Written by Ukrainians for Ukrainians

1. FAIR TAX CODE:
Written by Ukrainians for Ukrainians
September 2016
An alternative exists

2. During the April-September 2016, tax experts of the «Uspishna Kraina» team together with
Ukrainian entrepreneurs and civil activists were writing a new Tax Code. The document was
working out during the regional forums «Fair taxes – Successful country» in Poltava,
Dnipro, Kharkiv, Kirovograd, Sumy and Mikolayiv. Moreover, each person could join the
discussion of the Code on the vsiabonikhto.com website.
The results of mutual work of experts were reflected in the documents, which are necessary for
adoption of the new Tax Code in Ukraine:
• The draftlaw «On amendments to the Tax Code of Ukraine» (concerning the implementation of
fair tax policy), 146 pages.
• Comparative table of the draftlaw «On amendments to Tax Code of Ukraine» (concerning the
implementation of fair tax policy), 525 pages.
• Explanatory note on the draftlaw «On amendments to the Tax Code of Ukraine» (concerning the
implementation of fair tax policy), 5 pages.
• The draftlaw of Decree of the Verkhovna Rada «On taking the draftlaw «On amendments to the
Tax Code of Ukraine» as a basis», 1 page.
The Code was presented during the All-Ukrainian Forum
«An alternative exists. Own path for Ukraine» in September 2016.
2
About the Tax Code of the «Uspishna Kraina»

3. 1. Deoffshoring and fair taxation on personal income of oligarchs
2. Expanding the tax base, new approach for property taxes
3. Price reduction of basic taxes for citizens and business
4. Support for small and medium-sized business and agricultural producers
5. Improvement of tax administration and electronic services
6. Non-intervention of tax authorities in business activity
7. Decentralization of tax revenues
8. Creating favourable conditions for development of national economy and attracting investments
9.Stability and immutability of tax policy
3
Principles of fair tax policy

4. How can we achieve this?
We will restore control over transfer pricing of large taxpayers, including international
experience.
We will implement legal provisions, which will allow Ukraine to join the international
Action Plan on Base Eruption and Profit Shifting (BEPS).
We will introduce taxation on supervisory foreign companies, which are owned by Base
Eruption and Profit Shifting.
We will initiate a series of amendments to legislation for the sake of Ukraine’s joining
the MCAA Convention on cooperation between competent authorities concerning au-
tomatic exchange of information according to the CRS standard.
Deoffshoring and fair taxation
on personal income of oligarchs
4

5. What will it give to Ukraine and Ukrainians?
New instruments of struggling against tax evasion by oligarchs.
Severe control over the operations of large enterprises and its contracting parties.
Decreasing the amount of cases on referring to offshore jurisdictions for tax
manipulations.
Transparency in the context of property right issues of Ukrainian oligarchs.
Reducing the taxes for ordinary citizens through the personal income tax of oligarchs.
Increasing the revenues to the budget. Additional fundraising (UAH 320 billion per year to
taxation).
5
Deoffshoring and fair taxation
on personal income of oligarchs

6. How can we achieve this?
We will oblige to declare the external property, corporate rights in foreign companies,
funds in foreign banks. Concealing information about such assets will bring liability.
We will establish the control over the full tax payment, incomes and expanses of indi-
viduals authorized to fulfil state functions and powers of local government, as well as
their family members.
We will introduce luxury tax, namely, 5% of the value of expensive vehicles, yachts,
planes, helicopters and 10% of the value of jewelry, purchased fur, watches, etc.
We will fix real estate tax in Ukraine 0,2-2% depending on its appraised value, which
should be prepared via the institution of state appraisal. 4% will be established for real
estate, which is beyond the state appraisal.
We will cancel the real estate tax on property, which costs less than EUR 50 thousand.
We will cancel the obligation to pay vehicle tax each year.
Expanding the tax base,
new approach for property taxes
6

7. What will it give to Ukraine and Ukrainians?
Control over the income of politicians and public figures.
Appraisement of real estate, which is liable to transparent taxation, using the single
principles.
Real estate tax exemption for citizens with large, but old and cheap real estate, social
housing.
Maintenance of luxury tax in case of purchasing expensive cars – in case of import or
producing of a car.
Additional fundraising of UAH 5 billion per year from the luxury tax.
Reduction of taxes for ordinary citizens by dint of introducing the luxury tax.
Expanding the tax base,
new approach for property taxes
7

