Accounting Outsourcing and
Tax compliance in Ukraine
Ukraine – Accounting Outsourcing and Tax Compliance
Global Expansion Plus provides accounting outsourcing and tax compliance in Ukraine. We provide services with support of our local accountants and tax specialists. We will perform bookkeeping, accounting and filling tax return on your behalf bearing all associated compliance risks.
Every state will put in place a tax system, to raise revenue. Ukraine is no different. Whether a resident or a non-resident, individual or corporate, there is the need to understand taxation in Ukraine. Otherwise, you are bound to get on the wrong side of the law.
Ukraine in facts
Corporate income tax (CIT)
General CIT in Ukraine is rete is 18%. Special rate is applied to companies operating in insurance, gambling and banking industries.
Insurance companies pay additional CIT of 0% on:
Insurance companies pay additional CIT of 3% is payable on all other insurance premium (except: reinsurance contribution)
The additional CIT is tax deductible for the general CIT of 18%.
Value-added Tax (VAT)
As the name suggests, VAT is tax or charges imposed on goods or services, where value addition has taken place. It varies based on the kind of goods or services in question. This type of taxation in Ukraine comes in three categories;
The rate covers the largest tax base when it comes to vatable goods and services in Ukraine. However, not all purchases and sales will be subject to this. There are other rates but in special circumstances.
The 7% applies to all specialized medical products including medicines, supplies, and equipment, for clinical trials. They could be local or imports, the rate is designed to help in medical research and development in promoting good healthcare.
All exports are subjected to the 0% rate on VAT. It promotes a positive balance of payments, which is the difference between receipts from exports and payments made due to imports. Others in this category include re-exports, international transport and manufacturing supply services.
However, for the latter, only resident individuals and corporates will benefit from the zero-rated VAT service provision. Non-residents will attract a normal rate of 20% VAT.
Personal Income tax (PIT)
Any kind of individual income, resident or non-resident, will qualify as personal income, and thus subject to taxation. It could be in the form of salaries, in an employment capacity, interests, profits and other passive incomes earned through investments.
The rate is 18% for both resident or non-resident. For the former, the rate applies to all incomes generated from Ukraine and abroad, while non-residents apply to only incomes in Ukraine.
Passive incomes, such as dividends, paid by corporates, will attract different rates depending on whether the corporate is resident or otherwise. For residents, it is 5% and 9% for non-resident dividends paid.
It is deducted at source. The payer is supposed to withhold, on behalf of the taxman (state), a proportion of the gross amount payable. It applies to incomes such as interests, dividends and income due to the provision of professional services.
The standard WHT rate is 15% for incomes payable to professional service providers and other passive earnings. Such professional services include brokerage, engineering, and agency consulting for the non-resident.
Payroll related taxation
It is a form of withholding tax where employers have an obligation to withhold Personal Income Tax (PIT) on behalf of the state. It is a monthly obligation by the tax agents to do so, as long as they pay an income to their employees.
Social security contributionEmployers pay 22% of social security contribution (SSC) on the gross salary/remuneration. The SSC contribution is capped at 15 minimal wages. As of 1 January 2019, the minimal wage is equal to UAH 4,723 (USD 175; ex. rate UAH/USD – 27). So, the CAP will be equal to UAH 62,595 (USD 2,624; ex. rate UAH/USD – 27).
Military taxEmployee are paying personal income tax as stipulated above and Military tax in amount of 1,5% on gloss salary. For more information in Payroll taxes refer to our Payroll services page.
Import/ Export related taxation
Custom dutyIt is tax imposed on all imports in Ukraine. The importer has to pay the duty, as clearance fee, for goods coming into the country. However, not all imports qualify for this tax. There are duty-free goods depending on where they come from. Ukraine has entered into trade treaties with multiple countries that are set to benefit both parties when it comes to the movement of goods in and out of the country. Some of the countries benefiting from the free-trade agreements include Israel, Canada, Macedonia, Montenegro, and Georgia.
The tax duty applies to both imports and locally manufactured goods. In most cases, it is imposed on harmful products such as cigarettes, alcohol products, beer, tobacco, and cigarettes. Car parts, cars, and motorbikes locally manufactured or imported are also excisable goods. When it comes to fuel and fuel products such as petroleum, diesel, liquefied petroleum gas (LPG), and electricity, the same applies, as excisable goods. In Ukraine, the rates for this tax vary depending on the value of the goods in question.
For the harmful products such as tobacco and cigarettes, 29.7% applies as of 2018 and this rate is expected to go even higher in the near future. There is, however, a 5% excise duty, which applies to the local retail sale of alcohol and alcoholic drinks.
As a business, individual or corporate, outsourcing accounting and taxation services in Ukraine is necessary. Tax rates will change based on legislation and laws set forth. As such, it can be challenging to keep up with those changes and hence the need to hire professional services.