January 2013

New taxation rules with respect to securities

On 6 December 2012 the Verkhovna Rada of Ukraine adopted a Law of Ukraine “On amendments to the Tax Code of Ukraine regarding further improvement of taxes and charges administration” No.5519-VI, whichentered into force on 3 January 2013.

In accordance with the Law No.5519-VI the following main changes regarding the taxation of operations with securities and derivatives havebeen adopted:

 A special excise tax on operations with securities and derivatives has been introduced;
 The procedure for taxation regarding corporate profit tax and personal income tax and accounting of operations withsecurities and derivatives has been changed.

Ukrainian and foreign individuals and legal entities (including their branches) which perform operations with derivatives or with sales, exchanges or other disposals of securities shall be payers of the specialexcise tax on operations with securities and derivatives.

Non-payers of the special excise tax on operations with securities and derivatives shall be parties which perform operations on the disposal of:
 Shares in savings (depository) certificates;
 Shares in private joint stock companies;
 Corporate rights in forms other than securities;
 Shares and corporate rights in forms other than securitiesissued by foreign legal entities.

The following operations with securities and derivatives are not subject to the special excise tax:
 Operations with state and municipal securities, stateguaranteed securities and other like securities;
 Operations between issuer and taxpayer on redemption of shares and subsequent sale in return for money, placement of shares, cancellation of shares, conversion of own shares by issuer, operations on authorised share capital payments, as well as operations with the participation of a bill drawer, pledgor and other parties which issued order or debt security on issuance and cancellation of such securities;
 Operations of securities issuers of collective investment institutes of open type, in particular operations on placement, cancellation, redemption and subsequent sale;
 Operations with securities and other financial instruments which are performed by clearing houses;
 Operations of the National Bank of Ukraine on the off-exchangemarket related to performance of its functions.

A tax base for the special excise tax on operations with securities and derivatives shall be the contract value of securities or derivatives determined in the accounting documents of any sale, exchange or otherdisposal operation.

Special excise tax rates on operations of securities and derivatives disposals are as follows:
 0% of the amount of the operation on sales of securities or derivatives at stock exchange;
 0.1% of the amount of the operation on sales of securitiesincluded in the stock exchange registry out of stock exchange;

 1.5% of the amount of the operation on sales of securities not included in the stock exchange registry out of stock exchange;
 5 tax-free allowances for executed derivatives out of stockexchange.

A tax agent with respect to stock exchange and off-exchange operations shall be a security broker including a bank which performs such operations on the basis of an agreement. A tax agent with respect to operations on placement, cancellation, redemption and subsequent sale of open type collective investment institutes securities shall be anissuer.

The corporate profit tax rate on operations of sale, exchange or other types of disposals of securities and derivatives has been decreased to10%.

For further information regardingtaxation in Ukraine, please contact:

Igor Davydenko
Partner, Head of Salans’ Tax Practice in Ukraine
E: idavidenko@salans.com

Viktoriia Fomenko
Associate
E: vfomenko@salans.com

Salans Kyiv

49-A, Volodymyrska Street, 2nd Floor
01001 Kyiv, Ukraine

T: +380 44 494 4774
F: +380 44 494 1991
E: kyiv@salans.com

This newsletter does not constitute legal advice with respect to any matter or set of facts and
may not be relied upon for such purposes. Readers are advised to seek appropriate legal
advice before entering into any transaction, making any determination or taking any action
related to matters discussed herein. No part of this newsletter may be copied or quoted
without the prior written consent of Salans.
© 2013. All rights reserved.
Salans Kyiv, 18 January 2013