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Ukraine Tax Laws and Tax System













Ukraine Income Taxes


Last updated, February 2014.
(previous 2008 article by www.interlegal.com.ua)

Taxpayers are:
  • Residents receiving either income originating from the territory of Ukraine or foreign income.
  • Non-residents receiving income originating from the territory of Ukraine.
A person is a tax resident in Ukraine if he has a place of residence in Ukraine.
If the person has a permanent place of residence in Ukraine and another country, the person is deemed to be resident of Ukraine if his centre of vital interests is in Ukraine, or if he stays in Ukraine at least 183 days during the tax year(calendar year).
This is the general rule which is subject to any features provided by the Agreement of avoidance of double taxation.

Ukraine Personal income tax rates for 2014 are 0%, 1%, 5%, 15%,17% ,30%.

Income Tax rate
It is the standard tax rate. This rate usually applies to employment income of up to 10 times the minimum monthly salary, rental income, investment income, in the event of inheritance by any heir from a non-resident testator, income from the sale of an object of movable property. 15%
Employment income exceeding 10 times the minimum monthly income. Sale of immovable assets by a non-residence. Inheritance tax when the recipient is non-resident. 17%
This rate applies to income from prizes and winnings of residents; to income from prizes and winnings of non-residents originating from Ukraine 30%
This rate applies to income from the sale of more than one object of real estate property during a calendar year;
In the event of inheritance by the heirs other than the testator's family members of the first degree of kindred.
5%
This rate applies to income received by a taxpayer from the first sale of a house, apartment or room not more than once, during a reporting year if the total area of the object exceeds 100 square meters. The subject to taxation is the part of income proportional to the amount of exceeds 1%
This rate applies to inheritance from the heirs who are the family members of the first degree of kindred;
To income received by a taxpayer from the sale of a house, apartment or room not more than once during a reporting year, if the total surface area of the house, apartment or room does not exceed 100 square meters
0%


Personal Tax Deduction in Ukraine

A resident taxpayer may claim a deduction from annual taxable income for a limited amount of documented expenses incurred in the reporting year for:
  • Secondary professional or higher education of the taxpayer and his family members;
  • Donations or charitable contributions to non-profit organizations;
  • Cost of paid services with regard to medical treatment of the taxpayer or a member of his family of the first degree of kindred.


Corporate profit taxation in Ukraine Income Taxes

Ukrainian entities and foreign entities doing business in Ukraine through a permanent establishment are liable for corporate profit tax.

The Corporate Tax Law provides for the taxation of the following persons:

  • Legal entities organized under the laws of Ukraine and which carry out business in Ukraine;
  • Foreign entities which get a profit from sources in Ukraine (the profit arises from activities performed or property located in Ukraine, in case of dividends, interest, royalties and other passive income, the income is paid by a resident of Ukraine)
  • Non-resident legal entities which carry out business activities on the territory of Ukraine through a permanent establishment;
The corporate Tax Law established a basic corporate tax rate of 18% in 2014.
Software industry entities pay only 5% tax.
This is a standard rate from the net income for the entities and natural persons - private entrepreneurs.
Insurance companies and agricultural producers pay reduced corporate tax rate subject to terms.
Small legal entities may choose the simplified taxation paying up to 5% of their turnover.
There are tax incentives for companies performing approved investments in priority sectors as defined by law.
Approved investments are exempt from corporate income tax in the years 2014 to 2017. For the years 2018 to 2022 the corporate income tax rate is 8%.


Deduction of Tax at Source

Payments to non-residents are subject to tax withholding rates as follows:
  • Dividend - 15%
  • Interest - 15%
  • Royalties - 15%
  • Technical Services 15%
Note: payments are subject to double tax treaties when relevant .


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