For several
months Ukrainian business was focused on the "new tax reform" and the
new 2016 has started with the updated taxation system. Initially, there were
two major draft laws on the tax reform: the Ministry of Finance headed by the
Minister Natalia Yaresko prepared the first draft, the other one was prepared
by the Verkhovna Rada Committee on Taxation and Customs Policy, headed by Nina
Yuzhanina. Finally, a compromise was found on the eve of 2016.
For several months Ukrainian
business was focused on the "new tax reform" and the new 2016 has
started with the updated taxation system.
Initially, there were two
major draft laws on the tax reform: the Ministry of Finance headed by the
Minister Natalia Yaresko prepared the first draft, the other one was prepared
by the Verkhovna Rada Committee on Taxation and Customs Policy, headed by Nina
Yuzhanina. Finally, a compromise was found on the eve of 2016.
As the Prime Minister of Ukraine has mentioned many times, one of the main vectors of legislative process in taxation is reporting of the real salaries. In this regard, the government aimed at reducing the tax rates on salaries.
Thus, since 2016 the taxation
of salarieswas slightly modified: a single rate 18% of personal income tax was
set instead of 15% and 20%, which was effective previously and applied
depending on the amount of income.
On the other hand, the
unification of the tax rates is always a positive. However, at the same time,
now the tax rate will increase by 3% for taxpayers with incomes amount up to 10
minimum salaries, while for those whose income exceeds 10 minimum salaries this
rate will decrease by 2%.
The legislator has also
decided to abolish the payment of unified social tax by physical persons at the
rate of 3.6% and to reduce the rate of the unified social tax, which is paid by
employers, to a single rate of 22%. Including the military fee of 1.5% the
cumulative amount of taxes on salaries has decreased, but now the government
expects that Ukrainian employers will start to increase the salaries of
employees.
After these changes, one of
the main tasks of the government will be to solve the problem of filling the
state budget for payment of pensions.
Given the fact that the
unified social tax is the primary source for payment of pensions, the decrease
of this tax resulted in a significant increase in financing of pensions from
the state budget from 32% in 2015 to 55% in 2016, which could have negative
social and economic consequences.
Now the government should be
seriously engaged in the reforming of the pension system of Ukraine and
creating of a new funded pension system.
Businesses should also pay
attention to changes in taxation of dividends, according to which the personal
income tax rate of 5% on income is applied for dividends accrued by payers of
profit tax on a general basis. For single tax payers this rate of personal
income tax increases to 18%.
Special attention among all
the tax changes should be also paid to VAT. One of the major positives is the
abolition of the possibility of cancellation of VAT registration because of the
VAT payer absence at the registration office address.
Tax authorities alwaysused
this opportunity for the cancellation of VAT registration very actively, including
situation when the company forgot or missed deadline for providing of the
registration card 6 (confirmation form) to the state registrar. Now, companies
don’t have to fill such registration card 6 at all.
With regard to the VAT
budgetary refund, because of some reasons the legislator has provided two
registers on VAT refund, which is likely to be used in certain schemes for
budgetary compensation of VAT for privileged persons. Therefore, if the
Government wishes to reiterate its firm intention to fight against corruption
related to VAT refund, it should immediately abolish this separation of VAT
payers and create a single registry for all taxpayers.
The above mentioned is
certainly not the all changes in taxation system. The Cabinet of Ministers
together with deputies managed to start tax reform. However, both changing of
tax legislation and good intentions of the government is unlikely to lead to
the positive results until the entire system of taxation and tax bodies are
fully changed.
Tax bodies must become
servicing bodies for taxpayersinstead of being one of the obstacles to
effective and fair doing business in Ukraine.
Also, please, be informed that
on Thursday, January 28, 2016 Olga will be holding seminar devoted to changes
in Ukrainian legislative system. You are more thanwelcome!
Get to know more and register,
please, follow the link:https://www.facebook.com/events/1522066568122726/
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