Novelties of tax regulation & currency control in Ukraine

Introduction of mandatory 100% sale of foreign currency proceeds 

On 21 August 2014, the National Bank of Ukraine (the “NBU”) introduced a mandatory sale of 100% of foreign currency proceeds received from abroad by legal entities, private entrepreneurs, representative offices of foreign companies, as well as currency deposited on accounts, which are used for carrying on joined activity without establishing a legal entity, and currency on residents’ accounts opened abroad in accordance with the NBU’s individual licenses.1 

Foreign currency proceeds, received by Ukrainian intermediaries under commission, agency, or consignment agreements that should be further remitted to owners of such money, are not subject to mandatory sale. 

These requirements will be effective until 21 November 2014.

Ban on offset of mutual claims for export transactions

In connection with the above mentioned introduction of mandatory sale of 100% of foreign currency proceeds, the NBU banned offsetting mutual claims for export transactions. 

In the respective Resolution2, the NBU stated that banks should not release from the currency control the export transactions based on documents for offset of mutual claims. 

The Resolution entered into force on 29 August 2014. The requirements will be effective until 21 November 2014.

Explanatory letters regarding military tax

The State Fiscal Service of Ukraine (the “SFSU”) issued a number of explanatory letters in respect of certain aspects of the military tax assessment and payment. For the avoidance of any doubts in respect of the tax base calculation, the authorities mentioned that the tax base should not be decreased for the amounts of the personal income tax or unified social contribution.3

Private entrepreneurs, no matter what taxation regime they are subject to, do not pay the military tax from the income earned within their business activity.4 

Non-targeted one-time financial aid paid to employees is not regarded a salary payment and, therefore, is not subject to the military tax.5 

New list of medical products subject to 7% VAT

On 10 September 2014, a new list of medical products supply and import of which is subject to 7% VAT became effective.6 

The new list contains customs codes and names of such products rather than reference to medical products definitions provided by technical regulations (like the old list did). 

The new list does not contain some products (e.g., diapers, nipples, spectacle frames) that could have been subject to 7% VAT before. Therefore, their supply and import became taxable with 20% VAT.

To find out more download our Tax Alert / 16 September 2014  below (in English, Russian, and Ukrainian)

________________________________________________________________

1Resolution of the Board of the NBU No. 515 dated 20 August 2014

2Resolution of the Board of the NBU No. 534 dated 28 August 2014

3Explanatory letter of the SFSU dd. 20 August 2014

4Explanatory letters of the SFSU dd. 26 August 2014 and 27 June 2014

5Explanatory letter of the SFSU dd. 10 September 2014

6Resolution of the Cabinet of Ministers of Ukraine No. 410 dd. 03 September 2014