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Vorozhbitova Krystyna

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TAX CHANGES – 2020: INCOME TAXES

 01/16/2020 The VRU adopted the Law on the basis of Bill No. 1210, which amends the GCC. The law is quite voluminous. However, it cannot be said that it envisions any “revolutionary” changes. Much of the bill is devoted to the implementation of the BEPS (de-offshore) plan. At the same time the name of the Law speaks about the nature of the changes being made:

 1. Cost criterion of fixed assets (OS) increases from 6000 UAH. up to 20000 UAH. (PP 14.1.138 PKU).

 2. From 20 to 40 million UAH. the annual income threshold has increased, allowing you not to adjust your tax differences. At the same time, for such taxpayers (with an annual income of up to UAH 40 million), an annual reporting period has been established since 2021. Judging by the transitional provisions, in 2020 taxpayers who have an annual income of more than UAH 20 million should report on a quarterly basis.

 3. It is explicitly stated that self-employed persons, entrepreneurs (on the general system and on a single tax) are obliged to withhold, during the payment of income to non-residents, the so-called repatriation tax (in the manner provided for in item 141.4 of the Tax Code) and to file in the therefore, the income tax return with the application of MF.

 4. Depreciation difference (Article 138 of the CCU):

 (1) the prohibition on the use of the production depreciation method for the calculation of tax depreciation is excluded;
At the same time, transitional norms (item 52, sub-section 4, section XX of the CCU) were established regarding the use of the production method of depreciation with respect to the objects of the operating system, the depreciation of which had previously been started by another method.

 (2) “accelerated” depreciation is provided. In the period from 01/01/2020 to 12/31/2030 to calculate tax depreciation of the operating system:
– for groups 4 (machinery and equipment) and 5, a “shortened” minimum useful life of two years can be applied (the basic minimum allowable SPI for such facilities according to PP 138.3.3 is 5 years);

– for groups 3 (gear units) and 9 – the minimum useful life is set at 5 years (instead of the basic one – 10 and 12 years).

 However, the use of a “shortened” minimum allowable useful life can be made only if the objects are used in their own economic activity and are not sold or leased to other persons. Exception – only for enterprises for which renting is the main activity;

 (3) tax depreciation is not accrued in the period of non-use (operation) of OZs in connection with their modernization, reconstruction, completion, refurbishment and conservation (note: improvements are not mentioned in this article).

 5. The approach to calculating the difference in interest-bearing liabilities (clause 140.2 of the CCU) is changing, but the norm will only be effective from 1 January 2021. And compared to the first edition, the difference will only apply to non-resident debt (whether or not they are related).

 6. To regulate exactly how the assignee has the right to take into account the negative value of the object of income tax of the reorganized enterprise (PP 140.4.5).

 7. The financial result before taxation will also have to be increased by the amount of penalties levied by supervisory authorities and other bodies of state power. And not only for violation of tax legislation, but also for violation of any law (PP 140.5.11).

 8. Expected increase in the amount of expenses in favor of non-residents for transactions that have no business purpose (PP 140.5.17).

 9. If the income is paid to a non-resident in a non-monetary form or was not withheld at the time of payment, then a special formula for the calculation of the non-resident tax (repatriation tax) shall apply.

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