Changes on the Unified Tax, removal of taxes and duties on import of goods, vehicles, removal of property tax
Please be informed that on April 5, 2022 the Law of Ukraine № 2142-IX “On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine on improvement of legislation during martial law” (formerly Draft Law No. 7190) was published in the newspaper “The Voice of Ukraine” and came into force on that date.
Let us dwell on the main provisions of Law No. 2142-IX (the published text of the Law differs slightly from the original text of Draft Law No. 7190).
1. Changes for taxpayers during the transition to the single tax at the rate of 2% for the period of martial law, which are fixed by law, but not at the level of explanations of the State Tax Service of Ukraine:
– registration by the VAT payer is suspended, not cancelled; in this regard, the right to tax credit, negative value of VAT, budget refund of VAT is lost, there is no conditional sale of assets of the company with the accrual of VAT;
– the date of transition to the simplified system is the date specified in the application and the calculation of income for the previous calendar year is not attached to the application;
– the status of a single tax payer at the rate of 2% is assigned on the next working day after submitting an application for transition to a single tax;
– the reporting period is set to a month instead of a quarter;
– for all goods purchased with VAT before the transition to the simplified system and used while under the simplified system, after the end of martial law it will be necessary to accrue VAT;
– the ban on the simplified system of taxation of such activities as the retail sale of fuel and lubricants in containers of up to 20 liters, import of cars, car bodies to them, trailers and semi-trailers, motorcycles, vehicles designed to transport 10 persons or more, vehicles for the transport of goods, activities of individuals related to retail sale of beer, cider, peri (without added alcohol) and table wines.
2. The period, during which taxpayers, who were unable to file tax returns, must file their returns after the end of martial law, is extended from three to six months.
3. Property Tax
For the 2021 and 2022 tax (reporting) periods there is no tax on immovable property, other than land plots, for residential real estate, including parts thereof, which are located in areas where there is (were) hostilities, or for territories temporarily occupied by armed formations of the Russian Federation and for residential properties that have become uninhabitable due to the armed aggression of the Russian Federation.
For the period from March 1, 2022, through December 31 of the year in which martial law is terminated or lifted, no tax shall be charged or paid by legal entities on immovable property other than land for residential real estate, including parts thereof located on territories where military operations are (were) conducted or on territories temporarily occupied by armed formations of the Russian Federation, and for residential real estate that became uninhabitable due to the armed aggression of the Russian Federation.
For the period from March 1, 2022, through December 31 of the year in which martial law is terminated or lifted, no tax shall be charged or paid on immovable property other than a land plot for non-residential real estate, including parts thereof located on territories where military operations are (were) taking place or on territories temporarily occupied by the armed formations of the Russian Federation.
Herewith, taxpayers-legal entities within six calendar months after the date of termination or cancellation of martial law have the right to submit a clarifying tax declaration, which reflects the changes in the tax liability for tax on immovable property other than land for the relevant tax period.
For individual taxpayers, the supervisory authority shall calculate the tax liability on their own for the period from January 1 to March 1, 2022.
The list of territories where military operations are taking place or which are temporarily occupied by the armed formations of the Russian Federation is determined by the Cabinet of Ministers of Ukraine.
The procedure for declaring residential property uninhabitable due to the armed aggression of the Russian Federation is determined by the Cabinet of Ministers of Ukraine.
4. For the period from January 1, 2022 to December 31 of the year in which martial law is terminated or lifted, no environmental tax shall be assessed or paid by payers of such tax registered in territories where military operations are (were) taking place or in territories temporarily occupied by the armed forces of the Russian Federation.
5. Single tax payers of the first, second and third group, who pay tax at a rate of 2%, shall be exempt from import duty on goods that are imported into the territory of Ukraine and from VAT, excise tax on operations of importation of goods into the customs territory of Ukraine (i.e., taxpayers of UT at the rate of 3% with VAT are not exempt from VAT on imports).
The Law also provides for simplified customs clearance procedures for such goods. The simplified method of customs control provides for submission of a preliminary customs declaration and does not require a customs inspection.
Imports of goods are exempt from duties, except for goods from Russia, Belarus and temporarily occupied territories. Thus, the following imported goods shall be exempt from import duty:
– goods that are imported (sent) into the customs territory of Ukraine by enterprises for free circulation, except ethyl alcohol and other alcoholic distillates, alcoholic beverages, beer (except for “live” fermented kvass), tobacco products, tobacco, industrial tobacco substitutes, liquids that are used in electronic cigarettes;
– cars, car bodies, trailers and semi-trailers, motorcycles, vehicles intended for transportation of 10 persons or more, vehicles for cargo transportation, which are imported by citizens to the customs territory of Ukraine for free circulation.
For the list of goods determined by the Cabinet of Ministers, the obligation to submit permits required for imports (sanitary, environmental and other) is removed.
6. A moratorium on inspections by customs authorities was established for the period of martial law.
7. Changes were made regarding the taxation of personal income tax on personal agricultural produce, namely, starting from April 1, 2022, the income from the sale of personal agricultural products will be taxed by the tax agent, rather than by the individual themselves.
8. During martial law or state of emergency on the territory of Ukraine, the continuation of the registration of intellectual property objects in the customs register of intellectual property objects shall be carried out automatically by the appropriate software and information system of the unified automated information system of the customs authorities of Ukraine.
9. Restrictions on the sale of alcohol. Temporarily, during martial law and/or state of emergency, ethyl alcohol used as a medicine and alcohol or water-alcohol infusions shall be sold in retail only through pharmacies in vials of medical glass or in plastic vials and jars of medical use with a volume of drug content not exceeding 100 cm3, except for medicines such as balms.
10. Suspension of the statute of limitations does not apply to the case where martial law or a state of emergency is not imposed on the entire territory of Ukraine.
11. For exporters of fuel the sum of negative value of VAT determined for the relevant reporting period, the calculation of which includes the amount of tax liability on transactions with the application of the VAT rate for fuel 7%, shall not be subject to budgetary reimbursement. Such amounts shall be attributed to the tax credit of the next period.