8. Reduction in price of basic taxes
for citizens and business
How can we achieve this?
We will change VAT rates, Corporate Income Tax, Personal income tax, Single
contribution to mandatory social security fund.
We will reduce the VAT rate on vital gods and service from 20% to 5%.
We will introduce fair compensators of losses of the state budget – control over the
offshore operations and luxury taxation.
VAT
Corporate
Income Tax
Personal
income tax
Single
contribution to
mandatory social
security fund
20 15% 18 10% 18 10% 22 15%
8

9. What will it give to Ukraine and Ukrainians?
Price reduction of basic taxes
for citizens and business
Increasing the level of real salaries of Ukrainians.
Reducing the retail price on medicine, food, utility services, agricultural production.
Saving about UAH 825 per month by each Ukrainian family.
Decreasing the tax pressure on the Social Security Fund.
Release of business working capital and increase in sales.
Decreasing the tax pressure on business, expanding the tax base and increasing the
revenues to budgets of all levels.
Improving the level of competitiveness of Ukrainian business by reducing production
costs.
9

10. Support for small and medium-sized
business and agricultural producers
How can we achieve this?
We will expand the range of taxpayers, increase the admissible sums of annual
income.
Group
(expanding the range
of taxpayers)
Аnnual income Admissible
amount
of employees
Тax rate
(reduction of the rates
by 2 times for agricultural producers)
1st group: 15 000 €
Nowadays: UAH 300 thousand
0 Nowadays: up to 10 minimum wages
2nd group: 90 000 €
Nowadays: UAH 1500 thousand
10 Nowadays: up to 20 minimum wages
3rd group: 275 000 € (for individuals)
450 000 € (for legal person)
Nowadays: UAH 5000 thousand
20 (for individuals)
50 (for legal person)
Nowadays: without limits
3%
of income
+ VAT
5%
of income
without VAT
or
5%
of income
+ VAT
7%
of income
without VAT
or
4th group:
2 000 000 € No limits
5th group:
(current 4th
group)
2 000 000 €
Nowadays: without limits
No limits
Nowadays: from 0,16% to 5,4%
of regulatory monetary value
From 5 to 10 minimum wages
From 10 to 20 minimum wages
From 0,08% to 2,7%
of regulatory monetary value of
farmland, depending on the
category and location.
10

11. How can we achieve this?
Support for small and medium-sized
business and agricultural producers
We will fix 5% VAT rate for agricultural producers.
We will maintain the simplified tax system for agricultural producers and reduce tax
rates by 2 times.
We will keep special VAT taxation regime in agricultural industry with 100%
reimbursement of funds for agricultural producers.
We will introduce taxation of incomes, which were obtained by realization of season
activity using the short-term patent instead of registration of business entity.
11
5%

12. What will it give to Ukraine and Ukrainians?
An opportunity for private entrepreneurs (not large business) to use simplified system.
Additional possibilities for development of small and medium-sized business. Release
of business working capital and increase in sales.
Creating new workplaces and stabilization economy through the strengthening
positions of private entrepreneurs.
Support for agricultural enterprises in development and increase in sales.
Expanding the possibility of growing the amount of employed population and obtaining
the profit from several types of season activity.
Resolving the problem of illegal mining operations (including, extraction the amber,
coal, etc.) via providing short-term patent.
Support for small and medium-sized
business and agricultural producers
12

13. How can we achieve this?
We will introduce electronic system of tax administration for all procedures.
We will ensure remote document management and tax control in e-version.
We will inject automatic formation and filling VAT and excise declarations on the basis
of information from databases.
We will cancel accounts in the system of electronic administration of VAT and excise tax.
We will provide virtual payment transactions recorders with stable work.
We will provide business entities with tax consultations during the term of 10 days.
13
Improvement of tax administration and
electronic services

14. What will it give to Ukraine and Ukrainians?
Simple and easy calculations, reports, and tax payment, communication with
supervisory bodies, carrying out electronic inspections.
Transparency of registration of tax invoice and transparent tax loan of enterprises
without «forced» usage of any schemes.
Exclusion of human factor and corruption risks during the communication with
supervisory body.
Saving time and funds for development of own business.
Improvement of tax administration and
electronic services
14

