Tatiana Derun
National University of Food Technologies
The general rate of
individual income tax in Ukraine is a flat 15%.
Income paid to nonresident individuals is subject to a
30% rate, as is income from gambling and winnings. Ukraine-source income (from
a Ukrainian or foreign employer) received by a foreign employee who does not
qualify as a Ukraine tax resident will be taxed at the 30% rate unless a tax
residence certificate is received from the Ukraine tax authorities, i.e. until
the time the individual qualifies as a Ukrainian tax resident. An exception to
the double rate on nonresidents exists in respect of dividends, royalties and
interest payments, which are taxed at the same rates and under the same rules
as those applicable to resident individuals.
Resident individuals are taxable on their worldwide
income. Income is taxable irrespective of whether it is received in cash or in
kind. Nonresidents are taxed on income received from Ukrainian sources.
An individual is tax resident if he/she has a
permanent home in Ukraine. If an
individual has a permanent home in more than 1 country, he/she is considered a
tax resident of the country with which he/she has closer personal and economic
ties. If it is impossible to determine residence under either of the preceding
tests, an individual is a tax resident if he/she is present in Ukraine for at
least 183 days cumulatively during a calendar year (to separately include the
day of arrival and departure). If tax residence still cannot be determined, the
individual is a tax resident if he/she has Ukrainian citizenship or if the
individual "self recognises" tax residence. Foreign citizens who are
considered tax residents in Ukraine are taxed in the same manner and under the
same rules as Ukrainian resident
citizens.
Taxable income includes employment income (including
most employment benefits); proceeds from trading or professional activities
(including proceeds from intellectual property); proceeds from the alienation
of property; gifts and prizes; insurance payments; and contributions to
unqualified pension plans made in favour of a taxpayer by another
person/employer.
Although taxed at the 15% personal income tax rate,
financial results from investment asset transactions (e.g. securities,
corporate rights) are accounted for separately from other personal income. Tax
losses from such transactions cannot be offset against taxable income from
other sources (and vice versa) and must be carried forward to offset future
investment income.
Limited deductions may be taken for such items as
mortgage interest, contributions to registered charities, educational expenses
for the taxpayer and his/her immediate relatives and medical expenses. A
special annex to the tax return must be submitted to claim the deductions.
Income earned from the sale of a house, flat
(including part of a flat), room or village house (including a land plot) is
not subject to tax if the sale takes place once during the year and the total
size of the house, flat or apartment does not exceed 100 square metres (a 1%
tax on the amount received attributable to the excess area applies). A 5% rate
applies regardless of the area if the taxpayer makes more than 1 sale per year.
Land tax is imposed on owners/users, with the rate
determined according to the location and use of the land. Land under settlement
that has an assessable value is taxed at 1% of the estimated value. Otherwise,
the rate starts at UAH 0.075 per square metre in towns populated by less than
200 and increases up to UAH 1.05 per square metre in cities of over a million.
For regional centres, zone coefficients from 1.2 to 3 are applied. Agricultural
land is taxed at rates of 0.03% to 0.1% of the estimated value.
Inheritances (real estate, chattels, securities,
corporate rights, etc.) are taxable at the following rates: 15% if the
recipient is not a relative or is a nonresident; 5% if the recipient is a
resident relative not classified as a close relative; and 0% when the recipient
is a resident classified as a close relative (i.e. parent, spouse, parents of
spouse or children).
Subject to monthly caps, employee contributions
(withheld by the employer) are as follows: 0.5% of salary falling below the
annual cost of living (COL) amount and 2% of salary at or above COL is paid to
the state pension fund; 0.5% on salary below COL and 1% on salary at or above
COL is paid to the temporary disability state social security fund; and 0.6% of
salary is paid to the state unemployment fund.
Ukraine Tax year – Ukrainian tax year is the calendar year.
Employers and
other taxable entities are considered the tax agents of individuals and are
responsible for withholding personal income tax and state pension and social
security contributions from salaries and other types of remuneration. These
taxes must be remitted within 20 calendar days following the reporting date. If
income is paid in kind, the tax agent must remit tax to the government on the
following banking day after the payment has been made. It is the tax agent's
responsibility to make timely payments of withholding taxes on salaries and
file personal income tax reports on a quarterly basis. However, to claim a tax
credit in respect of certain expenses incurred during the calendar year, individual
taxpayers must file an annual tax return. Further, if an individual receives
taxable income from sources other than from a tax agent (e.g. foreign income),
he/she is required to file a personal income tax return by 1 April of the year
following the reporting year.
Late payments are
subject to interest of 120% of the effective National Bank discount rate
calculated on a daily basis. Additional penalties apply for understatements
(ranging from 10% to 50% of the understated liability). If an employer fails to
withhold personal income tax while paying salary, a penalty equal to 200% of
the amount of tax due will be imposed. The same penalty applies to
underpayments of social security contributions.
References:
http://wnu-ukraine.com/about-ukraine/how-to-do-business-in-ukraine/taxation/
http://www.ukraine-arabia.ae/investment/taxation/
http://www.worldwide-tax.com/ukraine/ukraine_taxes.asp