Further amendments to 2% unified tax regime for the period of martial law

On April 15, 2022, the President of Ukraine signed the Law of Ukraine "On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine on Administering Specific Taxes for the Period of Martial Law, State of Emergency" No. 2173-IX. Special tax regime of the unified tax at a rate of 2% has been further amended. Additional peculiarities of the regime are set for corporate income taxpayers that have chosen to apply unified tax.

The law eliminates the restriction on the maximum amount of annual revenue for entities that can opt to apply the unified tax at a rate of 2% for the period of martial law. At the same time, the scope of permitted activities has changed. In particular, all taxpayers engaged in retail sale of excisable goods will be able to use the simplified tax regime.

The law also enables the corporate income taxpayers to recognize the following items upon renewal of their general corporate income tax status:

• overpayment of corporate income tax existing at the time of the taxpayer’s transition to a simplified tax regime,

• the amount of advance corporate income tax on dividends that has not been offset against corporate income tax liabilities at the time of transition of the taxpayer to the simplified tax regime,

• the amount tax losses existing at the time of the taxpayer’s transition to a simplified tax regime,

• the amount of interest exceeding the limit provided by the "thin capitalization" rules that has not reduced the taxpayer's financial before transition of the taxpayer to the simplified tax regime.

Such amounts shall be offset against corporate income tax liabilities or shall reduce the taxpayer's financial result.

Corporate income taxpayers that will make a transition from the simplified tax regime in the current year will have to submit a corporate income tax return on an accrual basis since the beginning of such current year.

The law also provides that the amount of annual income from any activity (exclusive of indirect taxes) of corporate income taxpayer for the purposes of transfer pricing and reporting rules is calculated for the whole reporting year (inclusive of income received under simplified tax regime).