Taxation of Legal Entities

Legal entities shall choose general or simplified system of Taxation.

General system of Taxation:

All legal entities that didn’t choose other system of taxation, or for which limits are determined regarding either one, or another system of taxation are on this system of taxation.

Legal entities on general system of taxation pay the following general taxes, dues and other obligatory payments:

profits tax of companies (rate is 25% of basis of assessment);
value added tax;
vehicle owners and other self-propelled machines and mechanisms tax;
excise tax;
obligatory public retirement insurance tax (32,3% of common salary fund);
dues for obligatory public social insurance;
payment for a trade patent for some kinds of business activity;
custom duty;
land tax (payment);
and others according to legislation.

Legal entity is also a Fiscal Agent regarding engaged employees and is obliged to deduct and transfer to the budget income tax of physical persons.

Simplified system of Taxation

Simplified system of taxation, book-keeping, and accounting is applied according to Decree of President of Ukraine of 03.07.1998, No. 727/98.

According to this Decree payers of single tax shall be legal entities of any organizational and law form and form of property in which average number of employees does not exceed 50 persons per year and size of proceeds of goods (products, services, works) sale does not exceed one million UAH per year.

Rate of single tax for legal entities:

6 percent of proceeds of goods (products, services, works) sale without account excise tax in case of payment of value added tax according to Law of Ukraine “About value added tax”;
10 percent of proceeds of goods (products, services, works) sale without account excise tax in case of value added tax in composition of single tax.

Legal entity paying a single tax does not pay such taxes and duties (obligatory payments) as followings:

value added tax, except the case when legal entity chose manner of profit taxation on single tax at the rate of 6%;
companies profit tax;
land tax (duty);
duties for obligatory social insurance;
deductions and duties for building, reconstruction, repair and maintenance of motor roads of common use of Ukraine;
rate;
trade tax;
obligatory public retirement insurance tax;
duty on permitting of location of trade objects and human services;
dues to the Fund of Ukraine of social protection of invalids;
dues to the Public Fund of Employment;
dues on patents according to the law of Ukraine “About patenting of some kinds of business activity”.

New formed and registered in established order subjects of small business undertakings, which handed in to the State Tax Service at place of their registration an application on right of using of simplified system of taxation, book keeping and accounting are accepted as subjects of simplified system of taxation, book keeping and accounting since that quarter when their state registration was done.

The followings shall not be accepted as payers of single tax:

subjects of business activity which come under Law of Ukraine “About patenting of some kinds of business activities” in part of acquisition of special patent;
trusting companies, insurance companies, banks, other financial and credit and non-banks financial institutions;
subjects of business activity in which statutory fund any shares belonging to legal entities – to members and founders of this subjects which themselves are not subjects of business activity, exceed 25%;
physical persons - subjects of business activity which engage in business activity without creating a legal entity, and are engaged in trade of strong drinks and tobacco goods, fuel and petrol.

This is just to inform you.
For more detailed information don’t hesitate to contact us in our office!