Overview of Major Tax Law Amendments Effective from

Tax & Legal Alert

1 January 2014

In 2013, the Verkhovna Rada of Ukraine accepted a number of laws that introduce significant changes to taxation. Given below is a brief overview of the major tax law amendments effective from 1 January 2014.

Tax rate changes

  • The VAT rate reduction to 17% is postponed until 1 January 2015. In 2014, a standard VAT rate of 20% will apply
  • The CIT rate will be reduced from 19% to 18% in 2014, from 18% to 17% in 2015, and from 17% to 16% in 2016 
  • Excise tax rates on spirits and alcohol have been increased 

Tax differences reporting

  • Corporate income tax payers shall report in detail permanent and temporary differences in 2014
  • The report includes tax differences arising from product sales proceeds, other operating income, other income, income, cost of goods sold, other operating expenses, other expenses
  • Companies are required to report tax differences either quarterly or annually, depending on the companies’ reporting period in 2014. Companies still have to submit the respective reports to statistics authorities
    VAT on grain transactions.
  • The VAT exemption for certain grain transactions, as was introduced previously by the Transitional Provisions of the Tax Code to have effect only by 1 January 2014, is now included in the General Provisions of the Tax Code as part of the VAT exempt transactions section
  • Export of the aforementioned certain grain crops by agricultural producers and by companies that purchased grain directly from such producers will not be subject to VAT exemption and, therefore, will be taxed at 0%

Other amendments

  • The excise tax on trading in shares issued by public joint stock companies is cancelled
  • The VAT exemption on natural gas import into the customs territory of Ukraine has been cancelled
  • Losses from transactions with securities accumulated as at 1 January 2014 can not be used to calculate profit/loss for 2014
  • The VAT exemption of supply of scrap metal and raw skin or leather is extended until 1 January 2015
  • Supply of paper and cardboard for recycling (waste paper) is VAT exempt until 1 January 2015
  • A useful life of intangible assets is defined for cases where title documents do not specify duration of the right to use the respective assets. The useful life will be set by a taxpayer but cannot be less than two and more than ten years of continuous operation (previously, the useful life was ten years only)
  • Registration of VAT and single tax payers no longer requires obtaining the respective certificates. The registration will be performed by way of making records to the state registers of taxpayers
  • Companies that have a positive tax history will be able to benefit from a streamlined VAT refund procedure
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