In case of passing the bill by Ukrainian parliament local authorities will be authorized to impose new taxes, and review current ones

The Committee on Finance, Tax, and Custom Policy of the Ukrainian Parliament recommended to approve in principle the draft law No. 7190 “On Amendments to the Tax Code of Ukraine, and Other Legislative Acts of Ukraine on Improving Legislation for the Period of Martial Law”. It implies exemption from import duties, and VAT the Ukrainian import by single tax payers of the first, second, and third groups, abolition of real estate tax, and simplified form of custom clearance.

It was announced by Daniil Getmantsev, the Head of the Finance, Tax, and Custom Policy Committee in Telegram.

According to the text of the explanatory note of the bill, exception from duties doesn’t apply to goods from Russia, Belarus, and from temporarily occupied territories.  It canceled the obligation to submit termins required for import goods, listed by the Cabinet of Ministers. Also at the time of martial law from April 1, operations on the import of the goods by single tax payers of groups 1-3 are exempt from VAT.

Residential property owners from the war zones are exempt from taxes for 2021, and 2022, and non-residential property from taxes from March 1, 2022, to December 31.

Local authorities are granted the right to impose local taxes, and update previous ones (reduce/increase rates) without extending requirements of regulatory legislation.

Other significant changes are the following:

  • revenue from sales of agriculture products will be taxed by tax agent, and not by the individual;
  • the deadline of exemption from environmental tax is set from the March 1, 2022, to December 31, and such exemption will be applied to entities registered in the territories with military actions, and not to objects located on these territories;
  • For exporters of fuel, the amount of negative value of the VAT determined for the relevant reporting period is not subject to budgetary reimbursement, the calculation of which includes the amount of tax liability on transactions using the VAT rate for the fuel amounted to 7%. Such amounts will be applied to the tax credit of the next period.

As a reminder, the week ago the Verkhovna Rada voted for draft resolutions to support the economy, introducing a 2% rate of turnover instead of VAT, and income taxes for companies with turnovers of up to UAH 10 billion. The draft law includes decisions on tax liberalization, and business support during martial law.