15. How can we achieve this?
We will eliminate tax police by its acceding to the Ministry of internal Affairs,
decriminalize articles related to violation of tax legislation.
We will introduce 3-years monitoring on documental inspections of small enterprises
(including newly created), which have income less than UAH 1 billion.
We will strengthen responsibility of employees of tax authorities for abuse of power
and deliberate obstruction of business activity.
We will allow to carry out second departure inspections exclusively on the basis of
court decisions.
15
Non-intervention of tax authorities
in business activity

16. What will it give to Ukraine and Ukrainians?
Significant reduction of tax pressure on taxpayers by fiscal authorities.
Development of partner relationships between citizens, entrepreneurs and enterprises
with tax service.
Non-intervention of tax authorities
in business activity
16

17. How can we achieve this?
We will offer amendments to legislation, which redistribute tax revenues between
state and local budgets:
• 100% of personal income tax will be allocated to local budgets in regions, 80%
of this tax – in Kyiv;
• divide 50/50 Corporate Income Tax;
• increase the fraction of local budget in ecology tax up to 90%;
• 50% of rental payments for minerals of national importance will be allocated to
local budgets.
17
Decentralization of tax revenues
Rates of current Tax Code Rated of the Tax Code by the «Uspishna Kraina»
Tax
Local
budget
State
budget
Personal income tax 75% 25%
Personal income tax in Kyiv 40% 60%
Corporate Income Tax 10% 90%
Ecology tax 80% 20%
Rental payments
(minerals of national importance)
25% 75%
Tax
Local
budget
State
budget
Personal income tax 100% 0%
Personal income tax in Kyiv 80% 20%
Corporate Income Tax 50% 50%
Ecology tax 90% 10%
Rental payments
(minerals of national importance)
50% 50%

18. What will it give to Ukraine and Ukrainians?
Increasing the level of transparency of budgetary process in Ukraine.
Raising the incomes of local budgets.
Providing local communities with new opportunities for development.
Decentralization of tax revenues
18

19. How can we achieve this?
We will exempt enterprises on the territories of industrial parks and local innovative
centres from VAT taxation and customs duty in case of importation of equipment,
materials, components, which are not produced in Ukraine and are not excised.
We will establish benefits of 50% to employee income (in local innovative centres)
during 5 years.
We will exempt legal entities profit and income of individual entrepreneurs from
taxation for the next 5 years.
We will exempt real estate, which is located on the territory of industrial parks and
local innovative centres, from taxation for 5 years.
We will establish 1% rate of land tax, 3% of monetary value of rental payment for
5 years.
19
Creating favourable conditions for development
of national economy and attracting investments

20. What will it give to Ukraine and Ukrainians?
Attracting investments to new technologies, expanding, restructuring, technical «rear-
mament» and modernization of production. Improvement the quality and expanding
nomenclature of goods and services, which are characterized by significant novelty,
promoting it to regional and international markets.
Support for innovative processes and transfer of technologies. High-tech in production
and development of social projects for population.
Creating local innovative centres for development of sectors, which are adjacent to
IT-field and data protection, formation of new centres of processing.
Performance of work and services related to analysis, projecting and software of infor-
mational systems (IT-consulting, audit, system and maintenance of networks of state
information systems, creating databases).
Providing conditions for development key sectors of economy.
Creating favourable conditions for development
of national economy and attracting investments
20

21. Stability and immutability
of tax policy
How can we achieve this?
The new Tax Code will exclude the possibility of multiple interpretations of provisions,
eliminate collisions in tax legislation in part of doing business.
We will simplify tax reports and fix its immutability on legal level.
We will introduce moratorium on amendments to the Tax Code for the next 5 years
(apart from amendment, which would improve conditions for doing business).
21

22. What will it give to Ukraine and Ukrainians?
Reducing the amount of conflict situations between entrepreneurs and tax authorities
Providing «the rules of game» and investment climate for business.
Stability and immutability
of tax policy
22

23. 23
The new Tax Code is ready for consideration
in the Verkhovna Rada.
Full version of the Code in Ukrainian is available as a free download here
vsiabonikhto.com/spravedlyvyy-podatkovyy-kodeks

24. facebook.com/uspishna.kraina
vk.com/uspishna_kraina
ok.ru/uspishna.kraina
twitter.com/uspishna_kraina
instagram.com/uspishna_kraina
youtube.com/c/UspishnaOrg
telegram.me/UspishnaKraina
uspishnakraina.com/en