Tax Code of Ukraine
Date of entry into force:
January 1, 2011
According to Article 1 of the Code, the Code regulates relations that arise in the sphere of imposition of taxes and fees, in particular, determining the exhaustive list of taxes and fees that are imposed in Ukraine and the procedure for their administration; the payers of taxes and duties, their rights and obligations; the competence of the controlling bodies; the authority and obligations of their officials during tax controlling; and the liability for the violation of the tax legislation.
Article 6 of the Code establishes that a tax is a mandatory and unconditional payment to the appropriate budget, imposed on taxpayers according to the Code. A fee (charge, contribution) is a mandatory payment to the appropriate budget, imposed on fee payers on the condition of them attaining a specific benefit, including the performance of legally significant acts in favor of such entities by state bodies, bodies of local self-government, other authorized bodies and entities.
Article 8 of the Code states that national and local taxes and fees are established in Ukraine.
According to Article 9 of the Code, the following taxes and fees are classified as national:
- enterprise profit tax;
- personal income tax;
- value-added tax;
- excise tax;
- first vehicle registration fee;
- environmental tax;
- royalties for transportation of oil and petroleum products by trunk oil pipelines and petroleum product pipelines, as well as for transit transportation of natural gas and ammonia through the territory of Ukraine by pipelines;
- royalties for oil, natural gas and gas condensate extracted in Ukraine;
- charges for the use of bowels;
- land tax;
- fee for use of radio frequency resource of Ukraine;
- fee for special water use;
- fee for special use of forest resources;
- fixed agricultural tax;
- fee for development of vine-growing, gardening and hop-growing;
- fee in the form of surcharge to the effective power and heat tariff, except for power produced by qualified cogeneration units;
- fee in the form of surcharge to the effective natural gas tariff for consumers of all forms of ownership.
Article 10 of the Code establishes that local taxes include:
- real estate tax charged on real estate other than land plots;
- unified tax.
Local fees include:
- fee for conducting particular types of business activity;
- fee for vehicle parking lots;
- tourist tax.
For the purposes of determining the taxable item and/or taxable base, income received by a resident of Ukraine (except natural persons) from sources outside of Ukraine is included in full (Article 13 of the Code).
Article 14 of the Code defines the main terms used in the Code.
According to Article 15 of the Code, the taxpayers are natural persons (residents and non-residents of Ukraine), legal entities (residents and non-residents of Ukraine) and their separate divisions, that possess, receive (transfer) taxable items or conduct taxable activities (operations), and bear the obligation to pay taxes and fees.
Taxable items may be property, goods, revenue (income) or part of it, turnovers on sale of goods (works, services), transactions to supply goods (works, services) and other objects determined by the tax legislation, the presence of which creates a tax obligation for the tax payer according to the tax legislation (Article 22 of the Code).
Article 25 of the Code establishes that the tax rate is the amount of tax accrual on (from) one measurement unit of the tax base.
According to Article 29 of the Code, the tax amount is calculated by multiplying the tax base by the tax rate with or without the use of appropriate coefficients.
Article 30 of the Code states that a tax relief is exemption of a taxpayer from the obligation to accrue and pay a tax or a duty, or payment of a tax or duty in a reduced amount, as provided for by the tax and customs legislation.
The grounds for providing tax reliefs are the specifics of a certain group of tax payers, the type of their business activity, the taxable item or the nature and public importance of the expenses borne by the tax payer.
Article 46 envisages that a tax declaration or a tax return is a document submitted by a tax payer (including a separated division thereof, in cases defined by the Code) to a controlling body within the timeframe set by the law, based on which a tax obligation is accrued and/or paid, or a document that specifies the amount of revenue accrued (paid) in favor of natural person tax payers, and the sums of taxes charged and/or paid.
A tax declaration for the reporting period is submitted to the body of the state tax service with which the tax payer is registered, within the timeframe established by the Code.
According to Article 52 of the Code, controlling bodies provide free consultations in the issues of practical application of specific tax legislation norms, by request of tax payers, within 30 calendar days following the receipt of such request by the controlling body.
A tax consultation is individual in nature and can be used exclusively by the taxpayer who had received it.
Article 55 of the Code defines that a tax notice-resolution on determining the amount of a taxpayer's monetary liability or another resolution of a controlling body can be cancelled by a controlling body of a higher level in the course of administrative appeal of such resolution and, in other cases, if such resolution is established to be in conflict with legislative acts.
According to Article 61 of the Code, tax control is a system of measures used by controlling bodies to control the correct accrual, and complete and timely payment of taxes and fees, as well as adherence to the legislation in the issues of cash circulation regulation, payment and cash transactions, patenting, licensing, and other legislation, the adherence to which the controlling bodies have been charged with controlling.
All tax payers are subject to registration in state tax service bodies.
The central state tax service body creates and maintains the State Register of Natural Person Tax Payers (Article 70 of the Code).
