A group of MPs has registered bill No. 4245 with amendments to the Budget Code on the electronic residency mechanism, which implies a preferential income tax rate of 5%, in the Verkhovna Rada.
According to the information on the parliamentary website, the bill was registered on October 21 by MPs from the Holos faction Yaroslav Zhelezniak, Volodymyr Tsabal, Kira Rudik and Halyna Vasylchenko, as well as MP from the Servant of the People Danylo Hetmantsev.
“The idea is simple. If you are an IT specialist from India, China, Pakistan, Germany, or even Belarus, then, being in your country, you can become an electronic resident, that is, an electronic taxpayer. And for this you will pay only one simple tax – 5%, which our sole proprietors pay from turnover,” Zhelezniak said.
According to him, this mechanism may be of interest, in particular, to citizens of Asian countries. On the other hand, this will allow attracting additional funds to the national budget, he said.
“This proposal may not be so interesting to the United States or the EU, but it will definitely be interesting to other countries, especially Asia, the East, which have not a better reputation and more complex tax legislation compared to the Ukrainian one,” Zhelezniak said.
President of Ukraine Volodymyr Zelensky calls for maintaining the tax rate for IT employees at 5%, the President’s Office website reports.
“This industry in the country is developing not due to the state support, but due to the intelligence of Ukrainians. One of the steps that the state can take is not to increase the tax burden on this industry,” the president said at a meeting with representatives of IT business in Lviv within a working trip to the region.
Zelensky noted that at present it is one of the few professions that can not only ensure a decent standard of living, but also reform the state and help combat corruption.
“It is with digital that we can implement any important reforms. And what everyone is saying: we need honest customs, honest law enforcement agencies, we need to overcome corruption – we all understand that the human factor is very difficult to fix. But digital and IT industry can do it,” the president said.
The President of the IT Ukraine association, Taras Kytsmey, added that the Ukrainian IT industry has prospects for development and maintaining such a tax rate will facilitate the influx of personnel from abroad and ensure the retention of talented professionals in Ukraine.
The Verkhovna Rada intends to amend the Tax Code of Ukraine to support culture, tourism and creative industries.
Some 273 MPs voted in favor of bill No. 3851 at first reading.
According to an explanatory note to the bill, the document proposes to introduce tax mechanisms to provide state support to the spheres of culture, tourism and creative industries in order to prevent their stagnation, preserve and create new jobs.
The bill, in particular, proposes not to tax corporate profits, income of individuals, and a single income tax in the form of a cultural grant.
According to the bill, a cultural grant means “targeted assistance in the form of funds or property, which are provided on a free and irrevocable basis at the expense of the national and/or local budgets, international technical assistance for the implementation of a project or a program in the fields of culture, tourism and creative industries.
In addition, in terms of value added tax, it is proposed not to tax operations on import into the customs territory of Ukraine (import of goods) that are part of the national cinematic heritage.
It is also proposed not to tax certain operations for the supply of national films until January 1, 2025, and from January 1, 2023 to January 1, 2025, not to tax operations on the supply of services for the demonstration, distribution and screening of national films and foreign films that are dubbed, voiced in the state language on the territory of Ukraine, provided that such films are adapted, in accordance with the legislation, in the Ukrainian language version for persons with visual and hearing impairments.
Ukrainian winegrowers and winemakers have asked the president and the government to reduce tax burden to minimize the economic consequences of the COVID-19 pandemic and the national quarantine. According to Bayadera Group’s press service, the initiative was supported by more than 50 vineyards and major wineries.
“In an open letter, they proposed, in particular, to introduce a special taxation regime for agricultural producers engaged in the cultivation of perennial plantations, viticulture and winemaking. Due to the worsening economic situation in the industry and adverse climatic conditions in the Black Sea region, this year they urge the abolition of certain taxes and reduce financial burden,” Bayadera Group said.
In addition, due to the negative consequences of the pandemic, national producers urge the government to support them by providing more loyal terms of representation in retail chains, increasing the share of Ukrainian wine and introducing duties as a protective mechanism.
“A significant increase in the import of alcoholic drinks in Ukraine has been observed over the past three years. For example, in 2019 the share of imported wine in retail chains was 58%, sparkling wine some 51%, vermouth and aperitifs some 69%,” Bayadera Group noted.
The winegrowers and winemakers hope that in connection with the difficult situation resulting from the pandemic and the introduction of quarantine, the authorities will take the proposed measures in the near future.
The Aurum Group has said that it is necessary to annul the land tax in April 2020 to support business for the period of quarantine. The group paid attention of the government that ambiguous interpretations of the provisions of the so-called “anti-crisis law” adopted on March 30, according to which, in particular, the employer can be exempted from paying a fee for the use of property, will increase the loss of business from the consequences of quarantine.
“In March, in connection with the quarantine, the business was exempted from paying land tax, but in April, when the situation became even worse, the corresponding changes were not made,” the press service of the group told Interfax-Ukraine.
“Given the specifics of the activities and location of Aurum Group enterprises, the proportion of land tax of the tax burden of some companies ranges from 15% to 70%. In addition, in some regions, the land tax rate has doubled since January 1, 2020,” the press service said.
According to the company, the law on additional social and economic guarantees in connection with the spread of the coronavirus disease (COVID-19) provides an opportunity not to pay rent in commercial relations. However, in April, business must pay for renting land and real estate tax to the state.