For several months Ukrainian business was focused on the "new tax reform" and the new 2016 has started with the updated taxation system. Initially, there were two major draft laws on the tax reform: the Ministry of Finance headed by the Minister Natalia Yaresko prepared the first draft, the other one was prepared by the Verkhovna Rada Committee on Taxation and Customs Policy, headed by Nina Yuzhanina. Finally, a compromise was found on the eve of 2016.
As the Prime Minister of Ukraine has mentioned many times, one of the main vectors of legislative process in taxation is reporting of the real salaries. In this regard, the government aimed at reducing the tax rates on salaries. Thus, since 2016 the taxation of salaries was slightly modified: a single rate 18% of personal income tax was set instead of 15% and 20%, which was effective previously and applied depending on the amount of income. On the other hand, the unification of the tax rates is always a positive. However, at the same time, now the tax rate will increase by 3% for taxpayers with incomes amount up to 10 minimum salaries, while for those whose income exceeds 10 minimum salaries this rate will decrease by 2%.
The legislator has also decided to abolish the payment of unified social tax by physical persons at the rate of 3.6% and to reduce the rate of the unified social tax, which is paid by employers, to a single rate of 22%. Including the military fee of 1.5% the cumulative amount of taxes on salaries has decreased, but now the government expects that Ukrainian employers will start to increase the salaries of employees. After these changes, one of the main tasks of the government will be to solve the problem of filling the state budget for payment of pensions. Given the fact that the unified social tax is the primary source for payment of pensions, the decrease of this tax resulted in a significant increase in financing of pensions from the state budget from 32% in 2015 to 55% in 2016, which could have negative social and economic consequences. Now the government should be seriously engaged in the reforming of the pension system of Ukraine and creating of a new funded pension system.
Businesses should also pay attention to changes in taxation of dividends, according to which the personal income tax rate of 5% on income is applied for dividends accrued by payers of profit tax on a general basis. For single tax payers this rate of personal income tax increases to 18%.
Special attention among all the tax changes should be also paid to VAT. One of the major positives is the abolition of the possibility of cancellation of VAT registration because of the VAT payer absence at the registration office address. Tax authorities alwaysused this opportunity for the cancellation of VAT registration very actively, including situation when the company forgot or missed deadline for providing of the registration card 6 (confirmation form) to the state registrar. Now, companies don’t have to fill such registration card 6 at all.
With regard to the VAT budgetary refund, because of some reasons the legislator has provided two registers on VAT refund, which is likely to be used in certain schemes for budgetary compensation of VAT for privileged persons. Therefore, if the Government wishes to reiterate its firm intention to fight against corruption related to VAT refund, it should immediately abolish this separation of VAT payers and create a single registry for all taxpayers.
The above mentioned is certainly not the all changes in taxation system. The Cabinet of Ministers together with deputies managed to start tax reform. However, both changing of tax legislation and good intentions of the government is unlikely to lead to the positive results until the entire system of taxation and tax bodies are fully changed. Tax bodies must become servicing bodies for taxpayersinstead of being one of the obstacles to effective and fair doing business in Ukraine.
Also, please, be informed that on Thursday, January 28, 2016 Olga will be holding seminar devoted to changes in Ukrainian legislative system. You are more than welcome!
Get to know more and register, please, follow the link: https://www.facebook.com/events/1522066568122726/
UHY Prostor
Information about the company
UHY Prostor was founded in 2003. Currently company is located in Kiev (Ukraine) and provides highly professional audit services, review of financial statements services, conducting compulsory audit, provide the transformation of reporting to international and national accounting standards, tax and financial consulting services. In addition, there is the legal department operating in the company represented by qualified lawyers with years of experience in economic, tax, financial and labor law, members of the Lawyers Association of Ukraine. Overall, the company’s staff is 35 qualified employees. Auditors, accountants, lawyers and tax consultants are working together to formulate the best solutions to complex customer problems. The company’s specialists are certified auditors with diplomas in International Financial Reporting Standards, ACCA certificates as well as CAP, CIPA, IFA, «A» certificates.
If you want to know more about the company, please, follow the link: http://www.uhy-prostor.com/