Information entered into the State Register pertains to persons that are:
- citizens of Ukraine;
- foreigners and stateless individuals permanently residing in Ukraine;
- foreigners and stateless individuals that do not have a constant place of residence in Ukraine, but are obligated to pay taxes in Ukraine according to the legislation, or are founders of legal entities created on the territory of Ukraine.
Article 75 of the Code establishes that state tax service bodies have the right to conduct in-house, documentary (scheduled or unscheduled; field or remove) and factual audits.
In-house and documentary audits are conducted by the bodies of the state tax service within the scope of the authority, exclusively in the cases and according to the procedure established by the Code, while factual audits – in the cases and according to the procedure established by the Code and other laws of Ukraine, the adherence to which the state tax service bodies have been charged with controlling.
An in-house audit is an audit conducted at the premises of a state tax service body, exclusively based on the data stated in the tax payer's tax declarations (tax returns).
According to Article 85 of the Code, officials (civil servants) of the state tax service are forbidden to demand any documents of the tax payer except in cases provided for by the Code.
The tax payer is obligated to provide the officials (civil servants) of the state tax service with a full set of documents that pertain to or are related to the object of audit. This obligation of the tax payer arises after the audit has been initiated.
Audit results (except in-house audits) are recorded in a protocol or a certificate.
Chapter III of the Code regulates the procedure for accruing enterprise profit tax. The basic tax rate is 16 percent (Article 151 of the Code).
Chapter IV of the Code establishes the procedure for accruing personal income tax.
According to Article 162 of the Code, the payers of the tax are:
- natural persons – residents that receive incomes originating both in Ukraine and abroad;
- natural persons – non-residents that receive incomes originating in Ukraine;
- tax agents.
The tax rate is 15 percent of the tax base (Article 167 of the Code).
According to Article 176 of the Code, the tax payers are obligated to:
- record their revenues and expenses to the extent required to determine the amount of total annual taxable income;
- receive primary accounting documents and preserve them during a time period established by the Code;
- submit a tax declaration according to the established form, within the established timeframe;
- submit documents that confirm the revenue-receiving tax payer's right to apply social tax privileges, to entities defined as responsible for the imposition (accrual) and payment of the tax to the budget;
- grant officials (civil servants) of state tax service bodies access to the territories or premises used by the tax payer to generate revenues from economic activity;
- pay the approved amount of tax liabilities as well as the amount of fine (penal) sanctions on a timely basis;
- submit a tax declaration based on the reporting year results.
Chapter V of the Code regulates the payment procedure for the value-added tax.
According to Article 193 of the Code, the following tax rates are established:
- 17 percent of the tax base;
- 0 percent of the tax base.
Article 195 establishes that the following operations are taxed with the zero tax rate:
- export of goods (related services), if their export is confirmed by a customs declaration prepared according to the requirements of the customs legislation;
- supply of goods (for fueling or provisioning sea vessels, fueling or provisioning aircrafts, fueling (refueling) and provisioning space ships, launchers or Earth satellites, fueling (refueling) or provisioning land military vehicles or other special contingent of the Armed Forces of Ukraine taking part in peacemaking operations outside of Ukraine, or in other cases provided for by the legislation);
- supply of services (international transportation of passengers, luggage and cargo by railway, motor car, sea, river and air transport; services that entail operations with movable property previously imported into the customs territory of Ukraine for the purpose of such operations and subsequently exported from the customs territory of Ukraine by the tax payer that performed such operations or by a non-resident recipient; servicing aircrafts that perform international flights).
Chapter VI of the Code envisages the payment procedure for the excise tax.
According to Article 213 of the Code, the taxable items are the following operations:
- sale of excisable goods (products) manufactured in Ukraine;
- sale (transfer) of excisable goods (products) for the purpose of personal consumption, industrial processing, contribution to statutory capital, or to one's employees;
- import of excisable goods (products) into the customs territory of Ukraine;
- sale of confiscated excisable goods (products), excisable goods (products) declared ownerless, excisable goods (products) not claimed by the owner before the end of their storage term, and excisable goods (products) transferred into state ownership by right of inheritance or on other legitimate grounds;
- sale or transfer into ownership, use or management of excisable goods (products) that had been imported into the customs territory of Ukraine with tax exemption before the end of the statutory term;
- amounts and value of lost excised goods (products) in excess of the established norms.
Article 215 of the Code determines that excisable goods are:
- ethyl alcohol and other alcohol distillates, spirits and beer;
- tobacco products, tobacco and industrial tobacco substitutes;
- petroleum products, liquefied gas;
- passenger cars, chasses for them, trailers and semitrailers, motorcycles.
Chapter VII of the Code regulates the procedure of the first vehicle registration fee.
According to Article 231 of the Code, the payers of the fee are legal entities and natural persons that carry out the first registration of taxable vehicles in Ukraine.
