Экономические науки/6.Маркетинг и менеджмент.

Natorina A.A.

Vlasova I.A.

Donetsk National University of Economics and Trade Named after Mikhailo Tugan-Baranovsky

Corporate profits tax in ukraine

The introduction. The rules of calculation and payment of corporate profits tax is established by the Law of Ukraine «On Taxation of Corporate Profits».

Taxpayers are residents of Ukraine, whose activities aim at making a profit, as well as their branches. In addition, non-residents, who derive income from sources within Ukraine, and permanent establishments of non-residents, are recognized as payers of corporate profits tax. The item subject to taxation for the residents, their branches, as well as permanent establishments, whereby non-residents conduct business in Ukraine, is profit. The amount of profit is calculated by reducing the amount of gross income by the amount of gross expenditure and depreciation.

As a general rule, gross income includes any amount of income received by the taxpayer of all activities regardless of the form in which they are received. Some types of revenue are not included into the gross income, for example, the amount of indirect taxes included in the price of goods (works, services), the amount of direct investment in the authorized capital stock and securities of the taxpayer, the money received as credits, loans, and others.

The basic part. Gross expenditure is costs that the taxpayer has incurred in connection with the acquisition of goods and services for their subsequent use in their business activities. The law provides certain restrictions on the right of taxpayers to add some costs to the gross expenditure. For example, gross expenditure doesn't include the costs which do not relate to the business, the cost of acquisition of fixed assets which are subject to amortization, the amount of returned credits and loans, paid dividends, etc.

According to the law depreciation is the gradual reduction, within the established legal norms, of the profit of taxpayers by the sum of charges for the acquisition, construction or improvement of fixed assets and intangible assets. In other words, the cost of acquiring fixed assets does not reduce the taxable profit immediately, but gradually.Tax period for corporate profits tax is the calendar quarter, half, three quarters and year. The tax period begins with the first calendar day and ends on the last calendar day of the tax period. Tax for the accounting tax period is calculated on a cumulative total basis.Tax returns are filed with the tax authority within 40 calendar days following the last day of the relevant tax period. Thus, the corporate profits tax return should be submitted no later than: on 10th May current year – for the 1st quarter of current year, on 9th August current year – for 1st half of the current year, on 10th November – for the 1st 9 months of the current year, on 9th February of the following year – over the past year.

The standard rate of corporate profits tax is 25%. However, the law provides other tax rates too. For example, the tax rate for insurance business amounts to 0% or 3%, depending on the types of insurance, from which income was received. The amount of tax for the tax period shall be paid within 10 calendar days following the relevant deadline date for filing tax returns. Accordingly, the tax is to be paid no later than: May 20th current year – for the 1st quarter of this year, on 19th August current year – for the 1st half of the year, 20th November – 1st 9 months of this year, on 19th February following year – over the past year.

If according to the results of the tax year a taxpayer has a loss, that is, if the item subject to taxation has a negative value, the amount of such losses are included in the gross expenditure of the first calendar quarter of the following year. The item subject to taxation on the basis of the results for half, three quarters and year should be calculated taking into account losses in the previous year which are added to the gross expenditure of such tax periods until they will be fully covered. Over-paid amount of tax that was assessed as tax for the reporting period on a cumulative total basis from the beginning of the year may be offset against future payments or returned to the taxpayer on his application. Returns are made within the period no later than 10 working days from receipt of an application.

The law provides for special rules of taxation of certain types of transactions carried out by taxpayers. This applies particularly to barter transactions, insurance business, foreign exchange, transactions with related parties, transactions with securities and derivatives, joint-cooperation in the territory of Ukraine without establishing a legal entity, the payment of dividends, transactions with debt claims and liabilities, income from long-term contractual obligations. In addition, there are features of the taxation of certain taxpayers: non-profit agencies and organizations, companies owned by disabled persons' organizations, etc.

Conclusions. The item subject to taxation for non-residents is income received from sources within Ukraine. The law clearly defined list of such income. These include, inter alia, the so-called passive income (interest, dividends, royalties, and lease (rent) payments), income from the sale of real property, profits from trading in securities and corporate rights, and some others. Revenue or other compensation for goods (works, services), delivered (performed, rendered) by the non-resident are generally not recognized as income from sources within Ukraine and not subject to tax. The exceptions are certain types of works and services, if they are performed (rendered) in the territory of Ukraine. The rate of non-residents' income tax is 15%. Certain types of income are subject to other rates, for example, income in the form of freight, subject to a rate of 6%, and profits in the form of income for interest-free (discount) bonds or treasury bonds – 25%. A resident who pays income to non-resident, together with the payment of income is required to calculate the amount of non-residents' income tax, to deduct it from the paid amount and pay in the budget. A similar obligation rests with the permanent establishments of non-residents.

Literature

1. All about taxation in Ukraine – Corporate profit tax in Ukraine [Electronic resource]. – Access mode: < http://kpl.net.ua>.

2. Ukraine Tax Laws and Tax System [Electronic resource]. – Access mode: < http://www.worldwide-tax.com>.