The Minister of Finance has presented the working version of amendments to the tax regulations to the Parliamentary committee for tax and customs policy

9/7/16

Today, Minister of Finance Oleksandr Danyliuk has presented the working version of amendments to the Tax Code of Ukraine to the Parliamentary committee for tax and customs policy.

The working group consisting of MPs, public experts as well as representatives of business, the State Fiscal Service and the Ministry of Finance is finalizing the document. It is planned to submit the final version to the Cabinet of Ministers by the end of September.

The main objective of the amendments is to simplify tax administration, reduce manipulation opportunities at the State Fiscal Service and pressure on business.

The key amendments include five-year tax breaks for new small businesses, transparent VAT refund through a unified register and transfer of data bases from the State Fiscal Service to the Ministry of Finance. The liquidation of the tax police is proposed in a separate draft law which is now being agreed with relevant bodies.

Key fact about the proposed amendments:

Tax administration
Objectives:
- increased transparency
- reducing possibilities for the abuse of office at the State Fiscal Service
Key initiatives:
- enhancing the methodological role of the Ministry of Finance (priority shall be given to summarizing advice to taxpayers)
- transferring methodological functions to the Ministry of Finance (tax administration and registration procedures, technical maintenance of data bases)
- delegating administration functions for data bases from the State Fiscal Service to the Ministry of Finance or its entitled state enterprises
- development of electronic services (virtual offices of taxpayers)

Corporate profit tax:

Objectives:
- further development of small businesses including re-investment of funds generated through tax cuts, fostering start ups
- attracting investments, ensuring complete ROI for new fixed assets (which have been put into operation) within 4 years
- possibility to take into account irrecoverable debts when calculation the profit tax
Key initiatives:
- tax break for new businesses (5 years). New businesses should be able to choose what taxation mode they prefer – standard taxation procedure with the tax break or simplified system with the single tax
- faster depreciation (possibility to achieve ROI for new fixed assets within 4 years)
- profit tax exemption for small business which comply with set criteria
- implementation of faster depreciation for fixed asset belonging to groups 3-8, 16
- calculation of a new tax difference to provide legal reasons for the reduction of the financial result before taxes by the amount of irrecoverable debts

VAT

Objectives:
- transparent refund
- preventing manipulations and misuse of office
- reduction of overpayments on the electronic accounts of taxpayers
Key initiatives:
- implementation of a unified public register for VAT refund application
- implementation of a mandatory feature – HS code of product for all kinds of goods which must be stated in the tax bills
- refund of overpaid VAT amount to taxpayers solely on the SEA account from which the amount concerned was transferred to the state budget
- prolongation of the term for the registration of tax bills and calculation of corrections in these tax bills in the Single Register of Tax Bills (from 180 to 365 calendar days)
- tax credit shall be granted to the legal successors of entities which were reorganized through a merger or incorporation into other entities

Income tax

Objectives:
- legalization of business activity
- making business activity simpler
Key initiatives:
- new system for the taxation of income from business activity (as per draft law No. 3357)
- expansion of the list of expenses of private entrepreneurs (rent fee for land, excise tax on goods, depreciation)

Other amendments

Objectives:
- removal of administrative barriers for the development of selected branches of economy
- liquidation of the tax police
Key initiatives:
- tax exemption for raw tobacco material
- removal of small amounts of fuels from the electronic administration system (under 2 liters)
- clarifying the list of expenses of extractive industries which are not considered in the value of mineral raw materials (packaging and sorting costs).

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