Taxation in Kiev, Ukraine
What are the tax rates in Kiev, Ukraine? How are corporations taxed? Here’s Teleports overview of personal, corporate and other taxation topics in Kiev, Ukraine.
Personal taxation in Kiev
Effective personal income tax rate
| Annual income | $25,000 | $40,000 | $80,000 | $125,000 | $200,000 |
|---|---|---|---|---|---|
| Rate | 17% | 17% | 17% | 17% | 17% |
Teleport city rankings for personal income tax
Personal taxation puts Kiev in position 33 of all Teleport Cities.
Basis
Residents are taxable on their worldwide income. Nonresidents are taxed only on Ukrainian-source income.
Filing status
Joint filing is not allowed in Ukraine; each individual must file his/her own return.
Rates
The general personal income tax rate applied to employment income is 15% or 20%. The 15% rate applies to monthly income not exceeding 10 minimum salaries, and the 20% rate applies to monthly income exceeding this threshold.
Deductions and allowances
Deductions are available for social security contributions, mortgage interest (for real estate located in Ukraine), contributions to listed charities, educational expenses of the taxpayer and his/her immediate relatives and medical expenses (limited amounts).
Taxable income
Income is taxable whether obtained in cash or in kind. Taxable income includes employment income (including in-kind benefits); proceeds from trading or professional activities (including proceeds from intellectual property); proceeds from the alienation of property; dividends and interest; investment income; insurance payments; gifts and prizes; and contributions to unqualified pension plans made on behalf of a taxpayer by another person/employer.
Capital gains
The taxation of capital gains depends on the source of the gains.
Other taxes on individuals
Real property tax
Separate taxes apply for buildings and for land. An individual must pay tax annually if one of the following conditions is satisfied: (1) the area of his/her apartment(s) is more than 60 square meters; (2) the area of his/her dwelling house(s) is more than 120 square meters; or (3) the total area of his/her apartments and houses is more than 180 square meters. If an individual owns real estate with an area below any of the above, no tax is due. Otherwise, the excess over the above measurements is taxed at a rate of up to 2% of the minimum wage per square meter.
Inheritance/estate tax
Inheritances and gifts are taxable at the following rates: 0% if the recipient is a resident classified as a close relative (i.e. parent, spouse, parent of spouse, child/adopted child); 5% if the recipient is a resident not qualified as a close relative; and 15%/20% if the recipient (not a relative) is a non-resident, but the testator was a resident (or vice versa).
Social security
A salary or similar employment compensation paid to a local employee (including compensation paid to individuals under civil law contracts) is subject to the unified social security contribution, amounting to 3.6% of the salary (2.6% of the compensation/fee under civil law contracts), which is withheld by the employer. Social security contributions are subject to monthly caps.
Compliance for individuals
Penalties
Penalties are imposed for late payments and understatements of income.
Filing and payment
Employers and other taxable entities are considered to be tax agents of individuals and are responsible for withholding personal income tax and unified social security contributions from salaries and other types of remuneration. These taxes must be remitted before or at the time the income is paid. If income is paid in kind, the tax agent must remit the tax on the banking day following the date payment is made. The tax agent is responsible for making timely payments of withholding taxes on salaries and filing personal income tax reports on a quarterly basis.
Corporate taxation in Kiev
Teleport city rankings for corporate income tax
Corporate taxation puts Kiev in position 222 of all Teleport Cities.
Basis
A resident entity is taxed on worldwide income received or accrued within the reporting period, depending on the type of income. A nonresident company is taxable on business income derived from carrying out trade or business activities in Ukraine and other nonbusiness income received from Ukraine sources. A branch or PE of a nonresident in Ukraine is treated as a separate entity for tax purposes.
Taxation of dividends
Dividends received by a domestic company from another domestic corporate income taxpayer are not subject to corporate income tax. Dividends received by a domestic company from a nonresident are considered taxable income.
Residence
A legal entity incorporated and operating under Ukraine law generally is considered a tax resident; a legal entity incorporated abroad and operating according to the laws of another country normally is treated as a nonresident.
Losses
Tax losses generally may be carried forward indefinitely. Restrictions sometimes are imposed for certain periods. The carryback of losses is not permitted.
Incentives
Incentives are granted only to certain nonprofit institutions.
Rate
The corporate income tax rate is 18%. Certain types of businesses (e.g. insurance, etc.) are taxed under special regimes, which may provide lower tax rates.
Foreign tax credit
Foreign tax paid may be credited against Ukrainian tax or deducted from taxable income under an applicable tax treaty. The credit or deduction is limited to the amount of Ukrainian tax payable on the foreign income.
Taxable income
Taxable income is calculated based on accounting data, by adjusting profit (loss) before tax by the amount of relevant differences. Taxpayers with income not exceeding UAH 20
Capital gains
Capital gains are treated as ordinary income and taxed at the standard corporate income tax rate.
