What to expect from the bill on amendments to the IRC of Ukraine
Ministry of Finance 23/09/2016 on the official website has once again published a preliminary version of the draft law envisaging amendments to the Internal Revenue Code of Ukraine (hereinafter – IRC), with the aim of public discussion. These changes in the Ministry of Finance published the IRC is not the first time, subject to adjustment several times and will likely still remain unchanged, but the latest version of their merit.
Changes in the IRC have been developed within the framework of the reform of the tax system as a whole, as well as the reform of the State Fiscal Service of Ukraine, which take place on the basis of the Cabinet of Ministers of Ukraine # 418-r dated 27.05.2016 year.
The main goal of changes in the IRC is to improve the investment climate in Ukraine by simplifying the tax system and tax administration. In addition, it is expected that these changes will affect economic growth, attract new investment and create new jobs.
Next, we see more focus on specific parts of the Tax Code of Ukraine, in which it is planned to make changes, namely:
- Such changes are expected in the part of the administration:
- Translation of the order of administration of taxes and registration of taxpayers by the State Fiscal Service in the Ministry of Finance;
- Data administration of the Ministry of Finance bases or state-owned enterprise, which is expected to create at the Ministry of Finance;
- A new structure of the State Fiscal Service (it is planned that the verification work will be conducted at the regional level, while the regional tax inspections will be carried out exclusively by the service functions);
- Graphs of planned inspections will be publicly available on the official website and in the official publication the Ministry of Finance;
- Plans to introduce a full-fledged electronic tax payer office;
- An official supervisory authority, which shall verify will be deprived of the right to receive copies of documents relevant to the subject of the inspection;
- The elimination of the tax police, the creation of a new body – the Financial Police, whose activity will be regulated by a separate law.
- The following changes are planned in the part of the income tax:
- Addition clear definitions (tax) reporting period for non-profit organizations and (tax) reporting period when the payer status acquisition income tax;
- Clarification of the order of depreciation of fixed assets and intangible assets, the calculation of which is carried out without regard to their revaluation (devaluation, revaluation surplus), carried out in accordance with the provisions of accounting;
- Clarifying the procedure for calculating restrictions on interest payments to non-residents, which are related parties to the payer of income tax, namely in terms of limitation of interest on debt obligations which have arisen precisely to non-residents – related parties.
- The introduction of the period until 31 December 2021 the zero rate of income tax for companies whose annual income does not exceed 3 million hryvnia and the amount accrued for each month of the reporting period, wages (income) employees no less than two minimum wages. Subjects of taxation will be able to qualify for this benefit if they meet the following criteria:
a) The entity is registered after January 1, 2017;
b) the action of the subject, which in the previous three years annual income does not exceed 3 million hryvnia, and the average number of employees during the period was not more than 20 people;
c) the entity is registered a single tax payer in the period prior to 1 January 2017 with a view of the fact that for the last calendar year the amount of revenue from the sale of goods (works, services) amounted to 3 million hryvnia, and the average number of employees was within 50 persons.
- With regard to the value added tax are preparing the following changes:
- Improving the electronic management system of value added tax:
- The spread of compulsory props, as well as the product code according to the UKT VED, which is reflected in the tax bill, for all goods without exception, as well as a new addition to mandatory requisite services according to the State classifier of products and services.
a) refund of overpayments of the taxpayer solely on the account in the electronic administration of the tax system of value added tax (SEA).
b) increase in the period of registration of tax bills and calculate adjustments to them in the uniform register of tax invoices (ERNN) from 180 to 365 calendar days. Establishing a penalty in the absence of such registration in the amount of 50% of the amount of VAT as well as the establishment of penalty in case of violation of terms of registration of tax bills / payments adjustments to the tax bill, including compiled tax evaders;
c) an increase in the period of registration of tax bills / payments adjustments to such tax bill, which gives the right to allocation of VAT to the tax credit from 60 to 365 calendar days from the date of debit from the bank account of the taxpayer, who uses the cash method;
- The part of the tax on income of individuals a major change could be the introduction of two new categories in the system of taxation of income from activities (including business) on the common system of taxation, namely:
a) small individual activities;
b) softened the overall system
According to the Ministry of Finance, the simplification of the tax system, as well as increasing transparency and the quality of tax administration will help create favorable conditions for attracting investment, and will help in eliminating common schemes of tax evasion, which ultimately will increase the revenues of both the public and local budgets.
Also, the full text of the bill on amendments to the Tax Code of Ukraine and the comparison table can be found on the official website of the Ministry of Finance at http://www.minfin.gov.ua/news/view/minfin-opryliudniuie-poperedniu-versiiu-paketu -zmin-do-podatkovoho-kodeksu-dlia-shche-odnoho-publichnoho-obhovorennia
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