Corporate Tax 2010 - BMR Advisors

BC Toms & Co
Ukraine
The rates for the State duty are different:
(1) for notarisation of documents, depending on the type of
document notarised, it generally varies from 0.01 to 1 per cent
of the contract value. Where the contract value can not be
determined (e.g. for powers of attorneys, wills, etc.), the rate
generally varies from 0.05 to 1 per cent of the official nontaxable
monthly minimum income of a citizen (equivalent to
about USD 0.11 and 2.13 correspondingly); and
(2) for notarisation of documents, filed with a court, depending
on the type of filing and the court involved, and in general
vary from 0.1 per cent of the official non-taxable monthly
minimum income of a citizen (which is about USD 0.21) to
1 per cent of the value of the claim involved in the lawsuit.
State duty is also payable for the issuance of securities (with some
exceptions, including for State and municipal bonds) and mortgage
certificates at the rate of 0.1 per cent of the nominal value of the
securities or mortgage certificates.
The following transactions are subject to payments to the State
pension fund: the purchase of real estate (other than, inter alia, the
purchase of real estate by State enterprises using State or municipal
budget funds); the purchase of foreign currency at the inter-bank
market; the transfer of passengers cars (other than those provided to
disabled people or transferred by inheritance); the sale of jewellery
made of gold (other than wedding rings), platinum and/or precious
stones; and mobile phone services, with certain exceptions.
Payments to the State pension fund are based on rates of 0.5 per
cent for transactions involving the purchase of foreign currency, 1
per cent for the purchase of real estate, 3 per cent for the transfer of
cars, 5 per cent for the sale of jewellery and 7.5 per cent for mobile
phone services.
2.4 Is it always fully recoverable by all businesses If not,
what are the relevant restrictions
In general, a VAT-taxable person may receive a credit for all input
VAT, provided that it intends to use the goods or services purchased
in its commercial activities in VAT-taxable transactions. If such
goods or services are later used in VAT-exempt transactions, or if as
goods they constitute fixed assets and later become non-production
assets, for VAT purposes such goods or services will be deemed to
have been sold for an arm’s length price (but not below the original
purchase price) in a deemed transaction then subject to VAT.
No VAT credit is available for input VAT if: (a) the goods or
services are originally intended for use in VAT-exempt transactions
or for non-commercial purposes; (b) the goods are cars, other than
taxis; or (c) the input VAT is not confirmed by a VAT invoice or a
customs declaration or other required document. Input VAT for the
purchase of cars or for goods and services intended for use in VATexempt
transactions may, however, normally be deducted or, for
fixed assets, depreciated for income tax purposes.
If goods or services are used only partially in VAT-taxable
transactions, appropriate allocations must be made and the
corresponding part of the input VAT is credited.
No VAT credit is available to a person not registered in Ukraine as
a VAT-taxable person. A foreign entity may recover input VAT
incurred, but only for transactions conducted through its permanent
establishment in Ukraine that it has registered as a VAT taxable
person. The VAT system has for several years been experiencing
difficulties concerning VAT reimbursements from the State.
2.5 Are there any other transaction taxes
Ukraine
2.2 Do you have Value Added Tax (or a similar tax) If so, at
what rate or rates
There are no other transaction taxes.
There is a value added tax (“VAT”) in Ukraine. The standard VAT
rate of 20 per cent is charged on the majority of VAT-taxable
transactions. The export of goods and certain other transactions are
presently subject to a zero VAT rate.
2.3 Is VAT (or any similar tax) charged on all transactions or
are there any relevant exclusions
In Ukraine, generally the supply of goods and services within
Ukraine and the import and export of goods are VAT-taxable events,
subject to certain exceptions. Certain transactions are, however,
VAT-exempt, including the sale of land on which there are no
buildings or other structures, the issuance and sale of securities and
certain banking, insurance, and funds and securities management
services. In addition, the sale of certain goods such as many infant
foods and medicines as well as municipal transport services, are
exempt from VAT. The export of goods and sales of certain services
which are intended to be used or consumed outside of Ukraine are
also presently taxed at a zero VAT rate.
In addition, a law (the “Financial Crisis Law”) has recently been
adopted aimed at minimising the impact of the world financial crisis
in Ukraine, including by providing for a temporary VAT exemption
on the importation of fixed assets, materials, equipment and tools
by industrial enterprises that establish new production by
implementing energy-saving technologies. This VAT exemption
also applies to the importation of goods as a contribution to the
charter capital of the mentioned enterprises (the list of such
enterprises and the general criteria for such assets to be subject to
this VAT exemption is provided for the Cabinet of Ministers of
Ukraine). The VAT exemption is effective until 1 January 2011.
ICLG TO: CORPORATE TAX 2010
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2.6 Are there any other indirect taxes of which we should be
aware
There are excise tax and custom duties.
Excise tax is imposed on certain excise taxable items produced in,
or imported into, Ukraine. In particular, excise tax applies to
tobacco and alcohol products, petrol, diesel and certain other fuels
and motor vehicles. The rates of excise duty are specific for each
type of product and are calculated either as a percentage of the sale
price or as a fixed amount based on the quantity, weight or volume
of the goods.
Import customs duties are imposed on goods imported into Ukraine
and may be of following types: preferential; privileged; or full.
Goods from most countries are subject to privileged rates ranging
from 5 to 10 per cent.
The Ukrainian Financial Crisis Law, referred to above, also
provides for a temporary exemption from customs duties for certain
categories of equipment imported into Ukraine by industrial
enterprises (the list of such enterprises and the general criteria for
such equipment to be subject to this exemption is provided for by
the Cabinet of Ministers of Ukraine). The exemption is effective
until 1 January 2011.
Ukraine still retains some customs export duties, which apply to
limited types of goods, including in particular, natural gas, scrap
metal, livestock, raw hides and certain oil seeds.
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