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Further simplification of tax and customs rules in connection with the imposition of martial law

30/03/22

On 24 March 2022 the Verkhovna Rada of Ukraine approved the Draft Law on Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine on Improving Legislation for the Period of Martial Law N 7190 (further - “the Law”), which provides clarifications of recent changes in tax legislation that have entered into force in connection with the imposition of martial law. The main changes are highlighted below:

Simplified tax system and VAT

  • Taxpayers importing cars and other certain vehicles, car bodies and trailers to them, or conducting retail sales of fuel in containers of up to 20 liters are not restricted in the transition to a simplified tax system (“STS”) and can be registered as Group 3 unified tax payers (with a 2% tax rate). 
  • VAT registration of the taxpayers switching to STS is suspended. VAT is not paid during the transition to Group 3 of the unified tax at a 2% rate. Previously, the tax authorities have clarified the matter – for more details please see our report dated 23.03.2022. For the period of VAT registration suspension, the indicators of the registration amount in the VAT electronic administration system are not calculated for such taxpayers. No changes are proposed regarding the taxation of  inventories and other assets acquired or produced with VAT after the termination of martial law (respective provisions remain unchanged).
  • The import of goods into Ukraine is exempt from VAT if the import is done by unified tax payers of groups 1, 2, and 3, except for the Group 3 unified tax payers who have chosen a 3% tax rate of the unified tax with payment of VAT.
  • From 1 April 2022, for the period of martial law, imports of cars and other specified vehicles, bodies and trailers to them by the individuals are exempt from VAT and excise tax.
  • The VAT exemptions do not apply to the import and supply of goods originating and/or imported from Russia and Belarus, or from the occupied territory of Ukraine.
  • A business entity may become a Group 3 unified tax payer at the rate of 2% either from 01.04.2022 (if the application is submitted before this date) or after 01.04.2022 – from the next business day after the application submission.
  • VAT refund is completely prohibited for transactions with fuel (even for export). Input VAT incurred  in respect of such transactions can be used only to reduce future VAT liabilities.
  • Corporate income taxpayers who have switched to the simplified taxation system with a 2% rate (or switch from it to the general taxation system) file a corporate income tax return for that periods of the calendar year in which they were payers of corporate income tax.

Other tax changes

  • Exemption from the environmental tax and the real estate tax due to the conduct of hostilities has been expanded and clarified. 
  • Income from the sale by the taxpayer in favor of the tax agent of its own agricultural produce grown, fattened, caught, collected, manufactured, produced, processed directly by an individual, are finally taxed by the tax agent at the time of their accrual (payment).

Changes to customs legislation

  • Goods imported by enterprises, except for alcohol, alcoholic beverages and tobacco products are exempt from customs duties.
  • Individuals are exempt from customs duties on imports of vehicles: cars and their parts, trailers and semi-trailers, motorcycles, vehicles designed to carry 10 people or more, vehicles for the carriage of goods.
  • The customs duty exemption does not apply to the import of goods and vehicles originating in Russia, Belarus and the temporarily occupied territories.
  • The introduction of a moratorium on documentary inspections of compliance with customs legislation.
  • The obligation to submit permits during the import for a separate list of goods determined by the Cabinet of Ministers of Ukraine is abolished.
  • Declaration of imports of goods by payers of groups 1-3 of the unified tax (except for the third group with a rate of 3% of income) may be carried out by submitting a preliminary customs declaration without the presenting of such goods.
  • The term of customs clearance of goods is reduced to one business hour from the moment of presentation of goods to the customs authorities.
  • A significant part of the terms stipulated by the Customs Code of Ukraine is suspended (the term of temporary storage under customs control, the term of storage in the customs warehouse regime, the term of refund of advance payments, etc.).
  • Customs formalities may be performed by customs authorities other than those prescribed by the Customs Code of Ukraine.
  • The obligation of additional payment of customs formalities by interested parties outside the location of customs authorities or outside working hours has been abolished.
  • The Cabinet of Ministers of Ukraine has the right to establish the specifics of customs control and customs clearance of goods subject to state export control.
  • Categories of goods that are subject to the protection of intellectual property rights by customs authorities may be reviewed by the Cabinet of Ministers of Ukraine.
  • The Cabinet of Ministers of Ukraine may regulate cases in which prohibitions and restrictions on the import of goods into the customs territory of Ukraine do not apply.

Contact us

Slava Vlasov

Slava Vlasov

Partner, Leader, Tax and Legal Services, PwC Ukraine

Tel: +380 44 354 04 04

Maksym  Dudnyk

Maksym Dudnyk

Director, PwC Ukraine

Tel: +380 44 354 0404

Vita Miroshnychenko

Vita Miroshnychenko

Senior Manager, Head of Customs and International Trade practice, PwC Ukraine

Tel: +380 44 354 0404

Inna Andrushchenko

Inna Andrushchenko

Manager, Indirect Taxes, PwC Ukraine

Tel: +380 44 354 04 04

Yuliya Shyshko

Yuliya Shyshko

Manager, Indirect Taxes, PwC Ukraine

Tel: +380 44 354 0404

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