SPECIAL WARTIME TAX REGIME INTRODUCED IN UKRAINE

Legal alerts

SPECIAL WARTIME TAX REGIME INTRODUCED IN UKRAINE

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.

Related practices

Posted on April 5, 2022

AVELLUM advises Ministry of Finance of Ukraine on export loan from French Government

AVELLUM acted as the Ukrainian legal counsel to the Ministry of Finance of Ukraine in connection with a EUR37.6 million export loan provided under the framework agreement between the Governments of Ukraine and France. The funds will be directed towards purchasing and supplying rails from Saarstahl-Rail, a French manufacturer of rails, to Ukrainian Railways. This […]

Posted on March 1, 2024

The Antimonopoly Committee of Ukraine updates the Merger Regulation

The Antimonopoly Committee of Ukraine (“AMC”) has updated the Merger Regulation. This step is part of a more significant reform of Ukrainian antitrust law (find more information about the reform here). Below, we are sharing a brief overview of the main changes in the Ukrainian merger control landscape brought about by the antitrust reform and […]

Posted on February 28, 2024
Subscribe to our Newsletter
Back
Search results: