On 7 December 2017, the Ukrainian Parliament adopted Law of Ukraine “On Amendments to the Tax Code of Ukraine and Certain Laws of Ukraine on Securing Balance of Budget Revenues in 2018” No. 2245-VIII (“Law”). The Law became effective on 1 January 2018. Below is the summary of the changes introduced by the Law.

  • The Law clarified that double tax treaties apply to interest, which is paid to lenders in syndicated loans.
  • Special rules on taxation of interest payments under Eurobond-funded loans disbursed before 31 December 2016 apply regardless of the issuer’s place of registration.
  • Payers of unified tax (including agricultural companies) are exempt from the advanced corporate income tax payments on the distribution of dividends.
  • Taxpayers may not deduct 30% of expenses incurred to non-resident entities in special forms (tax transparent or exempt entities), unless they prove that those expenses are at an arms’ length.
  • Operations between permanent establishments and non-resident head offices are subject to transfer pricing rules. Therefore, profits of permanent establishments are allocated at an arm’s length.
  • Decreased 7% VAT rate applies to supply and import of all medical products, which are either (i) registered in the State registry of medical equipment and medical products or (ii) compliant with technical regulations (even if not registered).
  • VAT invoice suspension system functions in the test mode until the Cabinet of Ministers of Ukraine adopts new regulation on such system.
  • Export of soybeans (from 1 September 2018 until 31 December 2021), winter cress seeds and rapeseeds (from 1 January 2020 until 31 December 2021) will be temporarily exempt from VAT.
  • Starting from 1 January 2018, calculations of the amount of the state subsidy for agricultural producers is based on the amount of VAT accrued on supply of agricultural products.
  • Rent tax special rates for extraction of natural gas from new wells were introduced: (i) 6% for gas contained deeper than 5 000 meters and (ii) 12% for gas contained not deeper than 5 000 meters. These rates will apply (and cannot be increased) until 1 January 2023.

Additional notes

For further information on the topic please contact Mykola Stetsenko, Managing Partner, Glib Bondar, Senior Partner, Dmytro Marchukov, Partner, or by telephone +380 44 591-3355 or via e-mail.

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