Ukraine: 2011 Changes in the tax legislation

In 2011, changes in the Ukrainian tax legislation have been made with regard to corporate income tax, VAT, excise tax and land fees. Moreover, tax guidelines have been introduced which shall summarize the joint stance of the tax authorities on controversial tax legislation.

Corporate income tax changes.
As of 1 August 2011, the useful life of intangible assets is deemed to be 10 years if no other useful life is specified in the title document. Furthermore, sale and repurchase agreements (REPO) will be subject to CIT in accordance with a special procedure.

Changes to VAT rules.

  • Business entities are entitled to a voluntary registration as VAT payers immediately after the state registration provided that their authorized capital or book value of assets (fixed assets, intangible assets, inventories) exceeds the threshold of UAH 300,000 (approx EUR 27,000). Thereby a 12 months waiting period may be avoided.
  •  The date of input VAT deductibility in case of importation of services is specified. Thus, in case of the supply of services by a non-resident within the customs territory of Ukraine, input VAT is deductible by the service recipient at the time, when the reverse charge VAT liability is paid / accrued (ie in the reporting period following that in which the respective output VAT was reported, thus creating a cash flow gap).

Excise tax changes.
As of 1 January 2012, a zero excise tax rate for oil products produced in Ukraine and used as raw material in the chemical industry will be introduced. The chemical industry manufacturers will issue a tax promissory note for the amount of excise tax prior to the receipt of the raw material. The procedure for applying this tax benefit is described as well.

Land fee changes.
Effective 1 January 2012, the tax on land plots within communities (cities, towns, etc) on which small airports are situated shall amount to 25% of the base tax rate (which varies depending on the community).

Introduction of tax guidelines.
The Law introduces tax guidelines which shall summarize the joint stance of the tax authorities on controversial tax legislation. The guidelines will be based on tax consultations that concern a considerable number of taxpayers or a significant amount of tax liabilities.

Andriy Servetnyk
aservetnyk@deloitte.ua
                                                            
                                                             
                                                        
                                                            
                                                                                 

Barbara Krüglstein
bkrueglstein@deloitte.at

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