Taxes for companies in Ukraine

Ukraine, as a modern state, has a complex taxation system that includes many types of taxes and fees and covers various aspects of the economy or business activities. The following main types of taxes may apply to companies:

1. Taxes for companies under the general taxation system

1) Corporate income tax for companies

Corporate income tax is one of the key taxes for businesses in Ukraine. The basic tax rate is 18%. However, it may vary depending on the business activity, as some sectors of the economy are subject to special rates regulated by separate regulations.

It is worth noting that both residents and non-residents may be subject to corporate income tax.

2) Value added tax (VAT)

Value-added tax or VAT is an indirect tax that is included in the price of goods (works, services) and is paid by the buyer, but is accounted for and transferred to the state budget by the seller (tax agent).According to Ukrainian legislation, the following are subject to VAT

a) transactions on sale of goods (works, services) in the customs territory of Ukraine, which may be carried out by both residents and non-residents

b) import of goods and services into the customs territory of Ukraine; and

c) export of goods and services outside the customs territory of Ukraine.

The Tax Code of Ukraine sets forth the tax rates. Different goods and services may be subject to different VAT rates: 0% and 7%, 20% of the value of the goods. In most cases, companies pay VAT at the rate of 20%.

If the business plans to work with buyers who are VAT payers in the future, the business also needs to register as a VAT payer to receive a tax credit and reduce its tax liability. Also, if a legal entity is going to be on the general taxation system, then it is mandatory to register as a VAT payer if the amount of income for the last 12 calendar months exceeded UAH 1 million.

2. Taxes for companies under the simplified taxation system (STS)

Single tax on company income

Small businesses and entrepreneurs are subject to the single tax system, which allows them to pay a fixed amount based on gross income. This system simplifies accounting and reduces the tax burden on entrepreneurs. The third group of taxation is the most popular option among businesses that intend to become single tax payers. The main advantages of this group include the ability to cooperate with legal entities, a high annual income limit (UAH 7,818,900-1,167 of the minimum wage), and a small number of industries prohibited for Group 3.

The amount of the single tax in this case will depend on whether the company is a VAT payer or not.

1) for VAT payers - 3% of the monthly income and 20% VAT;

2) for VAT payers - 5% of monthly income.

Both under the general taxation system and the simplified taxation system, if a company has employees, it becomes a tax agent for them.

A tax agent is a person or organization that pays income to individuals and is obliged to withhold and pay taxes on this income on behalf of the income recipient.

The main taxes to be paid by a tax agent on behalf of an employee include:

1) Personal income tax (PIT): the tax is levied on the employee's income (salary) and is 18%.

2) Military duty is withheld from the employee's income (salary) and amounts to 1.5%.

3) Social security contribution is paid by the employer (company) without deduction from the employee's salary - 22%.