As is usually the case with new laws, the Draft Code provides certain novelties that appear both interesting and disturbing for foreign investors and Ukrainian businessmen alike.
First, the good news: the Draft Code will decrease the profit tax from the current 25 percent to 17 percent and abolish ten local taxes and duties. Now there will be four mandatory taxes (on land, immovable property, advertising and trade patent); the rest of the taxes and duties will be deducted at the discretion of the municipal administration. As always, we note a significant risk that the discretion of the local administration may become excessive (after all, the main goal of local tax administrations is to fill their quotas to the maximum).
Second, the Draft Code provides for the introduction of tax holidays for small-scale businesses. These holidays call for a zero-percent unified tax for natural persons, who carry out commercial activity and render personal services with revenue not exceeding Hr 300,000 per year, as well as for legal entities with income that does not exceed Hr 100,000 per year. If ultimately implemented, such holidays will run from January 1, 2011 until December 31, 2015.