The Ministry of Finance of Ukraine has supported the proposal of the Association “Insurance Business” (ASB) and the League of Insurance Organizations of Ukraine (LIOU) on the inadmissibility of VAT taxation of commission remuneration of insurance agents, according to the press release of the ASB.
It is specified that the norm on VAT taxation was contained in the draft law of Ukraine “On Amendments to the Tax Code of Ukraine to improve the taxation of insurance activities in Ukraine”.
As reported, both associations jointly appealed to the Ministry of Finance, the Ministry of Economy, the State Regulatory Service, the National Bank with a request not to worsen the tax conditions of insurance business and not to violate the requirements of the EU Directive.
“Ukraine is moving to the EU, so we must check all tax innovations both with common economic sense and with the principles and norms in force in the European Union,” says Vyacheslav Chernyakhovsky, general director of the Insurance Business Association.
At the same time, the press release specifies that the imposition of VAT on commissions of insurance agents directly contradicts the EU Council Directive No. 2006/112/EC of November 28, 2006 “On the Common System of Value Added Tax”. Article 135 “Exemption from taxation of other activities”, which expressly stipulate that “Member States shall exempt from taxation … insurance and reinsurance operations, including related services provided by insurance brokers and insurance agents.
The report also notes that to substantiate their position, insurance associations have analyzed the performance of insurers of Ukraine for the first nine months of 2023 and conducted a representative survey of market participants. According to the results of which it became clear that the state would not receive economic effect from this innovation, and on the contrary, there would be unpredictable additional costs for administration, control and monitoring of VAT operations in insurance activities.
“According to our estimates, our proposals, supported by the Ministry of Finance, saved each insurance company at least 40-50 thousand UAH monthly,” – said Chernyakhovsky.
insurance agents, MINISTRY OF FINANCE, TAXATION, VAT, АСБ, ЛСОУ
The Verkhovna Rada has supported drone production in Ukraine by exempting components of unmanned aerial vehicles (UAVs) from value added tax and import duty for the time being.
Bills No. 9275 and 9276 were voted for by 284 and 289 people’s deputies at the plenary session of the Verkhovna Rada on Monday in the first reading and as a whole, respectively, parliamentarian Yaroslav Zheleznyak (Golos faction) said in a Telegram.
The bills amend the Tax and Customs Codes and help optimize UAV production and supply processes.
In particular, for the duration of martial law, components (materials, units, equipment units, components) of UAVs that enterprises import for their own activities for the production and repair of unmanned aerial vehicles are exempt from VAT and import duty.
Receipts of taxes and other charges to the general fund of the state budget in 2022 in terms of payments administered by the State Tax Service amounted to 694.4 billion UAH, which is 4.5 billion UAH, or 0.6% below the indicative indicators, the head of the parliamentary committee on finance, tax and customs policy Daniel Getmantsev said.
“More than last year the fact of January-December 2021 paid 80.0 billion UAH (+13.0%),” he wrote in a telegram on Saturday.
Hetmantsev said that in December 2022 the general fund of the state budget received 55.8 billion UAH, which is 12.6% or 6.2 billion UAH more than the indicator, and by 12.3% or 6.1 billion UAH more than the plan 2021.
According to him, such figures are largely due to an increase in revenues from the value added tax (VAT) on manufactured goods compared to last year by almost 1.4 times, or 58.1 billion UAH – up to 213.9 billion UAH. This is also by 19.1% or 34.3 billion UAH more than the indicative plan.
The head of the committee added, without specifying the amount of VAT refund, that in December the indicative indicators for this tax are exceeded by 22.5%, or 3.2 billion UAH, and amounted to 17.5 billion UAH, which is 13.4% or 2.1 billion UAH more than in December 2021
Hetmantsev also noted that the excise tax (made + imported) brought the budget 8.6 billion UAH, or 270 million more to the figure of the Ministry of Finance.
On the eve of the State Customs Service reported that in 2022 transferred 300.8 billion UAH of customs payments to the state budget, including 36.7 billion UAH in December compared to 33.4 billion UAH in November and 32.5 billion UAH in October.
The department recalled that in January and February of this year the receipts were 37.2 billion UAH and 39.6 billion UAH respectively, then collapsed in March and June to 7.7 billion UAH, 8.8 billion UAH, 9.5 billion UAH and 12.7 billion UAH respectively.
