What taxes will I pay in Ukraine when starting a business?
You are planning to open a business in Ukraine. The smallest thing is to understand whether it is profitable for you in terms of taxation and market. A financial planner (we also provide such services) will help you with the assessment of the market and possible profits, but for the issue of taxation optimization and the choice of taxation system in Ukraine, you will have to connect a tax lawyer and an accountant.
Ukraine has a number of tax preferences for a large number of activities, such as IT or electricity trading, which makes it attractive to foreign investors.
Related article: Order a legal business plan for activities in Ukraine: what will it give, and what will go into the plan?
What taxation systems exist in Ukraine?
The general system of taxation is advantageous for large businesses that are engaged in e.g. trade, import or export. There are a number of activities that can only operate on the general system, such as financial institutions, casinos.
Tax rates:
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Income tax - 18%;
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VAT (value added tax) - 20%.
Other taxes will be added, for example, on the use of land or on the importation of goods.
Taxes related to hiring employees must be considered separately:
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PERSONAL INCOME TAX - 18%;
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military fee - 1,5%;
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ERU - 22% of the minimum wage.
Single tax - as it is also called the simplified taxation system in Ukraine, is beneficial to certain types of businesses, for example, IT, business in the agricultural sector, etc. It is also often profitable for business at the start-up, as it can be used by entrepreneurs with a certain income limit per year.
The flat tax has different groups with their own conditions. For example, a legal entity can choose only Group 3 and Group 4 of the Single Tax. More often than not, group 3 is chosen, the rates for which:
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3% + 20% for VAT;
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5% without registration as VAT payer.
Related article: How to keep personnel records and hire employees in Ukraine? Instruction for foreign investor
What taxes are faced by any business in Ukraine?
Depending on your tax system and exactly how you plan to run your business, you are likely to encounter a number of groups of taxes:
Income tax - 18%.
Note: You need to know the income tax rate for your type of business. For example, if it is a lottery or gambling, the rate would be 30%.
Taxes related to hiring employees:
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PERSONAL INCOME TAX - 18%;
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military fee - 1,5%;
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ERU - 22% of the minimum wage.
VAT.
VAT is not a prerequisite for all types of business. Usually it is necessary for those legal entities whose counterparties are also VAT payers. Also, the payment of VAT will have to go when the limit of annual income (more than 1 million UAH within 12 months) is exceeded.
VAT rate:
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20% - prime rate;
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7% - for transactions with certain types of goods, such as medical supplies.
If you want to understand exactly how the economy of your business in Ukraine will look like, want to be able to get a business plan in advance from experts in Ukraine - contact us.
