Cabinet approved amendments to Tax Code for 2021 national budget

Ukraine's Finance Ministry says the Cabinet of Ministers has approved a number of amendments to the Tax Code and other laws of Ukraine to ensure the balance of budget revenues for the adoption of the 2021 national budget.

Resource norms

"The amendments to the Tax Code proposed by the Finance Ministry contain resource norms for improving the conditions of doing business and quality of administration," the ministry's press service said on its website on September 14.

Doing business

In terms of improving the conditions for doing business, changes envisage: exempting farmers from VAT in case of force majeure (crop and cattle losses); correction of shortcomings in legislation on labeling liquids for e-cigarettes; elimination of inconsistencies on fuel licensing with the labor legislation; and extension for two months of the term of debt write-offs on single social security tax to inactive self-employed individuals.

Single tax payers' income

It is also envisaged to exclude support funds of the Entrepreneurship Development Fund and the Innovation Development Fund from single tax payers' income, as well as amounts received from the Innovation Development Fund from incomes of individual entrepreneurs and citizens.

Lifting moratorium on  audits

At the same time, the amendments to the Code abolish the moratorium on paperwork audits and physical checks, while allowing write-offs of (fines and penalties if tax debt is repaid in full within six months.

Tax debt

It is also proposed to allow collecting tax debt arising from non-payment of monetary obligations and/or penalties outlined by taxpayers in their declarations or clarifying calculations from such debtors' bank accounts or cash by decision of supervisory authority without litigation.

The changes proposed  provide an opportunity for the taxpayer to challenge the decision of the supervisory authority on the compliance or non-compliance of the value-added taxpayer with the risk criteria.

Read alsoFinance Ministry elaborates on main indicators of 2021 national budget draftAccording to the ministry's calculations, the implementation of the norms of the relevant bill will increase receipts of taxes and fees to the national budget by UAH 2.7 billion (US$96.4 million), while those to local budgets by UAH 0.5 billion (US$17.9 million).

State budget for 2021: background

• On September 14, 2020, Ukraine's Finance Ministry forwarded the draft national budget for 2021 to the government for consideration.
• On the same day, the Cabinet of Ministers supported the 2021 national budget draft submitted by the Finance Ministry.
• Ukrainian Prime Minister Denys Shmyhal said the Cabinet would table a draft law on the 2021 national budget of Ukraine at the parliament on September 15. According to Shmyhal, the rate of the national currency, the hryvnia, is set at UAH 29 against the U.S. dollar, while the deficit is laid down at 6%.
• On August 31, envoy of the Cabinet of Ministers to the Verkhovna Rada Vasyl Mokan said the government would submit Ukraine's draft national budget to parliament before September 15.
• On August 29, 2020, Ukrainian President Volodymyr Zelensky signed into law Bill No 822-IX passed by the Verkhovna Rada at its special session on August 25 to amend the law on the 2020 national budget of Ukraine.
• On August 6, Zelensky initiated amendments to the national budget to raise the minimum wage to UAH 5,000 (US$179) from September 1, 2020.
• Minimum wage in Ukraine from January 1, 2020, increased by UAH 550 (US$19.64), to UAH 4,723 (US$169) per month, or UAH 28.31 (US$1.01) per hour.