New Tax Code

The Ukrainian Parliament approved in the first reading the draft Tax Code submitted by the Cabinet of Ministers. The draft Tax Code should serve as the basis for Ukraine’s budget for 2001. Therefore, it may be expected that the Tax Code will be finally adopted by Parliament this year and introduced from 1 January 2001. Whilst the Government’s draft proposed for a reduction of corporate profits tax, VAT and personal income tax rates, Parliament took a more conservative approach. Specifically, Parliament instructed the Cabinet of Ministers and the Committee on Finance and Banking Activities to prepare the draft Tax Code for the second reading with due regard to the following:

rate of corporate profits tax should remain at the current 30%;
rates of personal income tax should be unified with the rate of corporate profits tax (i.e., top rate would be reduced from 40 to 30%);
rate of VAT should be reduced to 15% (17% during the first year after introduction of the Tax Code). The threshold of taxable transactions requiring the entity to register for VAT purposes should be increased to UAH 250,000;
tax on real estate at the rate of 0.5-1.0% should apply to private rather than to corporate property.It is expected that the Tax Code will be submitted to the second reading in fall. We will keep you updated on any progress with the Tax Code of Ukraine. (Resolution of the Verkhovka Rada of Ukraine dated 13 July 2000).

PricewaterhouseCoopers Kyiv.
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