Thus, 2013 will begin with a reduction in the corporate income tax rate to
19 percent, down from the previous 21 percent. Advance payment of income taxes
for enterprises will also be affected, with monthly advance payments amounting
to at least 1/12 of the accrued tax payable for the previous year.
Particularly noteworthy are the various innovations providing for
preferential tax treatment of some priority sectors of the domestic economy.
One very promising amendment is the establishment of income tax incentives (0
percent) for enterprises planning to modernize their production operations
through investments ranging from 500,000 euros ($665,000) to 3 million euros.
Subject to a number of other criteria, such enterprises can be exempt from
income tax until 2017.
This year will also be marked by the enactment of tax regulations
stipulating preferential conditions for firms operating in the software
industry. Thus, starting from January 1, 2013 and until January 1, 2023 the
sale of software-based goods and services will be exempt from value-added tax.
Furthermore, entities operating in the software industry will see their income
tax rates drop to five percent. However, it should be noted that only those
enterprises meeting a range of fairly stringent statutory criteria (i.e. not
all market participants) will enjoy this privilege.
The brand new Law of Ukraine “On Employment,” adopted in the
previous year and taking effect from the beginning of 2013, will be one of the
most resonant (in all respects) documents for the domestic business. As a
result of this law employers who during one year created new jobs and paid
salaries of not less than three minimum wages per month to each person employed
are entitled to a benefit in the next year amounting to 50 percent of the
accrued single fee for this person. In addition, subject to certain conditions,
employers hiring so-called “non-competitive” workers (mostly people who
have less than 10 years before retirement, those who meet the criteria of first
youth employment, orphans, the disabled) will be eligible for a 100 percent
“discount” (read compensation) of the fee. The most interesting
innovations also include the prohibition of charging money from the applicants
for employment (fees for agent’s services during employment will be paid by the
employers only), and the ban on placing information about the desired age of
the applicant in vacancy advertisements. The same applies to gender
discrimination, and the requirement to provide any information about the
private life of the applicant.
Its a positive sign that the main legislative developments are aimed at
resolving the key issues plaguing the national economy every year, i.e. the very
unattractive investment climate, the unpredictability of state regulatory
policy, the instable tax system, and miscarriages of justice.
The outlined legislative trend of “eradicating” unemployment,
aimed at reviving the domestic labor market, which experienced difficult times
in recent years, deserves special attention.
Will the newly adopted laws improve the situation? It seems that only
partly. The recent history of our country shows that in Ukraine its not the
laws themselves that matter, but rather how they are applied in practice.
On the one hand, the above-mentioned legislative innovations should
encourage businesses to leave the shadows, create new high-paying jobs, and
invest in production – the proverbial “real economy.” On the other
hand, problematic aspects connected with the practical implementation of these
legal innovations (most of which will manifest themselves only at the stage of
application) can completely distort the positive intentions behind the
legislation – as we have seen happen many times before.
Attorney Oleksiy
Khrystoforov is the head of the Kharkiv office of Ilyashev & Partners law firm.
