Below you will find a brief overview of the most significant points.
The final abolition of controls on VAT
The wording
of the Tax Code of Ukraine (TCU) has been clarified to avoid ambiguous
interpretation by the tax authorities making it clear that TCU applies to
income tax and not VAT
The thresholds for declaring controlled transactions have been increased
This latest
amendment establishes the following limits:
• Annual taxpayer income from all activities
exceeds 50 mln. UAH. (In the current edition - 20 mln. USD.)
• The volume of transactions with a single
counterparty exceeds 5 mln. UAH. (Currently the threshold is 1 mln. UAH and
applied to each individual group transactions).
(It should be noted that the amendment also
simplifies the application of the rules for calculating threshold TCU and
identifies those transactions that fall under the TCU control.)
Changing penalties
The amendment changes the penalties for failing to report on controlled transactions and TCU documentation. Comparisons are shown in this table:
Offence |
Old Penalty |
Amended Penalty |
Failure to report controlled transactions |
100 times minimum wage |
300 times minimum wage |
Omission of controlled transactions from report |
5% of transaction value |
1% of the transactions omitted from the report, but not more than 300 times minimum wage for all undeclared transactions |
Failure to submit full TCU documentation |
3% of the transaction, but not more than 200 times minimum wage for all undeclared transactions |
3% of the transaction, but not more than 200 times minimum wage for all controlled transactions carried out during the relevant tax accounting year |
Submission of application for declaration
The amendment does away with the requirement to submit an annex to the declaration of income tax on controlled transactions (introduced on 1st January 2015) as its purpose was not clear.
Special
rules for the analysis of
export-import operations of commodities
The amendment makes the Cabinet of
Ministers of Ukraine (CMU) responsible for determining the list of commodities
to which the special rules for analysis of export-import operations, and for
commodity exchanges, apply.
The amendment also specifies that commodity
values are calculated according to the stock market as established by the
Cabinet (unlike the current version, which requires the application of average
prices).
Declaration periods
The periods during which the taxpayer must
provide additional information at the request of tax authorities, has increased
from 10 to 30 days. An appropriate change given that experience shows that 10
days is insufficient to prepare a full response.
Amendment
of the wording to the rules on the
control of transactions with unrelated agent
The
wording of Paragraph 39.2.1.5 of the Code
provides that a transaction between related parties involving an unrelated
agent can be considered as under control, provided this broker does not perform
significant functions. This wording has been amended to prevent the risk of the
rule being applied to individuals.
Changing the criteria for the definition of
"low-tax" States
The law shortens the list of reasons for
which a particular State may be included in the list of "low-tax
jurisdictions" as approved by the Cabinet Ministers of Ukraine (CMU). The
new rules state that non-disclosure in the public domain of information on the
ownership structure of companies is no longer a reason for inclusion on the CMU
list.
The list
will be based upon the following two criteria:
• States in which the income tax rate is 5 or
more percentage points lower than in Ukraine;
• States with which no international agreements
exist on the exchange of information.
It is currently difficult to predict how this will
change the criteria to review the list of countries because the CMU did not
disclose the specific reasons for inclusion on the list.
Application of the Law
The amendment makes the rules of law
applicable to controlled transactions undertaken throughout 2015 (and not just
on the date of entry into force of the law).
Other changes and adjustments
In addition, there are several amendments
to the legislation aimed at clarification and the elimination of mistakes,
including the definition of business transactions, tax basis for early check of
controlled operations, profitability indication methods within the TCU, etc.
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