On July 18, 2024, the Government of Ukraine supported bill No. 11416, which envisages an increase in taxes amounting to UAH 140 billion in the state budget through amendments to the Tax Code of Ukraine and other legislative acts.
The Analytical Center of the Union prepared an explanation and conclusion regarding the bill supported by the Government:
- increase in the military tax rate from 1.5% to 5%;
- establishment of the obligation to pay the military tax:
- by legal entities in the amount of 1% of income from any activity;
- by sole proprietors single tax payers of categories I, II, IV in the amount of 5%;
- by sole proprietors single tax payers of category III in the amount of 1.0% of income;
- by legal and natural persons who conduct transactions for the purchase of banking metals from banks — 5% of the value of these metals;
- for those who trade in jewelry made of gold, platinum, and precious stones — 30% of the value of the sold items;
- by individuals acquiring ownership rights to passenger cars — 15% of the value of cars (excluding persons with disabilities as per the law);
- from the sale of real estate — 5% of income;
- by mobile communication operators in the amount of 5%;
- establishment of the obligation for monthly advance payments of corporate income tax by taxpayers engaged in retail trade of fuel in the amount of 0.5 minimum wages, established by law as of January 1 of the reporting (tax) year for gas stations selling fuel, calculated per 1 cubic meter of fuel storage tanks;
- establishment of a specific excise tax rate of 0.1 euros per liter of beverage;
- taxation of imported goods with VAT, the value of which does not exceed 150 euros. At the same time, imported goods, the total value of which does not exceed 45 euros for one recipient – a natural person, will not be taxed;
- granting the controlling authority the right to decide on restoring a taxpayer’s ability to fulfill their tax obligations if the taxpayer submits tax returns for two consecutive reporting (tax) periods, which indicate their business activity, registers tax/excise invoices, pays tax liabilities, and conducts export-import operations;
- introduction of the obligation for taxpayers to conduct an inventory of fixed assets, inventories, funds, withdrawal of balances of inventories, and cash at the request of the controlling authority during an audit;
- establishment of the obligation for large taxpayers, VAT payers, excise tax payers, and taxpayers who have acquired the status of electronic residents (e-residents) to correspond with the controlling authorities via electronic communication in electronic form through the electronic cabinet;
- granting the possibility, for the duration of martial law, for rural, settlement, and city councils to decide on setting a minimum tax base for personal income tax for the respective territory, but not less than the minimum wage.
Conclusion:
- The introduced bill includes tax rate increases, the introduction of new taxes, and the complication of tax reporting conditions.
- Increasing the powers of controlling authorities without proper reform.
- The provisions of the government bill do not contain any measures that would increase the efficiency of controlling authorities’ work (automation, responsibility, transparency, anti-corruption measures, and simplification for business (informing, simplification, prevention of fines and penalties).
