Cabinet proposes exempting from profit tax until 2018 companies realizing investment projects

The Cabinet of Ministers of Ukraine has proposed to exempt companies implementing investment projects in priority economic sectors from obligatory profit tax until 2018.

This is stipulated in government bill No. 11028 on amending Part 20 “Transitional Provisions of the Tax Code of Ukraine” on the specifics of taxation of legal businesses implementing investment projects in priority sectors of the economy, which was registered at parliament on July 25.

According to the document, it is planned to exempt from profit tax those enterprises that implement investment projects worth more than EUR 3 million for large entrepreneurs, EUR 1 million for medium businesses, and EUR 500,000 for small companies. In addition, the number of new jobs should exceed 150 people for large companies, 50 persons for medium businesses and 25 people for small companies.

In addition, the average wage of employees at such companies should be at least 2.5 times more than the average wage set by the law as of January 1 of the reporting (tax) year.

It is proposed to set the profit tax rate at 0% from January 1, 2013 until December 31, 2017 and 8% from January 1, 2018 to December 31, 2022.

However, businesses should transfer the sum of profit tax to a special account at the State Treasury Service and use the funds exclusively for the purchase of equipment and their own production needs related to the realization of investment projects.

At the same time, economic entities have the right to apply the method of accelerated reduction of depreciable value to second and third group objects, which allows for almost 10% faster depreciation of fixed assets during the first years of their operation.

The bill also foresees that investment activity subjects temporarily, until January 1, 2018, when importing equipment and components for it to the customs territory of Ukraine, can issue tax receipts to the customs authority of the amount of tax liability on VAT, with the repayment period being on the 60th calendar day from the date of its issuance, under the condition that the goods imported are not subject to excise duty, produced not more than three years ago (from the state registration of the investment project), and that are not used, not produced and have no analogues in Ukraine.

“The purpose of the bill is to improve conditions for investment in the priority sectors of the Ukrainian economy to preserve existing jobs and create new ones, introduce new technologies, develop infrastructure, increase the production of high quality domestic goods and services, and create modern industrial, transport and market infrastructure,” reads an explanatory note to the document.

Under the current law, profit tax for enterprises from January 1, 2012 to December 31, 2012 is set at 21%, from January 1, 2013 to December 31, 2013 at 19%, and from January 1, 2014 at 16%.

by Interfax-Ukraine 

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