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  • Average salary calculation
  • Minimal salary amount
  • Income limits for simplified taxpayers
  • Personal Income Tax and Unified Social Tax reporting
  • Benefits for PE in paying of UST
  • Work during quarantine
  • Restrictions on documentary inspections
  • Term Dividends
  • Order of VAT administration
  • VAT rate for the defined agricultural production
  • State language regulations

 

 

  • Average salary calculation

The Resolution of the Cabinet of Ministers from 08.02.95 № 100, the effect of which is extended to natural person-entrepreneurs and natural person who use the work of employees within the labor relations, as well as to the Procedure for calculating the average salary approved by this resolution was amended (hereinafter – the Procedure № 100), in particular:

  • the provision, required to adjust the average salary in case of salary increase (paragraph 10 of the Procedure № 100) was removed;
  • established that for calculating the average salary, all types of leaves provided by law are taken into account, as well as all amounts of accrued salary in accordance with the law and the terms of the employment contract (taking into account exceptions, specified in paragraph 4 of the Procedure № 100);
  • the procedure for including in the calculation of the average salary the amounts of bonuses and other payments paid for two months or for a longer period has been changed;
  • the list of payments that are not taken into account for calculation of the average salary in all cases of its preservation has been extended.

 

 

  • Minimal salary amount

Starting from January 01, 2021 the minimal salary is established on the rate of 6,000 UAH, and from December 01, 2021 – it will be 6,500 UAH (Part 1 of Article 31 Law of Ukraine “On Remuneration of Labor” dated March 24, 1995 № 108/95-VR.

At the same time, if an employee who has fulfilled the monthly work rate has been charged a lower salary, the employer shall supplement it to the minimal level.

The increasing of the minimal salary amount influenced to the maximum base for accrual of UST.

The maximum base for accrual of UST is 15 amounts of the minimum salaries established by law.

The maximum base of UST in 2021:

  • from January 01 to November 30 – 90,000 UAH (6,000 UAH x 15);
  • from 01 to 31 December – 97,500 UAH (6,500 UAH x 15).

 

 

  • Income limits for simplified taxpayers

On December 09, 2020, was published the Law of Ukraine № 1017-IX “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Liberalization of the Use of Registrar of Settlement Transactions by Single Taxpayers and Cancelation of the Compensation Mechanism to Buyers (Consumers) for Complaints carrying out settlement operations of a part of the amount of applied penalties”, that changed the amount of income, which gives the right to be in one of the single taxpayers group.

Starting from January 1, 2021, the maximum amounts of income for simplified taxpayers will be effective:

  • 1 group – 167 minimum salaries established by law on January 01 of the tax (reporting) year (was 1 million UAH);
  • 2 group – 834 sizes of the minimum salaries established by the law on January 01 of the tax (reporting) year (was 5 million UAH);
  • 3 group – 1167 sizes of the minimum salaries established by the law on January 01 of the tax (reporting) year (was 7 million UAH).

 

 

  • Personal Income Tax and Unified Social Tax reporting

Starting from the first quarter of 2021, taxpayers shall submit a combined form of personal income tax, military tax and UST. By the order of the Ministry of Finance dated 15.12.2020 № 773 updated tax calculation by the form 1DF was presented.

Calculation form shall be submitted separately for each quarter (tax period) divided by months of the reporting quarter within 40 calendar days following the last calendar day of the reporting quarter. A separate calculation for a calendar is not submitted.

 

 

  • Benefits for PE in paying of UST

In addition to the fact that tax debts of Private Entrepreneurs not exceeding 3 060 UAH will be written off, the mentioned taxpayers will be given preferences in paying a Unified Social Tax.  Starting from December 10, 2020, for the period from December 01 to December 31, sole proprietors, except those, who are on simplified tax system, will not pay UST for themselves if they do not receive a profit during the mentioned period. They are accrued UST for this period in the amounts specified by law, and information on the amounts paid shall be noted in the reporting document for the relevant period.

Also, material assistance provided to individuals connected with the implementation of strict quarantine in January 2021 is exempt from tax.

In addition, the terms of writing off debts on the unified social tax for the “sleeping” Private Entrepreneurs have been extended. Entrepreneurs, who do not use the simplified taxation system and individuals who carry out independent professional activity have the right to this preference. At the same time, a new period has been set, during which such payers have the right to apply for write-off. Mentioned applying shall be done until March 01, 2021. So, anyone who for any reason failed to apply to the supervisory authorities for write-off or failed fulfill the necessary conditions for this period, that was expired on August 31, 2020, will be able to take advantage from this prolongation.

According to the provisions specified in the writ of execution, payers who applied for write-offs before August 31, 2020, but their activities as business entities at the time of application have already been terminated in the period from January 01, 2017 to June 03, 2020 year, shall apply again. The supervisory authorities will perform the write off on the basis of previously submitted documents. Other entrepreneurs can apply to the supervisory authorities to write off debts for UST, fines, penalties accrued on these amounts in the case of absence of income from activities in the abovementioned period, as well as if before March 01, 2020 the required package of documents is submitted.

 

 

  • Work during quarantine

Government’s Decree № 1236 “On the renewal of quarantine requirements and the introduction of a lockdown in January of the 2021” contains, inter alia, requirements for changes in the mode of operation of public authorities and private entities.

