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Ukraine Signs Off On Tax Reform, New TP Regime

by Tatiana Smolenska, Tax-News.com, Moscow

30 December 2014


Ukraine's Parliament has approved a package of tax reforms that will lower the tax burden for small- and medium-sized companies (SMEs), simplify the tax regime, introduce additional temporary import duties, and introduce a new transfer pricing regime.

The Prime Minister, Arseniy Yatsenyuk, told Parliament that the amendments will allow for a fair tax system that will also meet the needs of the Budget. The number of taxes payable will be reduced from 22 to 9, and SMEs will be exempt from inspections for two years. In an effort to cut the rate of informal employment, the social security tax will be reduced from 41 percent to 16 percent.

A number of imports will be subject to a duty of five percent, while a higher duty of ten percent will apply to food. These levies will be in place for one year. There will also be tax increases for purchases of luxury items and new taxes on large properties.

Meanwhile, Ukraine has signed off on new legislation that fleshes out a transfer pricing regime in the nation. In particular it seeks to ensure that transactions between connected parties (newly defined in the legislation) are conducted at arm's length, with new documentation and disclosure requirements. A penalty of up to 200 minimum wages will apply to any company that fails to adhere to the documentation requirements. Persons who willfully fail to comply will face a fine of five percent of the value of the transaction.

TAGS: tax | corporation tax | legislation | transfer pricing | tax rates | social security | import duty | tax reform | legislation amendments | Ukraine | Tax | Tax Evasion

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