Changes to the Tax Code come into force

On July З1, 2014 the changes entered to the Tax Code of Ukraine came into force, the updates cover the taxes levied on individual unearned income. In so doing, the alterations to the process of calculating taxes on dividends are coming into force on January 1, 2015, the press-office of the Ministry of Revenue & Duties reports.

Pursuant to new provisions added to the Tax Code of Ukraine, income from dividends, winnings, prizes, interest income are to be taxed.  This is not applied to the interest income which amount does not exceed seventeen subsistence minimum income of a person able to work, per year, as set out in the legislation effective as of January 1 of the accounting year, as well as income from interest and dividends, winnings and prizes received in the national lottery, prize draws and raffles, if its amount does not exceed 50 minimum wages set by the law.

Taxes charged on income from interest, dividends, royalties and investments are calculated by a fiscal agent at the rate of 15% (17%) each time charges (payments) are to be made.

To recalculate total annual taxable income, its tax base, namely income from interest, dividends, royalties and investments, there should be applied the tax rates stated below:

- if the tax base in the accounting year does not exceed 204 minimum subsistence wages, the rate will be 15 %;

- if the tax base in the accounting year exceeds 204 minimum subsistence wages, but does not exceed 396 minimum subsistence wages, the amount in excess is taxed at the rate of 20 %;

- if the tax base in the accounting year exceeds 396 minimum subsistence wages, the amount in excess is taxed at the rate of 25 %.

The tax agent of a taxpayer is regarded to be the person who calculates the charges (payments) on income from interest paid to the taxpayer.

Total taxes withheld in the accounting year from the interest accrued (paid) to the said taxpayer, are paid (remitted) by the tax agent to the government budget within the time period specified in the Tax Code but limited to one month under review. Thus, it should be done by the 30-th day of the month under review.

The tax agent who calculates the income from interest is to state the data about the taxpayer’s total income calculated (paid) as stated in the tax return, along with total taxes withheld (transferred) correspondingly. Thus, the bank should not deduct or recalculate the taxes levied on income from interest, though the taxable natural persons should pay themselves the taxes charged and stated in their tax returns.

The above said changes are stipulated in Law of Ukraine dd. March 27, 2014 under № 1166-VII On Prevention of Financial Disaster and Creation of Preconditions for Economic Growth in Ukraine, and Law dd. April 10, 2014, № 1200-VII On Changes to the Tax Code of Ukraine and Some Enactments in Ukraine concerning elimination of discrepancies in legislative norms.