On 17 March 2022, Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine Regarding Effective Operation of Legal Norms During Martial Law” No. 2120-IX, dated 15 March 2022, entered into force. It was further amended by of Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine Regarding Improvement of Legislation During Martial Law” No. 2142-IX dated 24 March 2022. The laws introduced several significant tax changes during the martial law.
Special tax regime
Business entities with annual income up to UAH10bn may opt to apply unified tax at a preferential 2% rate instead of corporate income tax and VAT. This regime is applicable from 1 April 2022 until end of the martial law. Please note that VAT registration of taxpayers that opted for special wartime tax regime is suspended.
Taxpayers subject to unified tax are exempt from VAT on import of foreign goods starting from 1 April 2022 until end of the martial law. Customs duties do not apply to import of goods by business entities (with certain exceptions).
Taxation of fuel supply
VAT rate on domestic supplies and imports of motor gasoline, liquefied gas, and heavy distillates is reduced to 7%. Excise tax on such products is reduced to 0%.
Charitable activities
Individuals may deduct charitable contributions of up to 16% of their total annual taxable income (previously the deduction was limited at 4% of annual income).
Certain categories of charitable contributions by individuals engaged in independent professional activities and individual entrepreneurs may be deductible against their business and professional income.
Value added tax and excise tax
VAT would not accrue on (1) goods that were destroyed or lost due to the force majeure and (2) goods and services supplied to ensure the defence of Ukraine.
Excise tax would not apply to goods (1) transferred to the Armed Forces of Ukraine, volunteer units of local communities, health care institutions, etc., (2) expropriated for the needs of the state, or (3) provided as humanitarian aid.
Environmental tax, land tax and real estate tax
Environmental tax, land tax and real estate tax will not apply to assets located in the war zone or temporarily occupied territories.
Unified social contribution
Individual entrepreneurs, individuals carrying out independent professional activities are exempt from the unified social contribution.
Individual entrepreneurs of II and III groups of unified tax payers and legal entities – payers of the unified tax of III group may opt not to pay the unified social contribution for their mobilised employees.
