Ukraine legal and accounting and tax considerations in 2023
- Corporate income tax in Ukraine is flat 18% rate with lower tax regimes for insurance and banking institutions;
- Tax returns must be filed on an annual basis filled within 10 days from the end of the tax period;
- Late payments of corporate tax will begin to accumulate 120% of the national bank’s discount rate for the date on any outstanding amounts;
- The standard Value Added Tax (VAT) in Ukraine is 20%, with a reduced rate of 7% applied to pharmaceutical and healthcare products. The minimal threshold for mandatory VAT registration is UAH 1 million equivalent to €43,000;
- Losses in general can be carried forward indefinitely. Losses cannot be carried back;
- Withholding taxation on dividends, interest, royalties and technical service fees paid to a non-resident are subject to a 15% withholding tax, unless reduced by a tax treaty;
- Capital gains are treated as part of the standard corporate income taxation;
- Employers are required to support all employee social security contributions of fixed to 36,76% of their staff employment salary;
- Ukraine has signed 61 double taxation avoidance agreements with countries including i) Vietnam; ii) Turkey; iii) India and iv) South Africa;
- Healy Consultants will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparing financial accounting records and iv) preparing forecasts, budgets and performing sensitivity analysis;
- It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.
- The Ukrainian Ministry of Justice operates and regulates The United State Register of Legal Entities and Individual Entrepreneurs portal (USR) which allows resident as well as non-resident individuals and companies to view business specific information about Ukrainian companies including: i) company’s legal name, and business activity; ii) legal registered office address; iii) ownership status and iv) current standing status;
- The minimum paid up share capital requirements in Ukraine are i) €1 for a limited liability company and ii) €136,700 for an Ukrainian joint stock company;
- Ukrainian companies cannot appoint a sole corporate shareholder for an LLC company;
- All Ukraine joint stock company must appoint one director and one shareholder of any nationality. Furthermore, JSCs in Ukraine list on the Ukrainian Stock Exchange in order to finalize the incorporation process.
- All staff relations are regulated by the Ukrainian Labour Code under the close supervision of the Ministry of Social Policy;
- Local labour stipulates each employee to receive their employment contract in both Ukrainian or Russian and in language they can comprehend;
- The minimum probation (trial) period cannot exceed three months or six months under the approval from the respective union organization;
- The minimum wage in Ukraine is fixed at €52 per month, equivalent to UAH1,218;
- Under the provision of Article 50 of the Ukrainian Labour Code the standard work week: i) is average of 40 hours of work; ii) five working days from Monday to Friday with option for six days for some industries and iii) 120 hours per year night labour with 20% pay premium;
- Under Article 75, in Ukraine all employees are granted:
- Up to 24 calendar days of paid annual leave;
- 9 national holidays;
- 60% to 100% paid sick leave;
- Paid maternity leave of 70 days prior and 56-70 days after birth.
- The employer requires a statutory minimum notice of two months to terminate employee contract in several specified cases, including negligence, misconduct and absence of work without a valid reason. In practice most contracts are terminated in mutual agreement;
- Each employee must keep a labor book if employed for more than 5 days;
- All labor conflicts must be deposited to the applicable district court, as settlement body;
- Laid off employees due to redundancy are entitled to a severance pay equal to four month salary.
Other business regulations
- Ukraine signed the EU-Ukraine association agreement on 21 March 2014. If the end of the civil war allows for it, such agreement may lead to the eventual membership of the country in the European Union, planned for 2020 by the current president of Ukraine – Petro Poroshenko;
- The country is a member of both the World Bank and International Monetary Fund since 1992;
- Since 1998 Ukraine is a part of the Black Sea Trade and Development Bank to support economic development and regional cooperation of member states;
- As part of the Central European Initiative (CEI), the oldest and largest regional co-operation forum in Europe, member states, including Ukraine help each other achieve higher economic growth and human development;
- Ukraine is a member of the World Intellectual Property Organization, since 1994 which consequently allows i) non-resident companies to apply for patent or a trademark free and ii) foreigners the same intellectual property protection rights as Ukrainian nationals;
- Ukraine accepted the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention). As a result, arbitration case awards made in countries that are party to this convention should be enforceable in Ukraine according to implied regulations.