Other taxes on corporations
Real property tax
Land tax is imposed on the owner/user, with the rate determined based on the location and use of the land. Settled land with an assessable value is taxed at a rate of 3% of the estimated value; otherwise, the rate is up to 5% of the assessable value of the land. Agricultural land is taxed at rates of up to 1% of the estimated value.
Social security
Salary or similar employment compensation paid to an employee is subject to a unified social security contribution at a rate that ranges from 36.76% to 49.7%, depending on the taxpayer’s risk category.
Other
A 1% state duty is imposed on the transfer of real estate, as is a mandatory pension fund contribution of 1%.
Transfer tax
No, but see "Other" below for state duty and mandatory pension fund contributions triggered by transfers of real estate.
Compliance for corporations
Penalties
Penalties and/or fines apply for late payments, failure to comply with filing requirements and understatements of income.
Rulings
A taxpayer may request an explanation of the tax treatment of a particular issue.
Filing requirements
The corporate income tax return must be submitted within 40 days following the quarterly reporting period. Companies that have not reported tax losses for the previous reporting period may submit only an annual return that must be submitted by 1 June of the year following the reporting period.
Other taxation in Kiev
Value added tax
Filing and payment
The tax period (and the period for the filing and payment obligation) is either a calendar month or calendar quarter (depending on turnover). Monthly returns must be submitted within 20 calendar days of the last calendar day of each reporting
Rates
The standard VAT rate is 20%. A reduced rate of 7% is applied to supplies of pharmaceuticals and healthcare products. Exported goods and auxiliary services are zero-rated. For VAT purposes, services that are included in the customs value of imported/exported goods are considered auxiliary services. Certain supplies are not subject to VAT (e.g. the issuance of securities, insurance services, etc.). VAT-exempt supplies include domestically published periodicals and books.
Taxable transactions
VAT is levied on the supply of goods and services in Ukraine and on the import/export of goods and auxiliary services.
Registration
Registration is required (for residents and nonresidents) if turnover exceeds UAH 1 million during any rolling 12- month period. A legal entity may apply for voluntary registration if it deems such registration necessary.
Anti-avoidance rules
Thin capitalization
The thin capitalization rules apply to all loans received by resident companies from nonresident related parties where the debt is more than 3.5 times greater than the company’s equity. Interest paid on such loans is limited to 50% of profits before tax (plus the amount of financing expenses and depreciation) in the relevant tax period. Nondeductible interest may be carried forward to future periods, but subject to an annual limit of 5% of such interest.
Disclosure requirements
Individual shareholders (beneficial owners) must be disclosed at the time a legal entity registers with the state and at the time of a merger or acquisition.
Transfer pricing
The transfer pricing rules generally are based on the OECD transfer pricing guidelines. The rules apply to taxpayers with annual revenue (less indirect taxes) of at least UAH 50 million that carry out the following controlled transactions exceeding UAH 5 million with one counterparty: (1) transactions with nonresident related parties; (2) sales of goods under nonresident commission arrangements; (3) transactions with related parties (one of which is a nonresident) through one or more unrelated intermediaries that do not perform significant functions; or (4) transaction with nonresidents in black list countries (i.e. countries with a corporate tax rate at least 5% lower than the rate in Ukraine or countries that have not concluded an
Other
Ukraine does not have a general anti-avoidance rule. However, to prevent tax avoidance, restrictions are imposed on the deductibility of expenses in certain cases.
Investment basics
Foreign exchange control
Only local currency generally may be used in business transactions between residents. Foreign currency may be used in cross-border transactions between residents and nonresidents. Foreign currency proceeds received by a company from its foreign clients must be credited to a local bank account no later than 90 calendar days after the date goods or services are exported. Similarly, goods generally must be imported into Ukraine within 90 calendar days after prepayments have been made by a Ukrainian company to a foreign supplier. Additionally, 75% of foreign currency income must be converted into Ukrainian currency upon receipt.
Accounting principles/financial statements
Ukrainian accounting standards apply. These standards generally are in line with IFRS, but differ in certain areas. Financial statements must be prepared on a quarterly basis.
Principal business entities
These are the limited liability company, private and public joint stock company, representative office and branch/permanent establishment (PE) of a foreign corporation.
Withholding tax
Royalties
A 15% withholding tax is levied on royalties paid to a nonresident, unless the rate is reduced under a tax treaty.
Dividends
A 15% withholding tax is levied on dividends paid to a nonresident, unless the rate is reduced under a tax treaty.
Branch remittance tax
There is no branch profits tax specifically imposed in the corporate income tax section of the tax code, and the Ukrainian tax authorities generally agree that no tax should be withheld if there is a tax treaty between the country of the head office of the branch and Ukraine. In the absence of a treaty, the tax authorities may require payment of a 15% tax on the repatriation of after-tax branch profits.
Other
A 20% surtax applies to payments made for advertising services performed outside Ukraine by nonresident providers.
Interest
A 15% withholding tax is levied on interest paid to a nonresident, unless the rate is reduced under a tax treaty.
Technical service fees
A 15% withholding tax is levied on technical service fees paid to a nonresident, unless the rate is reduced under a tax treaty.
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