Taxation of enterprises 2015

The Tax Code of Ukraine adopted in 2010 became a codified law that regulates the field of relations arising in connection with the collection of mandatory taxes and fees in the country. Although the main task of the Code was supposed to be ensuring the stability of the taxation system, immediately after the TC came into force it began to be actively supplemented and amended; more than ten changes were made in the first year alone. The last major reform of the tax sphere took place on 28.12.2014 and reforms continue.

A review of annual amendments and additions makes it possible to trace the dynamics of changes in the corporate taxation system.

Attention! When you follow a link to the text of the Tax Code of Ukraine, check whether the publication of the law is up to date. Since changes occur very often, and the link takes you to the version of the article that existed at the time this post was written on our site. That you are viewing an outdated version of the Code is indicated by a shaded background on the zakon.rada.gov site, as well as an appropriate inscription at the top of the page, next to which there will be a link to the current version.

1. Corporate profit tax

This tax is regulated by Section III of the Tax Code of Ukraine.

The rate is set at 18%.

The tax base (the amount from which tax must be paid) is profit — that is the difference between income and expenses, determined based on accounting results.

Enterprises on the general taxation system file returns for this tax once a year.

Tax payment deadlines depend on the amount of annual turnover:

a) less than 20 mln UAH – payment is made once a year based on the annual declaration (by June 10);

b) more than 20 mln UAH – it is necessary to pay advance payments monthly. The advance payment is 1/12 of the tax amount for the previous period. For example, in 2014 the corporate profit tax was charged at 2400 UAH. Calculation of the advance payment for 2015: 2400/12 = 200 UAH.

2) Dividend tax is paid by the issuer on the general taxation system at 5%, and by an issuer who is a single tax payer at 20%. The tax is paid by advance payments.

3) Single tax

Regulated by Chapter 1 of Section 14 of the Tax Code of Ukraine.

The main change concerned the distribution of payers into groups. At the moment there are four groups:

Groups 1, 2, 3 — can be applied to individual entrepreneurs (FOP);

Group 3 — for enterprises;

Group 4 — for former payers of the agricultural tax.

The single tax rate for 2015 is set depending on the group:

Group 1 — maximum 10% of the minimum wage per month (121.80 UAH);

Group 2 — maximum 20% of the minimum wage per month (243.60 UAH);

Group 3 — non-VAT payers: 4% of income; VAT payers: 2% of income;

Group 4 — depends on the volume and characteristics of the land plot.

For the first two groups, the specific rate is set annually by the local council. Rates can be checked on the website of the State Fiscal Service.

Payment terms. Groups 1 and 2 pay advance payments monthly by the 20th (or for the whole year). Group 3 pays quarterly, within 10 days from the last day for filing the declaration. Group 4 pays the tax monthly (by the 30th of the month following the reporting month) in a certain percentage ratio.

4) VAT (Value Added Tax)

Regulated by Section 5 of the Tax Code of Ukraine, which has also been subject to amendments recently.

Possible VAT rates:

• the standard rate is set at 20%;
• for certain activities provided by the Tax Code (e.g., export of goods) the rate may be set at 0%;
• for supplies of certain medical drugs and medical equipment the rate is 7%.

Registration as a VAT payer can be done on a voluntary basis. However, you should also take into account that Art. 181 of the Tax Code provides for mandatory VAT registration 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 together exceeded 1 mln UAH (excluding the amount of VAT paid).

The tax base is determined by the contractual price, but cannot be lower than the cost of production, the purchase price of goods, or the residual value of fixed assets.

It should be noted that the envisaged electronic administration begins on 01.07.2015. From 01.02.2015 to 30.06.2015 the electronic system operates in test mode.

Changes to adjustments of NK and NO are subject to mandatory registration in the ERNN.

If you still have not signed a contract for accounting services and plan to keep accounting and tax records yourself, then to clarify the situation with VAT calculation for yourself, see our example:

LLC — a VAT payer. In the reporting period it provided services to 3 clients in the amounts of 550 UAH, 1100 UAH and 2000 UAH. Also, the LLC purchased goods for 2700 UAH (the total amount indicated in suppliers’ tax invoices).

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

Calculations are made as follows:

550/5 = 110 (VAT amount); 550 + 110 = 660 (total amount of the tax invoice, including VAT);

1100/5 = 220 (VAT amount); 1100 + 220 = 1320 (total amount of the tax invoice, including VAT);

2000/5 = 400 (VAT amount); 2000 + 400 = 2400 (total amount of the tax invoice, including VAT).

Total VAT (LLC’s liabilities) = 730 UAH.

Tax credit calculation: 2700/6 = 450 UAH. Calculation of VAT payable: 730 (LLC’s liabilities) – 450 (tax credit) = 280 UAH.

If the credit exceeds the liabilities, the payer has the right to a refund from the budget under Art. 200 of the Tax Code of Ukraine.

5) Personal income tax (PIT).

Regulated by Art. 167 of the Tax Code of Ukraine.

The minimum wage has not changed and currently also amounts to 1218 UAH.

Wages accrued by enterprises for which the profit tax rate is 0% must not be lower than twice the minimum wage.

Also keep in mind that if wages exceed 12,180 UAH, the amount exceeding this limit is subject to PIT at 20%. For wages not exceeding the limit, the rate is 15%.

Wages are also subject to a military levy at a rate of 1.5%.

Let’s give an example of payroll taxation:

Salary accrued amounts to 5,000 UAH.

SSC = 5,000 x 3.6% = 180 UAH.

PIT base: 5,000 – 180 = 4,820 UAH.

PIT rate 15%.

PIT calculation: 4,820 UAH x 15% = 723 UAH.

Military levy 5,000 x 1.5% = 75 UAH.

Net salary payable: 5,000 – 180 – 723 – 75 = 4,022 UAH.

6) Single social contribution

SSC is a kind of replacement for the previously existing contributions to the Pension Fund and social insurance, which is payable regardless of income.

Payers are individual entrepreneurs (FOP) and employers.

Legislation provides for 2 types of rates:

1. 3.6% is withheld by employers from the individual’s income. The employer in this case acts as a tax agent;

2. SSC on wages and other similar payments, that is on the amount of the wage fund (FOT). The rate depends on the class of professional risk and ranges from 36.76% to 49.7%. There are 67 classes in total, depending on types of economic activity (KVED). A separate rate of 34.7% is provided for civil-law contracts.

The base for SSC contributions cannot exceed 17 subsistence minimums.