Legal advice on changes to the TCU made by the Law № 466-IX (Bill № 1210)

Law №466-ХІ “On Amendments to the Tax Code of Ukraine on Improving Tax Administration, Elimination of Technical and Logical Inconsistencies in Tax Legislation” of January 16, 2020, signed by the President of Ukraine on May 22, 2020 and entered into force on May 23, 2020 (hereinafter – the Law), the Tax Code of Ukraine (hereinafter – the TCU).

Regarding changes in personal income tax

1. Personal income tax is not taxed (Article 164 – Article 165 of the TCU), in particular, the following payments:
1.1. compensation for non-pecuniary damage in the amount determined by a court decision, but not more than four times the amount of the minimum wage established by law on January 1 of the reporting (tax) year;
1.2. amounts of pensions, the amount of which exceeds 10 subsistence levels;
1.3. the amount of insurance (regular) payments, insurance indemnities made by the Motor (Transport) Insurance Bureau of Ukraine (the amount may not exceed the amount of damage actually caused to the beneficiary (final beneficial owner), determined at normal prices on the date of such insurance payment).

2. The taxpayer has the right to install within 3 years the tax liability accrued on the principal amount of the debt (loan) on a mortgage loan, forgiven by the creditor at his own discretion (was – a loan and / or interest).

3. From now on, the sale of an investment asset shall also be equated with the return to the taxpayer of funds or property (property rights) previously contributed by him (or the person from whom the investment asset was acquired directly or indirectly) to the authorized capital of the issuer of corporate rights. a taxpayer from among the founders (participants) of such an issuer, reduction of the authorized capital of such an issuer or liquidation of such an issuer (paragraph 170.2.2 of the TCU).
3.1. In case of sale or acquisition by a taxpayer of investment assets of non-residents – related parties or non-residents registered in the states (territories) included in the list of states (territories) approved by the Cabinet of Ministers, income and expenses on such transactions are determined:
3.1.1. in the amount not lower than the usual price – in case of sale by the taxpayer of an investment asset;
3.1.2. in the amount not exceeding the usual price – in the case of acquisition by the taxpayer of an investment asset.
However, this rule does not apply if the buyer of the investment asset is a directly or indirectly controlled foreign company in which the seller of the investment asset is a controlling entity and which remains the owner of the investment asset at the end of the reporting period.

4. Taxpayer – a resident recognized as a controlling person in relation to a controlled foreign company, is obliged to determine part of the profits of the controlled foreign company and include it in the total taxable income reflected in the annual tax return and taxed at the rate specified in paragraph 167.1 TCU ( 18%).

5. Changes in the taxation of real estate sales:
5.1. taxation at the basic rate of 18% of income received by the taxpayer from the sale during the reporting tax year of the third and subsequent real estate (vehicles) (the first object for the year remains at zero rate, the second – at a rate of 5%);
5.2. is exempt from payment of 5% PIT during the sale of the object of unfinished construction, provided that such property is owned by the taxpayer for more than three years.

6. For non-submission, submission in violation of the established deadlines, submission in full, with inaccurate information or with errors of tax calculation on the form №1DF, a fine of 1020 UAH (was 510 UAH), for repeated violations during the year – 2040 UAH was 1020 UAH).