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.