Approved Amendments to the Tax Legislation under the Draft Law No. 7190

On March 24, 2022, the Parliament adopted the draft Law of Ukraine No. 7190 “On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine Concerning the Improvement of Legislation for the Period of Martial Law”. The Law supplements the previously adopted amendments to the tax legislation and provides for new rules, which will be discussed below.

Extension of the deadline for fulfillment of obligations:

If the taxpayer does not have the opportunity to fulfill their tax obligation in a timely manner, in particular regarding compliance with deadlines for payment of taxes and fees, submission of reports, registration in relevant registers of tax or excise invoices, adjustment calculations, submission of electronic documents containing actual fuel balances and the volume of fuel or ethyl alcohol, etc., taxpayers are released from liability with mandatory performance of such duties within six months after the termination or abolition of martial law in Ukraine.

Single tax:

?  Expanding the list of entities to apply the peculiarities of taxation. It is determined that the payers of the single tax of the third group, who use the peculiarities of taxation during martial law, may be business entities (legal entities and individual entrepreneurs) that import cars, their bodies, trailers and semi-trailers, motorcycles, vehicles intended for the carriage of 10 or more persons, vehicles for the carriage of goods.

?  Exemption from VAT and submission of VAT reports. It is established that taxpayers of the third group who use the peculiarities of taxation during martial law are exempt from the obligation to charge and pay value added tax on transactions for the supply of goods, works and services, the place of supply of which is located in the customs territory of Ukraine, and when importing goods into the customs territory of Ukraine, as well as from the submission of tax declarations on value added tax. Transactions carried out by a single taxpayer of the third group, who uses the peculiarities of taxation, are considered not to be subject to value added tax.

?  Exceptions to VAT exemption. Exemption from taxation does not apply to transactions on the customs territory of Ukraine under the customs regime of import and supply in the customs territory of Ukraine of goods originating in the country recognized as the occupying state in accordance with law and/or recognized as the aggressor state in accordance with legislation, or imported from the territory of the occupying state (aggressor) and/or from the occupied territory of Ukraine, defined as such in accordance with the law.

?  Suspension of registration by a VAT payer. Registration by a value added taxpayer of taxpayers specified in the previous paragraph  shall be suspended from the first day of the month in which the application for registration as a single taxpayer of the third group is submitted, with the peculiarities of taxation specified in this paragraph.

Tax period and terms of payment of the single tax:

?  Tax period for single taxpayers of the third group who use the peculiarities of taxation during martial law is a calendar month. As a general rule, taxpayers shall submit to the supervisory authority the tax declaration of the single tax payer within the time limits set for the monthly tax (reporting) period. In other words, the declaration shall be submitted within 20 calendar days following the last calendar day of the reporting (tax) month (subpar. 49.18.1 of par. 49.18 of Art. 49 of the Tax Code of Ukraine).

?  The amount of tax liability specified in the tax declaration shall be payable within 10 calendar days following the last day of the deadline for filing the tax return.

Selection and transition to a simplified system with peculiarities:

?  An application shall be submitted to the supervisory authority. The calculation of income for the previous calendar year is not attached to the application.

? The business entity is considered a single taxpayer of the third group with the following peculiarities:

? from April 1, 2022 – if the application is submitted before April 1, 2022;

? from the next working day after the submission of such an application – if the application is submitted after April 1, 2022.

Peculiarities of VAT:

?  If goods (services) were purchased (manufactured) with VAT and sold when registration by the payer was suspended. It is determined that for goods/services, non-current assets purchased/manufactured with value added tax before the application of peculiarities of taxation, used (supplied, sold) by the single taxpayer of the third group during the period of peculiarities of taxation in transactions that were not object of taxation, the value added taxpayer is obliged to accrue tax liabilities not later than the last day of the reporting period in which the restoration of its registration as a value added taxpayer was carried out.

?  Determination of the tax base in the case provided for in the previous paragraph. The tax base for non-current assets is determined based on the book (residual) value at the beginning of the reporting (tax) period during which transactions were carried out (in the absence of accounting for non-current assets – based on normal price), and for goods/services – based on the cost of their acquisition.

Peculiarities of filing a declaration for corporate income taxpayers:

Corporate income taxpayers who have decided to switch to a simplified system of taxation by a taxpayer with special needs or refused to use the peculiarities of taxation shall file a tax declaration on corporate income tax for those periods during the calendar year in which the taxpayer was an income taxpayer.

Specified provisions on exemption from environmental tax:

?  Temporarily, from January 1, 2022 to December 31 of the year in which martial law is terminated or abolished, no environmental tax shall be accrued and paid by taxpayers registered at the location of stationary sources of pollution, for the generation of radioactive waste and temporary storage of radioactive waste, in the territories where hostilities are being conducted (were conducted), or in the territories temporarily occupied by the armed forces of the Russian Federation.

?  The list of territories where hostilities are being conducted (were conducted) or temporarily occupied by the armed forces of the Russian Federation is determined by the Cabinet of Ministers of Ukraine.

Immovable property tax:

?  Exemption from payment of tax on residential real estate – for 2021 and 2022 tax (reporting) years for residential real estate, including their shares located in the territories where hostilities are being conducted (were conducted), or in temporarily occupied territories and for residential real estate that has become uninhabitable in connection with the armed aggression of the Russian Federation.

?  Exemption from tax on non-residential real estate – for the period from March 1, 2022 to December 31 of the year in which martial law is terminated or abolished, no tax shall be paid on objects (their shares) located in the territories where hostilities are being conducted (were conducted), or in territories temporarily occupied by the armed forces of the Russian Federation.

?  The Cabinet of Ministers of Ukraine determines the list of territories where hostilities are being conducted or those temporarily occupied by the armed forces of the Russian Federation, as well as the procedure for recognizing residential real estate that has become uninhabitable in connection with the armed aggression of the Russian Federation.

?  Taxpayers-legal entities have the right to submit a clarifying tax declaration within six calendar months after the date of termination or abolition of martial law, which reflects changes in the tax liability for immovable property tax other than land for the relevant tax period.

Exemption from VAT and excise tax on certain transactions:

Temporarily, from April 1, 2022 for the period of martial law on the territory of Ukraine, the following shall be exempt from taxation:

? by value added tax – transactions on import of goods into the customs territory of Ukraine under the customs regime of import by business entities registered as single taxpayers of the first, second and third groups, except for individuals and legal entities that have chosen the single tax rate of 3 percent with the payment of VAT.

? by value added tax, excise tax – transactions on import by individuals into the customs territory of Ukraine of cars, their bodies, trailers and semi-trailers, motorcycles, vehicles intended for the carriage of 10 persons and more, vehicles for the carriage of goods under customs import regime.

These provisions do not apply to the import of goods from the country recognized as the occupier or aggressor, or from the occupied territory.

The Law will enter into force on the day of its publication.

Read more:

Payment of a Single Social Contribution during Martial Law

Payment of Land Tax, Minimum Tax Liability and Environmental Tax during Martial Law

Payment of a Single Tax during Martial Law

Important Changes in Tax and Other Legislation in Connection with the Imposition of Martial Law