Ukraine: Kyiv Tax Newsletter - January 12, 2017

Last Updated: 18 January 2017
Article by Igor Davydenko

Subsistence minimum and minimum wage

On 21 December 2016 the Parliament of Ukraine adopted the Law "On the State Budget of Ukraine for 2017" No.1801-VIII (hereinafter, "the Law on State Budget"). The Law on State Budget introduces the new subsistence minimum and minimum wage that came into force on 1 January 2017:

  • the minimal subsistence minimum is established at the level: 1 January 2017 – UAH 1,544; 1 May 2017 – UAH 1,624; 1 December 2017 – UAH 1,700 and
  • the subsistence minimum for able-bodied person: 1 January 2017 - UAH1,600, from May 1 – UAH 1,684, 1 December 2017 - UAH 1,762;
  • the minimum wage is established at the level: 1 January 2017 – UAH 3,200; in hourly amounts: UAH 19,34.

Amendments to the Tax Code

On 21 December 2016 the Parliament adopted Law No. 1797-VIII "On Amendments to the Tax Code in Relation to Improvement of the Investment Environment in Ukraine" (hereinafter, "the Law on Amendments to Tax Code"). The Law on Amendments to Tax Code introduces following novelties with respect to corporate profit tax (including withholding tax), value added tax and other taxes. The amendments came into force on 1 January 2017. The key amendments are as follows.


  • Certain definitions are added, i.e. big taxpayers, investment income, electronic cabinet, passive income, etc.
  • The amendments require creation of taxpayers' online accounts before 2018, the novelty is aimed at keeping track on taxpayers' tax position in a real-time mode and maintain correspondence with the tax authorities.
  • The amendments establish the priority of general tax consultations issued by the Ministry of Finance over individual tax consultations issued by the tax authorities to taxpayers.
  • The function to conduct tax audits is transferred from local tax offices to regional offices.
  • Tax amendments introduce liability of tax authorities for issuing unlawful decisions, etc.

Transfer pricing

  • The financial threshold for controlled transactions increased: the amount of annual income of the taxpayer should exceed UAH 150 million; the volume of business transactions with each counterparty should exceed UAH 10 million annually.
  • The criteria of controlled transactions are expanded:
  • foreign economic operations on the sale/purchase of goods/services through foreign person commissioner/agent (non-related);
  • operations with foreign persons, that are not payers of corporate (profit) tax, or exempt from it and/or are not tax residents of the state where they are registered as legal entities. The list of legal forms of foreign persons is to be defined by the Cabinet of Ministers of Ukraine (hereinafter – CMU), etc.
  • Other amendments relate to: the information that could be used for defining the cost effectiveness range for controlled transactions; rules for the application of the particular method; rules for grouping controlled transactions for the purpose of confirmation of the arm's length with one counterparty based on chosen grouping principle; expanding the list of supporting transfer pricing documentation: i.e. information on structures of the related parties, including information on subsidiaries; description of the transaction; copies of the contracts, etc.
  • Amendments relate to responsibility for violations of the transfer pricing legislation:
  • failure to submit the report on the controlled transactions – 300 subsistence minimum established for a working person;
  • failure to include the transaction into the report on the controlled transactions – 1% of the amount of undeclared transactions, but not more than – 300 subsistence minimum;
  • failure to submit transfer pricing documentation – 3% of the amount of controlled transactions, but not more than 200 times the subsistence minimum for all transactions;
  • late submission of the report on controlled transactions – 1 subsistence minimum for each calendar day of late submission, but not more than 300 subsistence minimum;
  • failure to submit the report on controlled transactions/adjusted report and/or transfer pricing documentation after the expiration of the 30 calendar days after the term for penalty payment – 5 subsistence minimum for each calendar day;
  • late submission of the transfer pricing documentation – 2 subsistence minimum for each calendar day of late submission, but not more than 200 subsistence minimum;
  • late declaration of the controlled transactions in the report on controlled transactions (in the case of the adjusted report submission) – 1 subsistence minimum for each calendar day of late declaring of transaction in the submitted Report, but not more than 300 subsistence minimum, etc.

