Starting from 1 January 2019, changes to Ukraine's taxation rules previously adopted by the Ukrainian parliament (Law #2628 dated November 23, 2018) come into legal force. The majority of amendments come into force starting from 1 January 2019. However, certain amendments come into force starting from 1 March 2019, from 1 June 2019, from 1 July 2019 and from 1 January 2020. Key novelties include:
- Inaccuracies and technical mistakes in applying certain transfer pricing rules have been eliminated and the "substance over form" principle for transfer pricing purposes has been established. According to this principle, the characteristics of the controlled operation are to be determined in accordance with the actual actions of the parties and the actual circumstances of their conduct. Should the documented form be in conflict with the actual substance, the latter will prevail. Now that Ukrainian tax authorities have this anti-avoidance tool at their disposal, there are growing concerns whether it might be subject to misuse by them to increase pressure on business and thus provoke a new wave of tax controversy. When planning business activities, business entities are advised to pay particular attention to their biggest and/or non-typical transactions with related parties.
- The maximum court fee for filing a claim in tax disputes has been substantially reduced (UAH 19.2 thousand). This should facilitate access to courts for taxpayers as well as for tax authorities. It is likely that this will increase the workload of courts that deal with tax disputes.
- VAT tax on international shipments – the non-taxable value of international shipments is set for reduction from 1 July 2019 to 31 December 2020 from EUR 150 to EUR 100 per one individual recipient.
- VAT exemption extension until 31 December 2022 for import into Ukraine of vehicles equipped exclusively with electric motors and certain equipment used in renewable energy. Exemptions have likewise undergone extension until 1 January 2022 for operations related to the import of waste and scrap of ferrous and nonferrous metals and the supply of coal and/or products of its enrichment on the customs territory of Ukraine.
- The obligatory use of payment transaction registrars (cash registers) for the sale of pharmaceuticals and medical products has been introduced. We encourage business entities to pay attention to products they sell for their possible belonging to the above categories.
- Increased tax rates:
– excise tax on tobacco products;
– ecological tax;
– rent for the use of subsoil for oil and condensate extraction;
– rent for the use of subsoil for iron ore extraction;
– rent for special use of forest resources.
- Improved fuel circulation administration and licensing of business entities engaged in manufacturing, storage, fuel wholesale and retail trade has been introduced.
- Procedural terms have been extended and "working" days instead of "calendar" days have been introduced for the purposes of:
– submission of objections to tax authority rulings;
– submission of objections to tax audit reports;
– adoption of tax assessments.
- Significant changes have been introduced to the collection of tourist tax with respect to taxpayers, tax rates and related payment procedures.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.