Page 53 - Mazars Central and Eastern European tax guide 2023

Ukraine Under the general rule, the place of the supply of services For the period of martial law, a 7% VAT rate is applied to the
is the place where the supplier is registered. However,
import and supply of gasoline, diesel fuel, and similar
there are some exceptions (e.g., for consulting, marketing, goods to the territory of Ukraine.
information services, software development, etc.). The other indirect tax in Ukraine is excise tax. The excisable
The reverse-charge mechanism applies to services goods are spirits, beer, tobacco, petroleum, cars, trailers,
provided by a non-resident. motorcycles, and electricity.
Mazars Ukraine LLC A so-called "Google tax" of 20% is imposed The excise tax on gasoline, diesel fuel, and liquefied gas
15A Kyrylivska Street, on the provision of electronic services by non-residents is abolished till 01 July 2023.
Kyiv, 04080, to individuals within the customs territory of Ukraine.
Ukraine Ukrainian VAT is administrated through an electronic Personal income tax / Social security system
Phone: +38 044 390 71 07 system. The taxpayer is entitled to issue VAT invoices for
www.mazars.ua The flat PIT rate of 18% is imposed on both active income
the amount within a certain cap.
(e.g., employment, benefits in kind) and passive income
(e.g., interest, royalties, investment income) for residents
VAT options in and non-residents.
Ukraine Applicable / limits Tax residents of Ukraine pay PIT on their worldwide income.
Corporate taxes and other direct taxes Companies with annual income below UAH 40 million Distance selling No Non-residents pay PIT on their Ukrainian source income.
(approx. EUR 1.03 million) are entitled not to apply any tax Dividends are subject to 9% PIT, except for dividends
In Ukraine, the standard CIT rate of 18% applies to the adjustments (except for tax losses carried forward). Call-off stock No distributed by Ukrainian CIT payers, which are subject
worldwide income of resident companies. A 15% withholding tax (WHT) is imposed on passive VAT group registration No to 5% PIT. For the specific types of passive income, the tax
For non-resident companies (and their permanent income (dividends, interest, royalties) paid to non- rates of 5% and 0% may apply.
establishments (PE) in Ukraine) CIT is only payable residents. Cash accounting – yearly ü There is a temporary military levy (until the completion
on income received from Ukrainian sources. Payment for services is WHT-exempt (except for amount in EUR (approx.) of the military reform) at a rate of 1.5% that applies to all
Taxable profit is calculated as financial profit before engineering). WHT is also levied on other payments to non- Import VAT deferment No income subject to PIT.
tax (reported in P&L statement according to Ukrainian residents, e.g., constructive dividends, alienation of shares Local reverse charge Imported services During martial law, the income and gains of combatants
GAAP or IFRS) adjusted with certain tax adjustments in Ukrainian asset-rich companies, freight, etc. and individuals living in combat areas received from
(depreciation, accruals and provisions, thin capitalization, A lower WHT rate or exemption may apply under a double Option for taxation charitable organizations are PIT exempt. Also, financial
tax losses, etc.). tax treaty (DTT). Ukraine has a wide DTT network (there letting of real estate ü support provided to law enforcement officers and military
Thin capitalization rules apply to loans granted by any non- are more than 70). A "look-through approach" is available. personnel is not subject to military levy.
residents (the debt-to-equity ratio is 3.5), with exceptions The application of DTT benefits is restricted by a "principal supply of used real estate No A reduced PIT rate of 5% applies to salaries of individuals
for certain financial and leasing entities. purpose test". VAT registration Revenue of UAH 1 million employed by Diia City residents, to remuneration of gig-
Tax losses can be carried forward indefinitely with TP rules apply to controlled transactions (CT) with threshold (approx. EUR 26) over experts and to author’s remuneration.
limitations for large taxpayers. Loss carry back is not related non-resident parties, and with non-related 12 consecutive months. Most forms of active income fall under the
permitted. scope of social security contribution (SSC)
foreign companies (registered in low-tax jurisdictions, There are VAT exemptions (tobacco products, gold) and with an employer’s contribution of 22%; there
Transfer pricing in Ukraine tax transparent). The TP rules apply only if the temporary VAT incentives for the supply of certain goods is no employee’s contribution. The minimum monthly SSC
company's annual revenue exceeds UAH 150 million and services (electric vehicles, scrap metals, equipment for
Arm’s length principle ü Since 2013 (approx. EUR 3.9 million), and it had CT with the same renewable energy, etc.). is UAH 1,474 (approx. EUR 38), the maximum monthly SSC
Documentation liability ü Since 2013 counterparty for more than UAH 10 million (approx. is UAH 22,110 (approx. EUR 566).

APA ü Applicable to large taxpayers, EUR 257 K).
Undistributed profits of controlled foreign companies
no cases in practice.
First filed in 2023 for (CFC) are taxed at 18% at the level of Ukrainian company
Country-by-Country FY ending in 2022 or individual (subject to exemptions). The first reporting
liability ü For MNE with income ≥ EUR 750
million (+ other conditions). period is 2022. Wage related taxes in Ukraine Minimum wage Average wage
Master file-local file May first be requested in 2023 Non-residents operating in Ukraine through PE are in private sector
for FY ending in 2021
(OECD BEPS 13) ü For MNE with income ≥ EUR required to register with the tax authorities and file their Exchange rate UAH/EUR 30.92 in EUR in UAH in EUR in UAH
applicable 50 million. CPT returns. 217 6,700 469 14,500
Penalty Sole traders, companies with annual income below UAH
7.8 million (approx. EUR 201 K) and agricultural producers
3% of the value of controlled may apply for the simplified taxation system. Total wage cost 265 122% 572 122%
transactions, but not more Social contribution tax 48 22% 103 22%
lack of documentation ü than UAH 536,800 (approx. A special beneficial tax regime, Diia City, is available for
EUR 13,781) for the 2023 IT companies and start-ups. Gross salary 217 100% 469 100%
reporting year. Personal income tax 39 18% 84 18%
25% of tax underpayment; VAT and other indirect taxes
50% in case of recurrent Military tax 3 2% 7 2%
tax shortage ü violation within 1095 days As a non-EU member, Ukraine did not implement the
+ late payment interest. EU VAT Directives. Net salary 175 80% 378 80%
Direct/indirect or common The standard VAT rate is 20% (14% for the import of some
control; (formalized or de-
Related parties 25% < facto); transactions with non- agricultural products; 7% for the supply of pharmaceuticals
related non-residents may fall and some services; 0% for the export of goods, the import
under TP control. of certain goods and services). Denys Shendryk
Safe harbours No – The VAT registration threshold is revenue of UAH 1 million Partner, Head of Tax and Legal Services
Level of attention paid by Tax (approx. EUR 26 K) over 12 consecutive months. Voluntary Phone: +38 044 390 71 07
Authority 7/10 registration is available. E-mail: denys.shendryk@mazars.ua

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