To ensure balanced budget revenues in 2019 and to fulfill the Association Agreement between Ukraine, on the one side, and the European Union, the European Atomic Energy Community and their member states, on the other side, the Parliament of Ukraine has approved the draft law “On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine on the Improvement of Administration and Review of Some of the Tax and Charge Rates” in the first reading.
The draft law will be prepared for the second reading taking into account proposals made by the members of Parliament.
What’s it about?
The draft law is set to:
• increase the excise tax rate for tobacco products by 9% starting from July 1, 2019 (forecast index of consumer prices in 2018 році);
• stimulate companies to reduce the contamination of the environment and to gradually adjust greenhouse gas emission fee rates to the EU level as well as to increase – starting from January 1, 2019 – the ecological tax for CO2 emission from immovable facilities from UAH 0.41 per ton to UAH 10 per ton with the its gradual further increase to UAH 30 per ton in 2023 (annual increase by UAH 5 per ton);
• increase the rent fee for the use of sub-soil resources in the oil and condensate production by 2% and by 0.8% for iron ore production;
• increase the rent fee for the special use of forest resources by 50%;
• ensure the display of the actual turnover of fuel by their storage location in the Electronic Fuel Sale Administration System (hereafter referred to as SEARP), in order to improve control over the turnover of fuel (presently, the fuel turnover is controlled for respective business entities);
• ensure the comparison of the SEARP data with the data of fuel and level meters installed in fuel containers with the breakdown by HS codes, excise storage facilities and entities managing excise storage facilities;
• implement a licensing procedure for the activities of all business entities engaged in the production, storage, wholesale and retail sale of fuel;
• establish control over the use of fuel for aviation transport (aviation petrol and fuel for jet engines), to set liability for the misuse of this fuel (in case of misuse, the increasing 10fold co-efficient shall be applied);
• implement the option for the tracing of spirit turnover in the SEARP;
• implement the zero rate of the excise tax on ethanol used for the production of nutrition vinegar, perfume and cosmetic products, technical products;
• establish control over the use of ethanol be enacting a list of requirements to entities receiving ethanol charged with the zero excise rate and to stipulate that these entities shall be equipped with ethanol consumption meters and production volume meters whose data shall be transferred to the controlling bodies on daily basis;
• stipulate that amendments in the excise tax administration for fuel and ethanol enter into force on July 1, 2019, while the liability for the violation of the respective regulations enters into force on October 1, 2019;
• stipulate that the import of goods to Ukraine with the total invoice value of more than EUR 100 which are shipped to one consignee, who is a private person, as one shipment from one shipper sent by international mail or as one international express shipment sent by an express company from one shipper shall be subject to VAT at the rate set by the Tax Code of Ukraine. To apply this regulation, it is proposed to set a transition period from January 1, 2019 till June 30, 2019 (1st half of 2019) when the VAT shall be charged on goods whose total invoice value is over EUR 150.
What’s the benefit?
The adoption of this law will contribute to balanced state budget revenues in 2019 and improve the administration of taxes and charges.