Ukraine

Corporate - Significant developments

Last reviewed - 30 December 2020

On 23 May 2020, the Ukrainian Parliament (the Verkhovna Rada of Ukraine) adopted the Law of Ukraine № 466-IX, which introduced significant changes to the tax legislation of Ukraine. Some changes have already come into force from 23 May 2020 and 1 July 2020, while others will become effective from 1 January 2021.

Main changes effective starting from 23 May 2020 and 1 July 2020 are related to the following areas:

  • Transfer pricing (see Transfer pricing in the Group taxation section).
  • Tax depreciation and deduction of certain types of expenses (see the Deductions section).
  • Withholding taxes (WHTs) and international taxation. Please note that some changes related to WHTs will take effect starting from 1 July 2020 (see the Withholding taxes section).
  • Taxation of permanent establishments (PEs) (see the Corporate residence section).
  • Rent payment for subsoil usage (see Charge for subsoil usage (rent) in the Other taxes section).

Main changes effective starting from 1 January 2021 are related to the following areas:

  • Introduction of the controlled foreign company (CFC) concept (see Controlled foreign companies (CFCs) in the Group taxation section).
  • Introduction of the deemed dividends concept for withholding tax purpose. (see the Corporate - Withholding taxes section)
  • Thin capitalisation rules (see Thin capitalisation in the Group taxation section).
  • Place of effective management of non-resident Companies in Ukraine (see the Corporate residence section).

Incentives related to COVID-19 (already effective):

In response to the global effects of COVID-19 on businesses, many countries around the world are implementing tax incentives to support their economies. In Ukraine, the following tax measures and changes in the labour law were introduced due to the impact of COVID-19:

  • Exemption from penalties for violation of tax laws (with certain exceptions) committed during the tax period starting from 1 March 2020 and until the last day of the month in which the quarantine period ends.
  • Exemption from interest for late payment of tax accrued during the tax period starting from 1 March 2020 and until the last day of the month in which the quarantine period ends.
  • No limitations for deduction of expenses for the year 2020 upon free of charge provision of medical goods and other goods listed by the Cabinet of Ministers of Ukraine in favour of non-profit organisations during the quarantine period.
  • Income/expenses from free of charge receipt/use of certain goods by state and municipal health care institutions during the quarantine period shall be excluded from the corporate income tax (CIT) base calculation for 2020.
  • Exemption from unified social contribution (USC) for certain individual entrepreneurs for March, April, and May 2020.
  • Exemption from land tax and tax on real estate for March 2020.
  • From 17 March 2020, to the last day of the month in which the quarantine restrictions end, the import and supply of medicine, medical goods, and medical equipment needed for performing measures against COVID-19 is temporarily exempt from value-added tax (VAT) and customs duty (for customs duty to 30 June 2020). The list of medicines and medical equipment is defined by the government.