Law of Ukraine

"On Amendments to the Tax Code of Ukraine to Ensure Exercise of Rights of Companies, Institutions and Organizations of Disabled Persons Civil Organizations to Preferential Taxation"

Date of entry into force:
September 7, 2014

The Law introduces amendments to sub-section 2, paragraph 8 of the Transitional Provisions of the Tax Code of Ukraine, according to which, until January 1, 2020 (previously – 2015), zero rate of the value-added tax is applied to supply of goods (except for excise goods) and services (except for services provided during lotteries and entertainment games, and services related to supply of goods received under commission (consignment), surety, agency, fiduciary management agreements, or other agreements under civil law that authorize such tax payer to supply goods on behalf of and by order of another person without transfer of the right of ownership to such goods) directly produced by companies and organizations of disabled persons civil organizations, founded and owned by disabled persons civil organizations, where the number of disabled persons in primary employment is at least 50 percent of the average list number of staff during the previous reporting period, and provided that the salary fund of such disabled persons during the reporting period is at least 25 percent of the total salary expenses included in production costs.

Direct production means production of goods/services where the amount of expenses incurred in the processing (treatment, other transformation) of raw materials, parts, components, and other purchased products used to manufacture such goods is at least 8 percent of the selling price of such manufactured goods.

The above companies and organizations of disabled persons civil organizations have the right to use this preference, subject to registration with an appropriate control authority, which is carried out based on an appropriate application submitted by the tax payer to request such preference, and on the positive resolution of the competent authority, according to the Law of Ukraine "On the Foundations of Social Protection of Disabled Persons in Ukraine".

In case the tax payer violates any of the above requirements, the control authority shall cancel its registration as a person entitled to the tax preference, and the tax liabilities of such tax payer shall be recalculated, starting from the tax period based on the results of which such violations were discovered, according to the general taxation rules established by the Tax Code of Ukraine, with simultaneous application of appropriate financial sanctions.

Tax reporting of such companies and organizations is submitted according to the procedure established by the legislation.
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