The Ministry of Finance is to present its plan of improvements to the tax system in July

In July, the Ministry of Finance will submit its draft law on the improvement of the tax system to the Cabinet of Ministers.

The main objective of the draft law is to simplify tax administration, to remove possible manipulations by the State Fiscal Service and thus to take away pressure on business.

The draft law takes into account proposals made by MPs, business and experts. 

What regulations does the draft law contain and what does it mean to business?

Tax administration:

• optimization of the structure and functions of the State Fiscal Service – shall result in a lower number of ad-hoc tax checks;
• implementation of a full-scale electronic taxpayer’s office – shall diminish the human factor and thus reduce space for corruption;
• introduction of a one-level system for filing claims against SFS decision – shall enhance protection for business;
• transfer of the power to provide written advice on tax matters from the SFS to the Ministry of Finance – shall diminish manipulations and discrepancies in interpreting tax regulations.

VAT:

• creation of a single open register of applications for VAT refund – shall contribute to timely VAT refund;
• improvement of the system for electronic VAT administration – shall make the entire process more transparent and comfortable for business;

Personal income tax:

• expansion of the list of expenses of private entrepreneurs related to business activity by including the excise tax paid on the retail sales of excise goods – shall simplify business processes;
• granting individuals the right to contact controlling authorities for advice in filling in the annual tax declaration – shall simplify the declaration procedure and reduce mistakes.

Single tax for private entrepreneurs:

• when paying the single tax, private entrepreneurs won’t have to consider their employees who were drafted to the Armed Forces – shall provide an opportunity to small businesses to hire more employees without having to pay more taxes.

Excise tax:

• abolition of the excise tax on entities selling fuel in small quantities – shall reduce the tax burden on small business;
• excise tax exemption for tobacco raw material used by tobacco processing factories as well as additional tax incentives for the production of such raw material in Ukraine (tax exemption for the cultivation and processing of tobacco in Ukraine) – shall reduce the tax burden and foster investments and employment.

Fee for the use of water:

• Abolition of the rent fee for the dedicated use of water for all entities except the primary consumers (water channel operators) – tax reduction for secondary water consumers.

Special tax regulations for the ATO zone:

• introducing special procedures for the payment of some of the taxes (VAT, PIT, excise tax, single tax, property tax) in the ATO zone and the currently occupied territories – зупинить нарахування штрафів, звільнить від сплати місцевих податків частину підприємств.

What next?

After the draft law has been approved by the Cabinet of Ministers, it will be submitted to the Parliament. In the period between the Parliament’s sessions it will be further discussed with business and public to agree on all points prior to submitting it to the Parliament again.