Exempt from tax are invalid cars with engine volume under 1500 cubic cm purchased at the expense of the state or local budgets and/or granted free of charge to disabled people according to the legislation of Ukraine, vehicles of nursing homes for the elderly and disabled, orphanages and foster homes, care homes for war and labor veterans, rehabilitation facilities for disabled people and disabled children, which are financed from the state and local budgets (Article 235 of the Code).
Section VIII of the Code regulates the environmental tax. According to Article 240 of the Code, the payers of the environmental tax are business entities, legal entities that do not conduct economic (entrepreneurial) activity, budget institutions, community and other enterprises, institutions and organizations, permanent representative offices of non-residents, including those that perform agency (representative) functions in respect of such non-residents or their founders, whose activity is associated with the following occurring on the territory of Ukraine, within its continental shelf and its exclusive (sea) economic zone:
- emissions of pollutants into atmosphere air by stationary sources of pollution;
- dumping of pollutants directly into water bodies;
- locating waste in specially designated places or sites, except for locating specific types of waste as secondary raw material;
- creation of radioactive waste (including the waste already accumulation);
- temporary storage of radioactive waste by the manufacturer in excess of the term established by the specific license conditions.
Chapter IX of the Code regulates the payment procedure for the royalties charged for transporting oil and petroleum products by trunk oil pipelines and petroleum product pipelines, as well as transit transporting of natural gas and ammonia by pipelines through the territory of Ukraine.
According to Article 251 of Code, the payers of the royalties are business entities that operate trunk pipeline objects and provide (organize) services of transporting (moving) cargo by Ukrainian pipelines. The payer of royalties for natural gas transit through the territory of Ukraine is a business entity authorized by the Cabinet of Ministers of Ukraine that provides (organizes) services of natural gas transit through the territory of Ukraine.
Article 253 of the Code establishes the following tax rates:
- UAH 1.67 for transit transport of 1,000 cubic meters of natural gas per 100 km of transport route distance;
- UAH 4.5 per one ton of oil transported by trunk oil pipelines;
- UAH 4.5 per one ton of petroleum transported by trunk petroleum product pipelines;
- UAH 5.1 for transit transport of one ton of ammonia per 100 km of transport route distance.
Chapter X of the Code regulates the payment procedure for royalties for oil, natural gas and gas condensate extracted in Ukraine.
The payers of the royalties are business entities that extract (including that done during geological exploration) of carbohydrate raw materials based on special permits to use the bowels, received according to the procedure established by the legislation.
Chapter XI of the Code establishes the payment procedure of the charge for the use of bowels. The charge for the use of bowels is nationalwide payment charged as:
- charge for the use of bowels for mining of mineral resources;
- charge for the use of bowels for purposes not related to mining of mineral resources.
Chapter XIII of the Code establishes the payment procedure for the land tax. The payers of the tax are:
- owners of land plots and land shares;
- land users.
The taxable items are:
- owned or used land plots;
- owner land shares.
According to Article 281, the following are exempt from paying the tax:
- group I and II group disabled people;
- natural persons raising three or more children under 18;
- pensioners (by age);
- war veterans;
- natural persons declared to be victims of the Chernobyl disaster.
Chapter XV of the Code regulates the payment procedure for the fee for the use of the radio frequency resource of Ukraine. According to Article 381 of the Code, the payers of the fee are general users of the radio frequency resource of Ukraine defined by the legislation on the radio frequency resource, that use the radio frequency resource of Ukraine within the radio frequency band allocated for general use, based on a:
- license to use the radio frequency resource of Ukraine;
- license to broadcast and permit to operate a radioelectronic device and a transmitter;
- permit to operate a radioelectronic device and a transmitter produced under an agreement with a holder of a broadcasting license;
- permit to operate a radioelectronic device and a transmitter.
Chapter XVI of the Code establishes the payment procedure for the fee for special water use. The payers of the fee are water using business entities regardless of their form of ownership: legal entities, their subsidiaries, branches, representative offices, other separated divisions that do not constitute a legal entity, permanent representative offices of non-residents, as well as natural persons – entrepreneurs that use water acquired through collection from water bodies (primary water users) and/or from primary or other water users (secondary water users), and use water for the needs of hydro energy, water transport and fishery.
Article 324 envisages that the taxable item is the actual amount of water used by the water users, taking into account the amount of water losses in their water supply systems.
According to Article 340 of the Code, the state guarantees that the legislation applied to the rights and obligations of an investor during the satisfaction of tax liabilities determined by a product sharing agreement will be the legislation in effect as of the moment of the agreement conclusion, except for cases when the amount of taxes and fees is reduced by the legislation, or when taxes and fees are cancelled by the legislation. The law that reduces the amount of taxes and fees or cancels taxes and fees is applied by the investor starting from the day of its entry into force.