LLC Taxation

General taxation system for LLCs in Ukraine

This system requires meticulous and rather complex accounting and tax records.

Types of taxes that are subject to payment:

1. Corporate income tax. It is the key tax for this system.

The tax base (the amount from which tax must be paid) is the profit — i.e., the difference between all revenues and expenses.

The tax rate is provided by Art. 136 of the Tax Code of Ukraine and is 18%.

Tax payment deadlines depend on the amount of annual revenue:

a) less than UAH 20 million – payment is made once a year based on the annual declaration;

b) more than UAH 20 million – payment is made quarterly based on the declarations for the quarter, half-year, three quarters, year.

2. Tax on dividends – 5%.
3. VAT – 20% (except for certain types of activities where the rate may be 7% and 0%). VAT is accounted for separately from other taxes and the amount of VAT is not included when calculating them.

You can register as a VAT payer on a voluntary basis. However, it should be noted that Art. 181 of the Tax Code of Ukraine provides for mandatory registration as a VAT payer if, based on the results of the last 12 months, the total amount from the sale of goods, performance of work and provision of services in aggregate exceeded UAH 1 million (net of paid VAT).

To calculate the VAT amount, you need to subtract the available input VAT (tax credit) from the total amount of obligations indicated in the tax invoices for the reporting period.

Let’s give an example that will clearly demonstrate the situation in practice:

An LLC is a VAT payer. In the reporting period it provided services to 3 clients in amounts of UAH 500, 1,000 and 1,200 (amounts are shown excluding VAT).

Calculations are made as follows:

The price including 20% VAT = UAH 2,700 = 120% (100% cost of goods + 20% VAT)

Let’s calculate the VAT amount by proportion:

• 2700 – 120
• VAT – 20
• 2700*20/120 = 2700/6 = 450 UAH

Calculation of VAT payable: 540 (LLC obligations) – 450 (tax credit) = UAH 90.

If the amount of the credit exceeds the amount of obligations, the payer has the right to a refund from the budget in accordance with Art. 200 of the Tax Code of Ukraine.

4. Unified social contribution – the rate depends on the category of employees, the main rate is 22% of the accrued salary.

For example, if the accrued salary in an LLC is UAH 5,000. Calculation of USC: 5,000 x 22% = UAH 1,100.

Some exceptions that companies most often encounter:

• USC rate on the salary of persons with disabilities – 8.41%
• The maximum base for calculating the unified contribution per employee is 15 times the minimum wage established by law, on which the unified contribution is charged (in 2019 – UAH 62,595).

5. Personal income tax (PIT) – tax on accrued salary and similar payments. Rate – 18%
6. Military levy (ML) – a temporary levy on income, subject to PIT taxation. ML rate – 1.5%.
7. Environmental tax – for certain types of activities.
8. And other taxes depending on the type of enterprise activity.

In this system the main tax is the unified tax, charged at a fixed rate, the size of which depends on the taxpayer’s group. At the moment there are 4 groups, of which individual entrepreneurs may apply 1, 2, 3, while LLCs are intended only for group 3. Group 4 includes only former payers of the fixed agricultural tax.

You can find detailed information on the unified tax in the table below.

Comparative table of taxation methods for LLCs in Ukraine