Introduction to taxes

Modern Business Management, 2020

TAX

UKRAINE
SYSTEM IN
 01 INTRO
PIT, CIT - DEFINITION
SHARE

02 INCOME

TAX-DEDUCTIBLE COSTS
03
NON-TAX-DEDUCTIBLE
EXPENSES
AGENDA
INCOME AND
04 DEDUCTIONS FROM
INCOME, TAX BASE

05 TAX RATES

LUMP-SUM FORMS
06
OF TAXATION
01 INTRODUCTION

❏ The organization responsible for tax policy in Ukraine: State Fiscal Service, operating

under the Ministry of Finance of Ukraine.

❏ Taxation is legally regulated by the Taxation Code of Ukraine.

❏ The calendar year serves as a fiscal year in Ukraine.

❏ The most important sources of tax revenue in Ukraine are unified social security

contributions, value added tax, individual income tax.

❏ In 2017 taxes collected formed 23% of GDP at 969,654 million UAH.

01 CIT AND PIT DEFINITION
Corporate income tax (CIT):

It applies to taxable profits earned by resident entities in Ukraine and abroad and non-residents with a

PE (Private Entrepreneur) in Ukraine. Resident entities are taxed on their worldwide income.

Non-resident entities are taxed on their Ukrainian-sourced income. Ukraine's standard CIT rate is 18%.

Personal Income Tax (PIT):

Residents are taxed on their worldwide income, with respect to the restrictions set forth by any

applicable double tax treaty (DTT). Non-residents are subject to Ukrainian tax only in respect of their

Ukrainian-source income (this includes income received by the individual from their employer, either

resident or non-resident, in relation to employment exercised in Ukraine).The same tax rates generally

apply to tax residents and non-residents (with certain exceptions). Ukraine's standard PIT rate is 18%.
01 CIT AND PIT ROLE

❏ Ukraine's state budget revenue in 2019 (million UAH): 1 026 131,8

❏ Ukraine's state budget revenue in 2019 (million Euro): 30 006,61

❏ PIT = 11.01% (109954,0 UAN, mln) of the state budget of Ukraine as for 2019

❏ CIT = 10.73% (107086,3 UAN, mln) of the state budget of Ukraine as for 2019
01 UKRAINIAN BUDGET 2019
02 INCOME

Taxable income is the amount of income used to calculate how much tax an individual or a
company owes to the government in a given tax year. It is generally described as adjusted
gross income (which is your total income, known as “gross income,” minus any deductions or
exemptions allowed in that tax year).

Taxable income includes wages, salaries, bonuses, and tips, as well as investment income
and unearned income.
04 TAX-DEDUCTIONS FROM INCOME

Premiums for Ukrainian voluntary long-term

Charitable donations to the Ukrainian
life insurance or non-state pension insurance
01 charities and non-profitable organizations, 02 for the benefit of a taxpayer and their
in an amount not exceeding 4 percent of
dependents. In 2019 a deductible limit is
the taxpayer's taxable income
UAH2,690.00 per month for a taxpayer and
UAH1,345.00 for dependents

Limited amount of mortgage

Expenses on education Cost related to a child interests, provided it is used
03 04 adoption – in a full
05
of the taxpayer and to finance the acquisition of a
their dependents amount taxpayer’s main place of
residence
03 TAX-DEDUCTIBLE EXPENSES

A tax deductible expense is any expense that is considered “ordinary, necessary, and reasonable”
and that helps a business to generate income.

01 INSURANCE 02 PROPERTY

03 RENT

04 ELECTRICITY 05 MAINTENANCE
03 NON-DEDUCTIBLE EXPENSES

PENALTIES & POLITICAL

01 FINES
02 CONTRIBUTION

LEGAL FEES AND

03 EXPENSES 04 CLOTHES
04 TAX BASE
The following benefits received by an individual are specifically exempted from inclusion in the TAX BASE:

income received in the alimony received from principal amount of deposit

01 form of interest on 02 residents 03 with Ukrainian banks and
investments non-banking financial
institutions

shares received from the amount of credit compensation of

04 capitalization of retained 05 received by an individual 06 apartment and car rental
earnings costs for employees

amounts received from income of a private

07 employers for certain 08 entrepreneur who has
types of medical opted into the simplified
treatment and services system of taxation
05 TAX RATES

tax rate, both bor residents and non-residents

18% *taxable income received from abroad is also subject to a rate of 18
percent.

1.5% military tax

n/a wealth tax

22% SSC paid monthly by employers per each employee

n/a capital tax

0-5-18% gift tax

06 LUMP-SUM FORMS OF TAXATION

❏ Paying the same amount in taxes

❏ A kind of regressive tax

❏ It requires no record on expenses and no primary documents

❏ Important for small vendors

06 LUMP-SUM FORMS OF TAXATION

❏ State Committee for Entrepreneurship

Development

❏ Law of Ukraine «On Amendments to the

Decree of Cabinet of Ministers of Ukraine
«On Personal Income Tax».

❏ Approved on February 13, 1998

Tax Rate/ Conditions Advantages Disadvantages
Amount to Apply

License, up -Physical -Exempts from paying: -Does not exempt from paying
to 200 UAH entities -Pay-roll tax VAT, thus, still need to maintain
-No hired labor -Deductions and fees of bookkeeping records;
roads -No strict list of activities that
-Value of sales
-The trade tax can be taxed;
during the last
-Contributions like Funds for
12 months -Limit on value of sales
Social protection of the
<119,000UAH provides an incentive to
Population, on mandatory
understate them;
social security, etc.
-Limit on hired labor brings an
-Exempts from keeping
incentive to hire people
mandatory accounting records –
unofficially for cash.
simplifies the accounting system;
-Incomes covered by the fixed
tax are not included to the
income report for the end of the
year.
THANK YOU FOR
ATTENTION!