The Government Approves Changes to Legislation to Restore the Pre-war Taxation System

The Government approved changes to tax legislation aimed at restoring the pre-war taxation system.

The draft law is not intended to raise taxes and does not introduce new tax rates.

The draft law amends the Tax Code of Ukraine and several laws, which provide for the repeal of certain provisions of legislative acts introduced for the period before the termination or lifting of martial law in Ukraine as of July 1, 2023.

The draft law provides for the following changes:

• the possibility for private entrepreneurs and legal entities to be Group III single tax payers at a rate of 2% of income is canceled;
• the possibility for private entrepreneurs of single tax payers of groups I and II not to pay the single tax is canceled;
• documentary inspections are being resumed;
• the time limits set by tax legislation are restored;
• penalties for violation of tax laws are restored;
• penalties for violations of the correctness of the calculation and payment of the unified social tax are restored;
• penalties for violation of the procedure for using registers of settlement operations are restored.

The adoption of this draft law is one of the requirements the Memorandum of Understanding of the new IMF Program Monitoring for Ukraine, restoring the pre-war taxation system in a quick manner. The performance of the relevant structural benchmarks of the Memorandum will pave the way for a full-fledged cooperation program with the Fund (Upper-Credit Tranche), with the attraction of appropriate financing this year.

    The adoption of the draft law will ensure that Ukraine performs its obligations under the Memorandum of Economic and Financial Policy dated December 8, 2022, and that measures are taken to increase tax revenues in 2023.