Corporate profit tax

  • Amendments expand the criteria for taxation of non-profit organizations and amend rules for taxation of producers of agricultural products, insurance companies
  • Certain amendments relate to tax reporting of securities
  • Amendments relate to: the rules on depreciation of nonproduction fixed assets; increase/decrease of financial result in operations on bad debt provisions; thin capitalization rules (i.e. tax adjustment should apply only to transactions with related foreign persons).
  • Amendments relate to certain deduction restrictions:
  • The financial result should be adjusted at the difference between the contract prices and the arm's length price as a result of tax (reporting) year.
  • The financial result should be adjusted by 30 percent if goods (works, services) are purchased from: (i) non-profit organizations (with certain limitations), foreign persons registered in the states included into the list of the Cabinet of Ministers for transfer pricing purposes (unless operations are not controlled, or, even, if controlled, performed at arm's length).
  • The financial result should be adjusted at the amount of royalty exceeding 4 percent from previous year's financial result, unless royalty is paid under transactions that are not controlled, and performed at arm's length.
  • Amendments relate to exemption from withholding tax on: interest or discount income from government and municipal bonds and other debt securities; interest paid to creditors, foreign persons under loans financed through debt securities listed on the stock exchanges; a reduced 5 percent rate should apply to interest on loans from qualified creditors, etc.

Personal income tax

  • Amendments expand the definition of fringe benefits (released debt under mortgaged loan issued to individual); exempts income from state securities, and some other types of income.
  • Amendments establish 18 percent personal income tax (PIT) rate for passive income earned by individuals (with certain exceptions), 9 percent for dividends paid by foreign persons (and non-payers of CIT), etc.
  • Amendments exempt from PIT travel allowances within the limit of EUR80 for business travel abroad.
  • Amendments require that legal entity, foreign person, private entrepreneur or other person acting as an agent for an individual for the disposition of movable property should act as tax agent liable for reporting tax authorities about individual's income and tax liabilities, etc.

Value added tax

  • Amendments establish that Ministry of Finance would be the authorized body for administering register of VAT taxpayers.
  • Amendments allow that adjustments to VAT invoices issued before 1 February 2015 as well as some other adjustments are subject to registration in the Uniform Register of Tax Invoices.
  • Amendments specifically exempt from VAT operations on assignment of claims and transfer of title to the object of financial leasing.
  • Introduced amendments allow the purchaser to report VAT based on tax invoice and adjustments to tax invoice issued by the seller within 365 days (before the adjustments could be registered within 180) as of the date of issuance of tax invoice/adjustment.
  • Amendments allow transferring unutilized input VAT, confirmed by tax authorities to tax books of legal successor as a result of reorganization.
  • Amendments establish that refund of overpaid VAT should be made based on the data of the state public register of VAT refund.
  • The form of tax invoice should be amended with the UKTZED code and reference to VAT benefit, in case the transaction is not subject to VAT.
  • The tax return registered in the Uniform register of tax invoices after 1 January 2017 should serve as sufficient ground for the purchaser to report input VAT.
  • Changes in rules of electronic tax invoice issuing and registration.
  • Amendments abolish special VAT regime for producers of agricultural products from 1 January 2017. The agricultural producers should register VAT invoices before the 15 January 2017.
  • Amendments establish tax holidays for qualified small businesses with annual income not exceeding UAH 3 million until 31 December 2021, etc.

Excise duty

On 20 December 2016 the Parliament adopted the Law No. 1791-VIII "On Amendments to the Tax Code in Relation to Securing Budget Revenues" (hereinafter, "the Law on Securing Budget Revenues"). In addition to amendments established by the Law on Amendments to Tax Code, certain amendments related excise duty, rent payment, ecological tax were introduced by the Law on Securing Budget Revenues.

  • Amendments increase excise duty rates in 2017 on alcohol, alcoholic beverages, tobacco products and certain types of fuel. Certain amendments affect administration of excise tax, etc.
  • Amendments abolish excise duty on retail sale of fuel.

Rent payment

  • Amendments increase rent payment rates in 2017 on subsoil use, water use, radiofrequency resource use, etc.
  • The new amendments, inter alia, change the rates of royalty payments for oil production in the following way:
  • for oil produced by private or state enterprises from wells up to 5 km – 29% for any enterprise;
  • for oil produced by private enterprises from wells more than 5 km – 14%, etc.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
6 Dec 2017, Webinar, New York, United States

Join Dentons for a complimentary webinar focused on the ongoing challenge of integrating new technologies into existing information governance policies and risk management frameworks.

7 Dec 2017, Seminar, Cape Town, South Africa

Dentons South Africa would be delighted if you could join us for our upcoming event.

8 Dec 2017, Seminar, Johannesburg, South Africa

Dentons South Africa would be delighted if you could join us for our upcoming event.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.