President Volodymyr Zelenskyy has signed a law on amendments to the Tax Code of Ukraine regarding the peculiarities of taxation during martial law, the president’s press service reported on July 27.
The corresponding information regarding the law has been posted on the website of Ukraine’s parliament, the Verkhovna Rada.
The adopted law stipulates that from August 1, 2023, the 2% single tax rate will be abolished, and the previous, pre-war tax scheme, will be reintroduced.
The law will have the following effects for taxpayers:
— Payers of the 2% rate will have the right to submit an application to withdraw from the system, and indicate which taxation system they wish to be subject to instead. If they do not apply, or fail to state their preferred tax system, the 2% ratepayer will automatically be transferred to the system they were subject to previously;
— Newly created economic entities, which chose the 2% rate when they were registered, will automatically be considered as payers in the 5% tax band;
— Automatic restoration of the rights and obligations of VAT payers for those VAT registered entities who had previously been suspended;
— Taxpayers who switched from the 2% rate band in 2023 to the general system will be able to switch again this year by submitting an application. At the same time, if the taxpayer submits an application before September 1, 2023, they will be counted as a ratepayer from August 1, 2023.
The law also partially cancels the current moratorium on inspections for excise goods (alcohol, tobacco, fuel), gambling businesses, and financial services.
The law also stated that, starting from October 1, violations in the use of registrars of settlement operations will once again be penalized. Exemption from financial responsibility for violations of these registrars (except during trade in excise goods) is possible only if they were committed in front-line territories (including territories of possible hostilities).
Tax benefits for businesses had been introduced on April 1, 2022, with most commentators believing they would remain in place until the end of martial law.
Subsequently, after the signing of a memorandum with the IMF, it was assumed that they would be abolished from July 1, 2023.
However, the Verkhovna Rada did not have time to adopt the proposed bill.
Prime Minister Denys Shmyhal previously stated that the authorities do not plan to raise taxes until the end of the war, except to return them to the pre-war level.