4.1.9. stability – changes to any elements of taxes and fees may not be
entered later than six months before the start of the new budget
period in which new rules and rates will apply.
Taxes and fees, their rates, as well as tax benefits may not be changed during the budget year;

No, we haven`t heard (c)

Dear colleagues and partners!

This has never happened before and here it is: new rules for calculating taxes as a “gift” under the Christmas tree. This is the so-called “resource” bill №5600. At the end of November, despite the significant resonance from society in general and individual sectors of the economy in particular, the bill was supported by the Verkhovna Rada of Ukraine, and on December 18, 2021 it was signed by the President of Ukraine.

Thus, it is no longer just another bill, but the Law of Ukraine “On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine to ensure the balance of budget revenues” №1914-IX (hereinafter – the Law), most of the provisions of which will enter into force from January 1, 2022.

Everyone probably knows that the law revises the rent rates for iron ore mining, but for some it may come as a surprise that it also changes a whole range of tax issues that will affect not only oligarchs. For example, the systems of taxation of agricultural producers and farmers, real estate sale operations, payment of environmental and excise taxes, VAT administration, etc. are subject to partial changes and revisions. We offer to focus your attention on these changes.

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New taxes for landowners

One of the innovations of the Law was the “minimum tax liability” – this is the minimum possible amount of taxes to be paid by the owner or user of 1 hectare of agricultural land located outside the settlements.

According to preliminary calculations, the amount of such an obligation will be approximately 4% of the regulatory and monetary value of the land, and 5% from 2024. Thus, if the total amount of taxes paid on the plot is less than the established minimum tax liability, the owner or user will be obliged to pay the difference.

The Minimum Tax Liability Regulation will take effect in 2022, and the first liabilities should be paid in 2023.

“Hello” to small farms and individuals

The watchful eye of the legislator did not ignore the representatives of small businesses engaged in economic activities on their own land.

Now, if the income from the sale of agricultural products for the reporting year exceeds 12 times the minimum wage (in 2022 it is 78,000 UAH), such a taxpayer is obliged to reflect the amount of such excess in the total monthly (annual) taxable income for the reporting year and submit an annual declaration on property and income (tax declaration).

Such income will be subject to personal income tax at the rate of 18% + 1.5% of the military tax, which must be paid independently by the taxpayer. At the same time, the size of the land plot at exemption from taxation of sale of agricultural products does not matter.

“0” of taxes on the sale of a land plot

It seems that the legislator finally came to his senses and exempted from personal income tax the “first” sale of agricultural land directly received by the taxpayer in the process of privatization of land of state and municipal agricultural enterprises, institutions and organizations or privatization of land plots, which were in the use of such a payer, or allocated in kind (on the ground) to the owner of the land share, as well as such land plots received by the taxpayer as inheritance.

In this case, the second sale will be taxed at a rate of 5%, and the third and subsequent – 18%. At the same time, the procedure for calculating and paying the military fee did not change.

Updated tax requests and sanctions on heads of enterprises

It seems that the legislator listened to the complaints of taxpayers about the inefficiency of their main remote tool – requests for provision of information and documents. The current legislation provided for an exclusive list of grounds for sending a request and in fact forced the tax authorities, at least formally, to invent the facts of violations of the law. As a rule, they did not manage to do it successfully, so taxpayers exercised their right to ignore such requests.

This situation, of course, could not suit the tax authorities. Now, to send a request to the tax authorities, it is enough to establish the facts that may indicate violation of tax law. Such formulations are very popular with the tax authorities and have been used for a long time in inquiries, which have remained unanswered. This will certainly make life of regulators easier, and taxpayers will need to be more careful about handling such requests.

To be more convincing, the tax authorities have been given new powers. For example, the right to go to court to prohibit the departure of the head of a legal entity-debtor or a permanent representative office outside Ukraine. Such a ban may be imposed in the event of non-payment within 240 calendar days of the amount of the tax debt and may be lifted only after the debt is repaid, the head is changed or bankruptcy proceedings is launched.

Other changes:

• A separate item 170.111 has been added to the Tax Code of Ukraine, which determines the procedure for taxation of payments received from trusts, funds, partnerships, etc. Payments from such entities will be taxed at a rate of 9% if the following conditions are met:

– trusts, funds, partnerships, etc. make such payments in connection with the distribution of profits, or part thereof, in favor of its members, partners, founders, trustees, beneficiaries, etc .;

– such entities, in accordance with the documents, have the right to carry out activity aimed at obtaining income in the interests of their participants, partners, founders, principals, beneficiaries, etc .;

– they are not controlled by foreign companies.

• New VAT administration rules:

– the deadline for registration of the adjustment calculation (and hence the right to include the amount of VAT in the tax credit) to the tax invoice is reduced from 1095 to 365 calendar days from the date of such invoice;

– Until January 1, 2025, the benefits for installment VAT on the import of equipment have been extended.

• The list of grounds on which the controlling body will be able to charge land tax has been expanded. Among them now there is information from:

– State Land Cadastre;

– State Register of Real Rights to Immovable Property;

– state acts on land, certificates for the right to land plots;

– decisions of local governments on the allocation of land in kind (on the ground) to the owners of land plots;

– title documents certifying the ownership or the right to use the land plot, the right to a land share.

To calculate the tax on the basis of documents issued to landowners/land users, they must submit them to the supervisory authority. Reconciliation of data on land plots of the taxpayer can be carried out not only at the location of the property, but also at the place of registration of the taxpayer in the supervisory authorities.

• Maintaining a Register of heads of taxpayers-debtors is provided;
• The right to make sound recording, photo and video recording during inspections, both to the taxpayer and the controlling body is provided, and accordingly to use such recordings as a basis for the conclusions of the inspection report; etc.

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We would like to draw your attention to the fact that the adopted Law is complex and it is simply impossible to cover all its provisions in one message.

We hope you have found this information useful. If you need a more detailed explanation of the law, please contact us any time convenient for you.

Andrii Martyniuk
Director of Business Development
+38 098 244 6262; +380 44 391 30 01
a.martyniuk@omp.ua

Halyna Brun,
Marketing director
+380 95 497 66 05; +380 44 391 30 01
g.brun@omp.ua