The Tax Code defines the payers of taxes and duties in Ukraine. The following organizations and individuals are considered to be the taxpayers:
Ukrainian state taxes:
Any Ukraine-sourced income of a non-resident company is subject to a withholding tax (“WHT”) in Ukraine at a rate of 15%. Such income includes, inter alia, dividends, interest, royalties, capital gains, lease payments, brokerage and agency commission, etc. Income received as a consideration for goods/services/works provided to a resident is mostly WHT-exempt. Different WHT rates apply to certain types of non-residents’ income (e.g., freight, insurance premiums paid abroad and advertising fees).
Taxation of IT companies VAT: For the period until 1 January 2023 all supplies of software within the customs territory of Ukraine are exempt from VAT.
In terms of the TCU, supplies of software includes the following:
However, the wording of this exemption is somewhat ambiguous, thus resulting in different interpretation by the taxpayers and tax authorities.
Accounting Financial statements of the Ukrainian entities must be prepared either based on the Ukrainian National Accounting Standards (the “Ukrainian GAAP”, developed on the basis of IFRS back in 1999) or IFRS.
In accordance with the Ukrainian legislation public interest entities (Public Joint Stock companies), banks, insurance companies, some other companies operating on financial markets are required to prepare financial statements in accordance with IFRS. The Cabinet of Ministers of Ukraine may provide additional list of entities subject to reporting under IFRS. All other entities may voluntarily choose IFRS as their reporting framework.
The Law on Audit Activity requires that public stock companies, legal entities – issuers of bonds, professional participants of stock exchange market, financial institutions and other business entities, financial reporting of which has to be made officially public, excluding institutions and organizations which are totally financed by the state budget, are required to have their entity and consolidated financial statements audited. The statutory audit requirement also applies to:
The State Fiscal Service of Ukraine (hereinafter, the “tax authorities”) is responsible for levying taxes and duties, and have the right to perform tax audits. It may perform both scheduled and unscheduled tax audits of taxpayers. Starting 2015, the tax authorities in Ukraine may also check the correctness of the financial accounting of the taxpayer.
Types of tax audits include:
The frequency of scheduled regular audits depends on the tax risk level of the company’s activities:
The Tax Code of Ukraine defined new sources of exempt from taxation income (by Article 157).
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