10 ADVANTAGES FOR BUSINESS
1. BUSINESS WILL BENEFIT FROM THE MACROECONOMIC EFFECT OF THE TAX REFORM
• The reform will help stabilize the macroeconomic environment and give business more confidence in investment planning and implementation;
• The reform will stabilize public finance, help the government stick to its course and avoid unexpected changes or increases in taxes;
• The reform will mean continued support from the IMF providing security that Ukraine will be able to cover its deficit of the balance of payments and to keep its currency stable.
2. WE WILL DO THE BUSINESS ENVIRONMENT MORE OPEN FOR COMPETITION
• The reform will create more space for business by fostering fair competition;
• Some traditional tax exemptions will be abolished which used to cause tax burden disparities between different branches of the economy.
We grant a one-year grace period to farming companies prior to abolishing their preferential VAT mode, in order to let agriculture adjust itself to the new tax environment. For one year, 75% of the VAT entailing for farming companies will be transferred to the state budget, 25% of the VAT revenue will stay at the disposal of farming companies. We will also restore the VAT refund for all grain exporters.
• The reform will secure better conditions for fair competition by diminishing the misuse of the «small entrepreneur» status by some companies which made their competitors pay more taxes than they have to;
• The administrative pressure on business will be reduced resulting in lower costs for business.
3. WE WILL SIGNIFICANTLY REDUCE THE MOST RANKLING TAX (PAYROLL TAX) AND MAKE UKRAINE COMPETITIVE COMPARED TO OTHER COUNTRIES IN CENTRAL AND EASTERN EUROPE
• The tax reform will make regular employment more attractive for everyone. The state will be taking less taxes from the salaries. Business will be paying less, the net income of employees will increase thanks to the changes we are going to implement;
• The costs of hiring new employees will be significantly reduced. Starting from 2016, the payroll tax will be halved to 20%, the PIT will be 18%. In 2017, the PIT will be reduced to 17%, starting from 2018 the tax will be abolished completely. Thus, the effective tax on salaries in 2018 will be 20% only.
4. WE ARE IMPLEMENTING AN INVESTMENT TAX CREDIT FOR THOSE WHO WILL BE INVESTING IN TANGIBLE ASSETS IN 2016-2018
• Companies investing into tangible assets will be allowed to save up to 50% in the profit tax within next three years;
• The investment-related tax credit will be equal to 30% of the value of new equipment;
5. WE WILL MAKE ROUTINE TAX MANAGEMENT PROCEDURES EASIER
• Tax bills for VAT: requirements to the format of tax documents will be simplified; minor mistakes in tax bills cannot be the reason to deny the tax credit;
• Tax declarations: tax authorities won’t be able to reject them;
• Check of tax payments: transparent procedures will be implemented obliging tax authorities to inform tax payers on the sum of taxes received from them;
• Tax consulting services: clear rules will be set saying that tax payers acting according to tax consultants’ advise are free from fines (but not from the additional tax amount to be paid, if any);
• Tax checks: the number of reasons for unscheduled tax checks will be reduced. Tax authorities won’t be able to use the so-called «tax-relevant information» (in fact – any reason at their discretion) as a reason for the unscheduled tax check.
6. WE WILL MAKE TAX-RELATED CLAIM PROCEDURES FAIR AND TRANSPARENT
• The system of administrative claims will be reduced to one level, which is the State Fiscal Service, instead of two;
• We will be engaging independent experts (on behalf of the Council of the business ombudsman) in processing claims within the administrative procedure related to significant additional tax amounts demanded by tax authorities.
7. WE WILL ADJUST THE UKRAINIAN TAX REGULATIONS TO THE EU AND OECD PRACTICES
• The place of delivery of services as well as services exempt from VAT will be defined in line with the relevant EU directive;
• The rules of Funds Transfer Pricing will become closer to the OECD guidelines, especially in regard to requirements to small business and simple transactions.
8. WE WILL SOLVE THE MAIN ISSUES OF THE TAX LAW FOR SINGLE BRANCHES AND FOR BUSINESS IN GENERAL
We will remove discrepancies and disparities which have been making business difficult in Ukraine:
• overpayment in profit tax (all branches): advance payments will be abolished, possibilities to credit overpayments against current tax liabilities will be clearly regulated;
• official publication of data on VAT refund containing information on the respective VAT payers, VAT amount and refund progress;
• launch of the electronic payer’s office, setting principles and mechanisms for its operation;
• differences between accounting by international standards and tax records (banking): definition of reserves for accounting and tax purposes will be adjusted to the IFRS;
• VAT (exporters of grain): the embargo on VAT reimbursement will be abolished;
• rent payments (oil and gas): the rent rates will be significantly reduced in two steps – in 2016 and 2018.
• transformation of the State Fiscal Service and the Office for big tax payers;
• demilitarization of the tax police.
9. WE WILL IMPOSE A TWO-YEAR EMBARGO ON AMENDMENTS TO TAX REGULATIONS
• We oblige ourselves to restrain from any changes in the new Tax Code in the course of two years except for changes reducing taxes or simplifying tax regulations.
10. WE WILL IMPROVE THE WORDING OF TAX REGULATIONS TO MAKE LIFE EASIRE FOR BUSINESS