One of the factors that have contributed to the growth of the Ukrainian economy is the presence of effective tax regulations. The country has put in place comprehensive tax schemes for both individuals and corporate entities (for both locals and foreigners). To learn more about taxation on the individual level, please continue reading.
Residents vs Non-residents
In Ukraine, residents are charged taxes on their worldwide revenues. This is done with regard to the restrictions put in place by available double taxation treaties. In contrast, non-residents are taxed only in the matter of their Ukrainian-source income. This income may come from an employer who is either a resident/non-resident.
The tax rates used in business also apply to individuals (both residents and non-residents) with a few exceptions.
It's imperative to understand how an individual is defined as a resident for the purpose of taxation. Ukraine used the concept of tax residency as applied by double taxation treaties. Generally, an individual can be regarded as a tax resident of Ukraine if they have a domicile in the state. In the event that the individual possesses another domicile in a foreign country, he/she can qualify to be a tax resident of Ukraine, if he/she has a permanent residence in Ukraine.
If that individual also obtained a permanent residence in a foreign country, the individual can be a tax resident of Ukraine on the grounds that they have special interests in the country. Some of the interests may include family. For instance, Ukraine may still be the location where their family members permanently reside.
In the event that an individual has failed to find a centre of interest, and, or does not have a permanent place of residence in any country; the individual can be a tax resident of Ukraine if they have lived in the country for over 183 days in one year. In order to accurately determine the number of days a person has been in the state of Ukraine, their arrivals and departures will be counted.
If all the conditions mentioned cannot be used to determine the residency of an individual, then that person can only qualify as a Ukrainian tax resident through citizenship. They would have to become a citizen first.
Personal income tax rates
The government of Ukraine introduced a standard tax rate of 18%. This is applicable to revenues received as wages or salaries. The tax rate encompasses any of the benefits that an individual may get under employment, foreign taxable income, civil arrangements, and passive income (e.g. dividends, interests, investment profit, royalties). Individuals cannot pay a different rate unless there is a specification by a special article.
As for dividends, if it's a resident (CIT) taxpayer who is paying, they will be subject to a tax rate of 5% (save for mutual investment institutions). When paid by non-residents, non-CIT payers, and mutual investment funds in the country, a tax rate of 9% will be charged. For dividends that aren't ordinary, they are taxed at the standard rate of 18%.
You should also be informed that the income acquired from Ukrainian sources by tax non-residents is liable to tax under the same rates and order as given for tax residents. The conditions can only be different when specified by the Ukrainian Tax Code.
Military tax rates
As for now, there is a temporary military tax rate of 1.5%. This will be in place until legislators have confirmed the completion of the Ukrainian Military Forces reformation. You may also want to know that the tax base introduced for the military tax is similar to the tax base for PIT.
When are tax returns due?
Apparently, this is a frequently asked question. In Ukraine, the annual filing due date is 30 April for every reporting year. However, this date can be extended to 31 December depending on the application submitted by the taxpayer. A taxpayer may submit an application which needs special documents to be collected from a foreign country.
Departure from Ukraine
In the event that an individual would like to leave Ukraine to stay in another country, they are required to submit what's called a "departure tax declaration". This should be provided in not less than 60 days before the individual makes their exit. The taxes that are due should be settled in accordance with the assessment given by the Ukrainian tax authorities.
If an individual fails to file their tax returns within the stipulated time, a fine that's equal to UAH 170.00 will be charged. In the case of a delay to pay taxes within 30 days from the deadline, a penalty of 10% of the amount owed will be issued. If the individual delays for more than 30 days, the penalty will go up to 20% of the tax liability owed.