Finance ministry proposes to replace profit tax with tax on moved capital
Ukraine's Finance Ministry has proposed to replace profit tax in Ukraine with tax on moved capital, the ministry has reported on its website.
The bill was drawn up by the ministry jointly with business, experts and lawmakers.
According to the presentation posted on the website, the bill determines the procedure for taxation of distributed dividends and payments equaled to them. It implies the annulment of the tax on repatriation of dividends.
Tax on moved capital at the rate of 15% will be imposed on dividends paid to nonresident legal entities, to legal entities that pay tax on moved capital at the rate of 0% and to resident individuals - at the rate of 15% and individual income tax at 0%.
Payments equaled to dividends will be taxed at the rate of 20% (tax on moved capital).
These are the following payments: free provision of property to a non-payer of the tax on moved capital; additional charge for transfer pricing; acquisition of goods and services from related persons applying a simplified taxation system; payment of financial assistance to the non-payer of the tax on moved capital; and investment unreturned within 12 months to the statutory fund of non-payers of the tax on moved capital. In some cases, such payments are equivalent to the payment of royalties over the limit; interest paid to related non-residents; and payments under insurance or reinsurance contracts in favor of non-resident insurers.
The presentation also says that the banking sector will be able to remain a payer of profit tax until 2020 inclusive. The amount of dividends paid for 2013-2017, will not be taxed with the tax on moved capital within the scope of taxable profits, on which the profit tax was previously paid.
According the presentation, the bill will take into account the submission of aggregated information on banking transactions between payers and non-payers of the tax on moved capital to the supervisory authorities.
The final meeting of the working group on the bill was held on June 14, 2017. At present, the impact of the bill on revenues to the national budget is being assessed, after which the document is to be approved by authorities, and public discussion is to be held.
Upon completion of this process, the bill will be submitted to the Cabinet of Ministers for consideration.