% of the interest rate set by the National Bank of Ukraine;

- Additionally, the automated VAT refund procedure is introduced (based on the findings of a desk tax audit), provided that tax payers meet the criteria envisaged by the Code.

Unified State Register of VAT Invoices

- VAT invoices in the amount of more than UAH 1 million (from 1 January 2011) and more than UAH 10,000 (from 1 January 2012) must be registered with the Unified State Register;

- Non-availability of VAT invoices disallows purchasers from recognizing VAT input, whilst sellers are obliged to recognize VAT output;

 Any discrepancy between data contained in a VAT invoice and the Unified State Register constitutes a ground for an unscheduled tax audit of both the seller and the purchaser.

Personal Income Tax

Effective date

 Section IV of the Code that deals with personal income tax will take effect on 01 January 2011 (except for certain provisions which will become effective later on).

Tax rate

The Code reintroduced a progressive tax rate. The 15 % rate is applicable to income not exceeding 10 minimum monthly salaries (presently, the minimum monthly salary is UAH 922). Any income in excess of the limit is taxed at 17%. Certain categories of citizens (e.g. miners) will still be subject to 10% PIT.

Taxation of non-residents

- Although the draft Tax Code amended the procedure for determining the tax residence status, the adopted Tax Code introduced no changes to the existing tax residence criteria;

- Income earned by non-residents is taxed according to the procedure applicable to residents (i.e. at 15% or 17%, depending on the amount of income). In view of the above, foreign nationals will not have to apply for a tax residence certificate.

Taxation of specific incomes and transactions

Taxation of sales proceeds from movable and immovable property

- The applicable tax rate depends on the number of sales transactions performed within a year and valuation of the property object;

- The tax rates applicable to sales revenues (as opposed to gains) are as follows:

- 0% - if immovable property is sold within a year for the first time;

- 1% - applies to the first sale of movable property (passenger cars, motor bikes, motor scooters);

- 5% - applies to the sale of more than one immovable property objects and to the sale of movable property, including the second and each subsequent sale of cars, motor bikes and motor scooters;

- 15% / 17% - applies to the sale (exchange) of immovable property by non-resident individuals.

Taxation of dividends

- The tax rate applicable to dividends was decreased from 15% to 5%.