However, in the following months, including due to the abolition of import privileges introduced at the beginning of the war, they increased significantly, amounting already in July to 22.9 billion UAH and 30 billion UAH in August and September.
As it was reported with reference to the Ministry of Finance, the State Tax Service revenues to the general fund of the state budget in 2021 were 614.4 billion UAH, an increase of 3.1%, or 18.4 billion UAH above the budget.
Customs revenues last year brought 409.3 billion UAH to the general fund, and another 75.6 billion UAH to the special fund, which is 35% or 126.3 billion UAH more than in 2020. Including in December 2021 the total transfers of the State Customs Service amounted to 52.7 billion UAH, and during martial law in Ukraine (February 24) – 226.4 billion UAH of customs payments.
It should be noted that under martial law the functionality and positive dynamics of the increase of transfers of customs duties and other payments to the revenue part of the budget has been maintained.
Thus, the indicators of revenues increased from UAH 7.7 billion in March to UAH 36.7 billion in December this year.
President of Ukraine Volodymyr Zelensky signed a law on the resumption of taxation of imports, including cars, from July 1, head of the parliamentary committee on finance, taxation and customs policy Danylo Hetmantsev said.
“Bill No. 7418 on the resumption of import taxes was signed by the President,” Hetmantsev wrote on Telegram on Thursday.
The Financial Stability Board (FSB), which includes, in particular, the leadership of the National Bank and the Ministry of Finance of Ukraine, proposes to abandon the preferential taxation of motor fuel. According to the press service of the NBU on the website on Monday, an increase in taxes on imports, in particular excises on fuel, is proposed as one of the ways to further increase budget revenues.
“According to the results of January-May 2022, the state budget deficit was larger than for the whole year of 2021 and 2020. Budget revenues decreased, including due to preferential taxation of imports, while at the same time, spending increased significantly, primarily for military needs and social programs,” the NBU said in a statement.
As reported, on June 23, the FSB agreed on key areas of action to narrow the state budget deficit and reduce the volume of its monetary financing: optimization of government spending and revenue growth, activation of domestic market borrowing and increasing the predictability of international aid.
At the end of March, the Rada adopted amendments to the Tax Code, according to which it canceled the excise tax on the supply of gasoline and liquefied gas and reduced VAT on the import of motor fuel to 7%.
Subsequently, a draft law was submitted to the Rada that provided for the rejection of these benefits, but these norms were excluded from it even before they were introduced to the hall, as they caused fears of an even greater increase in the price of fuel. As a result, from July 1, import privileges for most goods will be canceled, but they will remain for motor fuel.
The National Bank of Ukraine is also proposing to the government and the Rada to introduce a 10% additional import duty, similar to the one that existed in 2014-2015, to ease pressure on the hryvnia and replenish the state budget. However, the government and the profile committee have so far refused to apply such a measure.
President of Ukraine Volodymyr Zelensky signed the law On Amendments to the Tax Code of Ukraine regarding the abolition of taxation of income received by non-residents in the form of payments for the production and/or distribution of advertising, and improvement of the taxation procedure for value added tax transactions for the supply of electronic services by non-residents to individuals No. 1525-IX, which the Verkhovna Rada adopted on June 3. The website of the head of state reports that the document defines a special taxation procedure for value added tax of non-resident companies that provide electronic services to persons residing in Ukraine.
“This will allow increasing state budget revenues from VAT. Such taxation rules are already becoming a common practice in foreign countries, for example, in the countries of the European Union, Australia, Belarus, Kazakhstan, and the like,” it said.
It is reported that foreign companies that supply electronic services to Ukrainians will be required to register as value-added tax payers using a simplified procedure through a special electronic service if the total amount from the implementation of the relevant transactions exceeds UAH 1 million per year. Non-residents will fill out simplified statements in electronic form in the state or English language.
At the same time, according to the document, transactions for the supply of distance learning services via the Internet are exempted from VAT if this network is used exclusively as a means of communication between a teacher and a student. Also, transactions on the supply of educational services by access to public educational, scientific and information resources on the Internet from the branches of knowledge and specialties in which the training of applicants for higher education is carried out are exempted from value added tax, if their implementation and provision does not require human participation.
From January 1, 2022, Ukrainian companies which pay for services for the production or distribution of advertising abroad, will be exempted from VAT.
