Ukrainian Officials See the New Tax Code as a Huge Step Forward

Dec 10, 2010, 03:49 ET from Worldwide News Ukraine

KIEV, Ukraine, December 10, 2010 /PRNewswire/ -- Ukraine's Prime Minister Mykola Azarov and Vice Prime Minister of Social Policy Serhiy Tyhypko believe that the recently adopted Tax Code will raise the country's profile among international investors. Though the code was adopted amidst a vibrant public debate and still needs some adjustments, the authors of the document are confident that both national and international investors should immediately feel the positive impact on their businesses.

The Vice Prime Minister of Social Policy of Ukraine Serhiy Tyhypko stated that "by adopting the Tax Code we have made a step forward as a country". Tyhypko mentioned that the government would launch special online training programs for businesses on the new Tax Code's implications.

According to the Prime Minister of Ukraine Mykola Azarov, next year will be the transition period from the old tax system to the new one, so neither fines nor penalties will be applied to the companies.

Among the key achievements of the new bill is the reduction of the number of national taxes from 29 to 17. The code foresees a gradual reduction of the corporate income tax from existing 25% to 16%: by 2011 - it will be reduced to 23%, 2012 - to 21%, 2013 - to 19%, and starting from 2014 - down to 16%. The new bill takes the tax burden off light industry, shipbuilding, aircraft building, and hotel businesses for the next ten years to come. The Value Added Tax rate will be lowered too - from 20% to 17%.

The Tax Code introduces an automatic VAT refund. It foresees a 23-day term for the state to refund VAT to a company upon receipt of the latter's claim. In case of a delay the liable state agencies will be charged with a fine of 120% of National Bank of Ukraine refinancing rate. As of today, the state's unpaid debt for VAT refund equals 9,5 billion Ukrainian hryvnias (1,19 billion US dollars), including 2,4 billion of the overdue debt. Automatic VAT refund is among International Monetary Fund's conditions for Ukraine.

Construction works of affordable housing and housing built on public funds was exempted from VAT. This measure promises to significantly lower the real estate prices and to encourage further investments into the sector.

SOURCE Worldwide News Ukraine