Business suggests 5 key changes to the Tax Code

15/ 12/ 2020

Last week, the meeting of the Verkhovna Rada Committee on Finance, Tax and Customs Policy took place. During the meeting, the VRU Committee approved the draft law №4065 “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine to Ensure the Collection of Data and Information Necessary for Declaring Certain Objects of Taxation” before the second reading. The final version of the amendments (including those supported by business) has not yet been made available to the public. We hope that the draft law №4065 with the proposals to the Tax Code of Ukraine, offered and promoted by the EBA members, will get support at the meeting of the Committee and soon find approval among deputies during the voting in the Verkhovna Rada. Thus, the EBA would like to draw attention to the following issues: · postponing the introduction of control over the registration of excise warehouses for the storage of methane-containing mixtures and residues of such mixtures to the beginning of 2021; · clarifying the legislative requirements on the tax consequences for the liquidation of controlled foreign companies; · exempting permanent establishments from financial sanctions in respect of corporate income tax for the periods when the new rules of tax accounting were introduced. It should be noted that a possible change for the second time this year in taxation rules of permanent establishments of non-residents will lead to significant misunderstandings in matters of their practical application. · gradually increasing the tax rate on tobacco-containing products for electric heating (TVEN), extending by 2030 the plan of annual increase of the cigarette tax rate with 10% annual increase of rates for cigarettes and excluding from the Tax Code of Ukraine the provisions on indexation of excise tax rates on tobacco products. · introducing a transition period until July 1, 2021, for the retail sale of liquids for electronic cigarettes not marked with excise tax stamps. The European Business Association emphasizes that the stability and predictability of the tax system in the country is, without a doubt, an important factor for foreign investors. Thus, excessive changes in tax rules, not to mention changes that affect past tax periods which keep taxpayers in a state of uncertainty until the new rules are promulgated; also, insufficient time to prepare for the application of changes cause equitable outrage among investors and do not contribute to their productive activities in Ukraine. Therefore, we hope that the proposals from the business will find support among the peoples deputies and will be accepted during the voting in the Verkhovna Rada. Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

The final version of the amendments (including those supported by business) has not yet been made available to the public. We hope that the draft law №4065 with the proposals to the Tax Code of Ukraine, offered and promoted by the EBA members, will get support at the meeting of the Committee and soon find approval among deputies during the voting in the Verkhovna Rada. Thus, the EBA would like to draw attention to the following issues:

· postponing the introduction of control over the registration of excise warehouses for the storage of methane-containing mixtures and residues of such mixtures to the beginning of 2021;
· clarifying the legislative requirements on the tax consequences for the liquidation of controlled foreign companies;
· exempting permanent establishments from financial sanctions in respect of corporate income tax for the periods when the new rules of tax accounting were introduced. It should be noted that a possible change for the second time this year in taxation rules of permanent establishments of non-residents will lead to significant misunderstandings in matters of their practical application.
· gradually increasing the tax rate on tobacco-containing products for electric heating (TVEN), extending by 2030 the plan of annual increase of the cigarette tax rate with 10% annual increase of rates for cigarettes and excluding from the Tax Code of Ukraine the provisions on indexation of excise tax rates on tobacco products.
· introducing a transition period until July 1, 2021, for the retail sale of liquids for electronic cigarettes not marked with excise tax stamps.

The European Business Association emphasizes that the stability and predictability of the tax system in the country is, without a doubt, an important factor for foreign investors. Thus, excessive changes in tax rules, not to mention changes that affect past tax periods which keep taxpayers in a state of uncertainty until the new rules are promulgated; also, insufficient time to prepare for the application of changes cause equitable outrage among investors and do not contribute to their productive activities in Ukraine.

Therefore, we hope that the proposals from the business will find support among the people’s deputies and will be accepted during the voting in the Verkhovna Rada.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.