The Cabinet of Ministers recommended to executive authorities, other state bodies, local governments, enterprises, institutions, organizations, not depending of the ownership to ensure for the period of quarantine:

  • to limit congestion in transport and on the way to work (from work) the possibility of flexible working hours, which, in particular, provides different start and end time for different categories of employees, shift work, and if technically – also work in real time via the Internet with payroll, remote (home) work;
  • to determine the period (not less than two hours per day) of priority serving of elderly citizens and individuals with disabilities.

The government recommended, that private entities shall implement changes to their operating regimes during the quarantine period in order to set the start of work at 9, 10 o’clock or later. In particular, to set the start of work at 10 o’clock or later and the time of priority serving from 10 to 12 o’clock or at later time within two hours for elder citizens and individuals with disabilities. The mentioned recommendation is made for businesses that conduct its activities in the following areas: wholesale and retail trade; repair of cars and motorcycles; postal and courier services; temporary accommodation and catering; insurance services; provision of social assistance; art, sport, entertainment, and recreation.

 

 

  • Restrictions on documentary inspections

During the measures aimed at preventing the spread of acute respiratory disease in Ukraine (COVID-19), was established a moratorium on documentary inspections till the last calendar day of the month (inclusive), when the quarantine measures established by the Cabinet of Ministers of Ukraine throughout Ukraine will finish.

Resolution of the Cabinet of Ministers of Ukraine from October 13, 2020 № 956 amended the Resolution from July 22, 2020 № 641 “On the establishment of quarantine and implementation of enhanced anti-epidemic measures in areas with a significant spread of acute respiratory disease COVID-19 caused by SARS-CoV-22 virus” and extended the quarantine restrictions until December 31, 2020.

 

 

  • Term Dividends

From January 01, 2021, a new version of Article 14.1.49 of the Tax Code of Ukraine comes into force, according to which dividends defined as a payment made by a legal entity, including the issuer of corporate rights, investment certificates or other securities, in favor of the owner. Such corporate rights, investment certificates and other securities certifying the investor’s ownership of the share (share) in the property (assets) of the issuer, in connection with the distribution of part of its profits, calculated according to the accounting rules.

For tax purposes the following payments are covered by the term “Dividends”:

  • payment in cash or in kind, made by a legal entity in favor of its founder and / or participant (participants) in connection with the distribution of net profit (its part);
  • the amount of income in the form of payments for securities (corporate rights), which are paid in favor of a non-resident specified in controlled transactions that exceeds the amount due to the principle of “outstretched hand”;
  • the value of goods (works, services), except of securities and derivatives, which are purchased from a non-resident specified through the controlled transactions exceeding of the amount that corresponds to the principle of “outstretched hand”;
  • the amount of understatement of goods (works, services) sold to a non-resident specified in paragraphs “a”, “c”, “d” of paragraphs 39.2.1.1 of the Tax Code of Ukraine, in controlled transactions compared to the amount that corresponds to the principle of “outstretched hand”;
  • payment in cash or in kind, made by a legal entity in favor of its founder and / or participant – a non-resident of Ukraine in connection with the reduction of charter capital, redemption of corporate rights in its charter capital, withdrawal of a participant from the legal entity or other similar transaction between legal entities and its participant, in the amount that leads to a decrease in retained earnings of the legal entity.

 

 

  • Order of VAT administration

The Cabinet of Ministers of Ukraine by Resolution dated 28.10.2020 № 1024 “On Amendments to the Procedure for Electronic Administration of Value Added Tax” amended the Procedure for Electronic Administration of Value Added Tax (hereinafter – the Procedure).

The Procedure is supplemented by the provisions establishing the recalculation of the paid amount by the taxpayer which registration was cancelled for the reporting period, when registration was cancelled. Such recalculation is performed by the State tax authority within three working days after taxpayer’s registration was cancelled by recalculation of the amount by each indicator.

List of exceptions, when the recalculating of paid amount shall not be performed:

  • If by the moment of cancellation, the taxpayer is on a simplified tax system and is not a VAT payer;
  • If the repeated registration of the taxpayer (following to the cancelled registration) was cancelled on the grounds prescribed by the Tax Code of Ukraine Art. 184.1.

 

 

  • VAT rate for the defined agricultural production

On December 17, was adopted the draft of Law № 3656. This document amends the Tax Code, which introduces a reduction in the VAT rate on certain types of agricultural products to 14%.

The reduced tax rate is set for agricultural products belonging to the following product groups in accordance with the Ukrainian classification of goods:

  • 0102 – cattle;
  • 0103 – pigs;
  • 0104 10 – sheep;
  • 0401 – including the whole milk;
  • 1001 – wheat and a mixture of wheat and rye (meslin);
  • 1002 – wheat;
  • 1003 – barley;
  • 1004 – oats;
  • 1005 – corn;
  • 1201 – soybeans;
  • 1204 00 – flax seeds;
  • 1205 – seeds of rapeseed and rape;
  • 1206 00 – sunflower seeds;
  • 1207 – seeds and fruits of other oilseeds;
  • 1212 91 – sugar beets.

 

 

  • State language regulations

From January 16, 2021, the Law of Ukraine “On Ensuring the Functioning of the Ukrainian Language as the State Language” is coming in a legal force.

The law obliges all service providers in Ukraine to communicate with customers exclusively in the state language, unless otherwise requested by the consumer.

Manufacturers and sellers in Ukraine are obliged to provide consumers with information about goods, works or services in the state language. But such information can be duplicated in any other language.

As well it is allowed to use another language, but only upon the customer`s request.

 

 

This information is a general overview and is not prepared to be a legal, accounting or other guidance.
Feel free to contact us for the individual consultation.

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