Ministry of Education,Science,Youth and Sports of Ukraine

Kharkiv National University of Economics

Department of Foreign Languages

TAX SYSTEM OF UKRAINE

Fahim Diana,

“Marketing and Management”

Faculty (2-13)

Supervisor:

Ryzhaya T.A.

Kharkiv-2011

Міністерство освіти, науки, молоді та спорту України

Харківський національний економічний університет

Кафедра іноземних мов

ПОДАТКОВА СИСТЕМА В УКРАЇНІ

Виконавець:

Фахім Д.Н.

“Маркетинг та Менеджмент”

Керівник:

Рижая Т.О.

Харків-2011

Introduction

In Ukraine the system of the taxation, taxes and levies, both nation-wide, and local, are imposed exclusively by laws which are issued by the highest legislative body of the state – the Verkhovna Rada (Parliament) of Ukraine.

Local authorities are given the power to impose or abolish local taxes and levies and to define the order of their payment according to the list and within the boundary rates established by laws of Ukraine. The tax system of Ukraine includes 28 nation-wide and 14 local taxes and levies.

Some of taxes and levies found on the list of nation-wide taxes and levies and thus stipulated by law, are not actually collected today. These include the real estate tax, the stamp duty, duties in Fund for realization of actions on liquidations of consequences of Chernobyl accident and social protection of the population, duties to the State innovative fund, for example.

In Ukraine there is a system of national pension and social insurance which provides regular insurance payments must be made by legal entities and private persons. In spite of the fact that such payments are not taxes or levies, they have an obligatory character. The system of the national insurance includes pension insurance, unemployment insurance, temporary disability insurance and insurance against incapacitating occupational accident or disease.

Corporate profits tax, value added tax and national insurance payments are paid by the overwhelming majority of business entities. In addition, many of them are the payers of excise duty, custom duty, land fee (or land tax), tax on vehicles. Businesses that use hired labor are charged with the duty to deduct income tax from an employee's pay.

Along with the general taxation system in Ukraine there are alternative (simplified) ones (a single tax, a flat-sum tax, a flat-sum agricultural tax), the essence of which is to replace a number of taxes with one alternative tax. Only certain categories of taxpayers such as small businesses or agricultural producers who meet the criteria laid down by law are entitled to select one of the simplified systems of taxation. Foreign-owned companies are taxed in Ukraine by the same rules that are set for companies established by residents.

Some provisions of Ukrainian legislation reduce the attractiveness of offshore companies as business partners of Ukrainian business entities. For example, when calculating corporate profits tax a Ukrainian company has the right to include in gross expenditures and, consequently, reduce the taxable profit, not the entire amount of the cost of goods and services acquired from offshore companies, but only 85% of this amount. The list of jurisdictions that are recognized in Ukraine as offshore is determined by the Cabinet of Ministers of Ukraine. Currently this list includes 36 offshore zones. As of the beginning of 2009 more than 60 double taxation avoidance agreements concluded with other nations of the world had come into effect. Those states include almost all European Union countries (except for Ireland, Luxembourg and Malta), Russia and all CIS countries. In addition, Ukraine has treaties with Switzerland, Norway, Croatia, Serbia, Montenegro, United States, Canada, Brazil, Israel, Turkey, India, China, Japan, UAE, Iran, etc.

The main body, which oversees compliance with tax laws, the accuracy of calculation, completeness and timeliness for payment of taxes and levies, is the State Tax Administration of Ukraine and its divisions. Some types of taxes and levies are controlled by the State Customs Service of Ukraine and the Pension Fund of Ukraine, and payments in the national pension and social insurance system - by the Pension Fund of Ukraine and relevant Social Insurance Funds.

A taxpayer, as a rule, by himself determines the amount of taxes and levies which are subject to his payment to the budget, and declares them in the relevant tax returns. In some cases the amount of tax liability is determined by the tax authority, for example, if as the result of tax audit the tax authority has identified underreporting or overstatement of tax liabilities, referred to the taxpayer in tax returns.

In Ukraine, there is an institution of tax pledge. Tax pledge arises in the case of taxpayer filing late tax returns or failure to pay tax liabilities on time.

The essence of the tax pledge is to disable the taxpayer to dispose freely of its assets to fully repay the tax debt.