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Payment of the land tax by single tax payers – physical persons – entrepreneurs

We would like to present to your attention a Summarized tax advice regarding payment of the land tax by owners of  non-residential premises, single tax payers – physical persons-entrepreneurs, approved by the Order of the State Tax Service of Ukraine No 1051 of Nnovember 23, 2012.

First of all it is pointed out that according to the Art. 269 of the Tax Code of Ukraine (hereinafter referred to as “Code”), payers of the land tax are owners of land plots or land shares and land users.

 Thus, the subcl. 297.1.4 of the cl. 297.1 of the Art. 297 of the Code provides that the single tax payers are exempted from an obligation of charging, paying and submitting the tax report on land tax, except for land tax on land plots, which are not used for business activity.

At the same time it should be paid attention to subcl. 291.5.3 of the cl. 291.5 of the Art. 291 of the Code which provides that physical persons-entrepreneurs who lease land plots, total area of which exceeds 0.2 hectares, dwelling premises, total area of which exceeds 100 square meters, non-residential premises (buildings, structures) and/or their parts, total area of which exceeds 300 square meters, can not be the single tax payers.

As for payment of the tax, the State Tax Service of Ukraine reffers also to the Art. 796 of the Civil Code of Ukraine which stipulates that simultaneously with the right to rent the building or other capital facility (their separate part), the lessee has the right to use a land plot, on which they are located, and which adjoins to the building or structure, in the amount required to achieve the purpose of the rent.

Herewith, the Art. 797 of the Civil Code of Ukraine provides that payment that is charged from the lessee of the building or other capital facility (their separate part) consists from the payment for using it and payment for using a land plot.

As a result, it is reported that if the ownership on a land plot is registered on the physical person (physical person-entrepreneur) and he uses a land plot for conducting economic activities (ex.: shop, service station, etc.), such an entrepreneur (the single tax payer) is exsempted from an obligation of calculating, paying and submitting the tax report on land tax (taking into account provisions of subcl. 291.5.3 of the cl. 291.5 of the Art. 291 of the Code).

Besides, if the building, structure or their part are rented out under the lease agreement in such a case simultaneously with the right of such lease the lessee has the right to use the land plot, on which such buildings/constructions are located, and which also adjoins to the building or structure, i.e. entrepreneurship of Lessors is conducted necessarly by means of leasing property and a land plot, then such physical person-entrepreneur (the owner of non-residential premises) is also exempted from charging (paying) and submitting the tax report on the land tax.