A new Act has significantly amended Ukraine's corporate profit
tax regime, effectively decreasing the overall tax burden and
eliminating many ambiguities thought responsible for conflicts with
tax authorities (Act of Ukraine No 349-IV, effective January 1
2003). The main effects of the new Act are as follows:
In a radical change, it will be possible to carry forward tax
losses for an unlimited period of time (previously up to five
years).
Regular advance corporate profit tax payments have been
eliminated, though two advance payments will be required over
2003.
The tax rate has been lowered from 30% to 25% (effective January
1 2004).
Goods or services purchased from non-residents may only be
recognized as deductible expenses following their actual receipt.
Prepayments may not give rise to deductible expenses. This also
applies to transactions with residents entitled to tax
privileges.
A new fourth class of fixed assets has been introduced and new
depreciation rates (effective January 1 2004), have been set for
the first three classes:
- Real estate: 2% (previously 1.25%);
- Cars, furniture, other office equipment: 10% (6.25%);
- Other: 6% (3.75%);
- New: computers, software, phone sets, printers: 15%.
New anti-money laundering legislation
Ukraine has amended its foreign currency and banking legislation
in line with FATF recommendations on money laundering and capital
flight prevention. In particular, the National Bank of Ukraine
adopted a Regulation stipulating that Ukrainian residents wishing
to acquire Ukrainian-issued securities from non-residents must
first obtain a licence to transfer foreign currency abroad.
The authorities have also made mandatory the monitoring of
transactions valued over Hm15,000 ($2,800) as well as the
disclosure of financial institutions' clientele, and have
established both administrative and criminal liability for money
laundering. The National Bank is expected to take more anti-money
laundering steps shortly, including changes to improve transparency
in the financial services industry and strengthen control over
doubtful transactions.