Ukraine

Until 31 December 2030, application of a reduced statutory minimum useful life is allowed for machines, equipment, and vehicles (two years), as well as for transmitting devices and other fixed assets (five years), provided that certain conditions are met (see Depreciation and amortisation in the Deductions section for more information).

Temporarily, up to 1 January 2035, there is a CIT exemption for the income received by investors with significant investments. The taxpayer can use this regime during five consistent years after receiving the status of investors with significant investments. The amount of the potential tax benefit is limited and correlated with the investment made.

The government has provided industrial parks with a number of tax incentives, namely with regard to the payment of income tax (will not be paid for ten years), VAT, import duty, etc. Industrial parks will be able to apply such tax benefits only if they direct tax-exempt funds to the development of the industrial park.

Simplified (unified) tax system

Entities and individuals (i.e. private entrepreneurs) are entitled to use a simplified (unified) tax system (with exemption from CIT) if certain requirements are met.

Groups 1 and 2 of the simplified (unified) tax system are available for private entrepreneurs only, and group 3 for both private entrepreneurs and legal entities (depending on the types of activities, the level of income [only up to 1,167 minimal salary as of 1 January of the reporting year (for 2024 this amount is equal to UAH 8,285,000), except agricultural producers], and the number of employees’ criteria).

These regimes foresee low effective tax rates (up to 10% of the amount of statutory subsistence minimum for able-bodied individuals as of 1 January of the reporting year for group 1 per month; up to 20% of the minimal salary set as of 1 January of the reporting year for group 2 per month, or up to 5% of revenue for a private entrepreneur/an entity of the third group) and easier reporting for small businesses. However, specific types of business activities are prohibited under this tax regime (inter alia, transactions with certain excisable products, exploration/production/sale of precious metals and stones, company management and communication services).

Taxpayers of group 1 are not required to use cash registers. Taxpayers of group 2, 3, and 4 are obligated to start using cash registers in the quarter following the one when their revenue exceeds 220 minimal salary as of 1 January of the reporting year (2024 this amount is equal to UAH 1,562,000). Taxpayers engaged in selling technically complex household goods subject to warranty services, medicines, and healthcare products are obligated to use cash registers regardless of the revenue amount they earn.

Starting from 1 October 2020, the list of taxpayers required to use cash registers regardless of the revenue amount they earn was extended, in particular to taxpayers engaged in: e-commerce; hoteling; selling jewellery and household goods made from precious metal and gems; retail of used goods via shops; restaurant business; providing travel agency and tour operator services; and selling of textiles, spare parts, and accessories for motor vehicles.

Starting from 1 January 2022, all taxpayers of group 2, 3, and 4, regardless of their revenue, are required to use cash registers.

The group 4 classification of the simplified (unified) tax system is available for qualified agricultural producers.

Agricultural producers are entitled to use a very favourable tax regime (with exemption from CIT), provided certain requirements are met. The main criterion requires that income from the sale of their own agricultural products constitutes not less than 75% of their total gross revenue of the previous tax (reporting) year.

Under this system, the amount of tax due depends on the size of the agricultural land plot owned or rented by the agricultural producers. The tax rates vary from 0.19% to 6.33%, apply to the normative monetary value of one hectare of agricultural land, and depend on the type of such land.

Changes related to the introduction of martial law: The special 2% simplified tax system (STS)

Starting from 1 April 2022 and during the period of martial law (but not longer that 1 August 2023), the business entities of any organisational and legal form, without headcount or ownership structure limitations (and without other limitations set out by clause 291.5 of the Tax Code of Ukraine), could opt to choose (with certain limitations) a simplified tax system.

Starting from 1 August 2023, the special 2% STS was abolished. The taxpayers who switched to the simplified (unified) tax system during the martial law were automatically returned to the tax system they were on before the special 2% regime.

Note that there are also some changes for VAT payers who had previously switched to the STS due to the abovementioned cancellation of the special 2% regime.

Foreign tax credit

Tax residents are allowed to credit foreign taxes paid on income received abroad, provided there is a DTT between Ukraine and the relevant foreign jurisdiction. The amount of foreign tax credit is limited to the amount of Ukrainian tax payable in the respective reporting period. To claim a tax credit, the taxpayer requires an official confirmation of income received, tax base, and amount of income tax paid in such a foreign jurisdiction. Such documents are issued by the relevant foreign tax authority and should be properly legalised and translated into Ukrainian.