On 31 July 2014 VerkhovnaRada approved Law #4309a "Onamendments to Tax Code of Ukraineand other legislative acts (on improvement of certainprovisions)" ("Law"). 

Law was signedby the Presidenton 1 August 2014 and officially published on 2 August 2014.The amendmentsenvisaged by the Law come in force on 4 August 2014 (exceptfor some provisions coming in force later). 

Below we list the most importantchanges. 

Corporate profit tax 

·         10% tax rate on transactions with securities is abolished. Such transactions will be taxedat statutory 18% rate. 

·         Profit exemption has been abolished for: 

§  qualified companies operating in the hotel business; 

§  companies producing energysolely from renewable sources. 

·         Interest income of investment funds accrued on its assetswill be taxed at 18% rate (currently exempted). 

VAT 

·         Threshold for obligatory VAT registration increased to 1,000,000 UAH (now - 300,000 UAH). 

·         Law crucially changed the determination of the VAT base: 

§  for goods/services - not lower than the purchaseprice of goods/services; 

§  for fixed assets - not lower than book value (as of thebeginning of the reporting period) or usual price (in case of absenceof accounting). 

·         The moment for recognition of VAT credit upon import of services has been changed. The right for VAT credit under reverse-charge will arise from the moment of the registration of VAT invoicein the Unified registerof VAT invoices (i.e.within the same reporting period with the recognition of VAT liabilities). 

·         Electronic VAT administration systemis introduced: 

§  all taxpayers shall submit tax reports electronically; 

§  all VAT invoices are subject to obligatory registration in the Unified registerof VAT invoices,in electronic form (hard copies are no longer used); 

§  the registerof the issued and received tax invoices shall be maintained and submitted in electronic form only; 

§  the tax invoicemay be issued by a selleronly within the amount calculated by a special formula.

·         Special accountswithin the electronic administration system are introduced for the purposeof VAT payments ("VAT accounts"): 

§  VAT accounts are opened automatically based on the registersent by the tax authorities, in the bank to be yet determined by the Cabinetof Ministers; 

§   the mode of VAT account implies that funds are used solely for the purposesof remittance of respective amounts of VAT due to the budget and on a specialaccount of the agricultural enterprises working on a special tax regime. In fact, funds in the VAT accounts are withdrawn from the taxpayers' turnover; 

§  the VAT due shall be remitted automatically from the VAT account based on the registerto be sent by the tax authority to the authorized bank. 

·         VAT budgetary refundprocedure is significantly simplified: 

§   tax audits of the budgetary refunds are cancelled; 

§   criteria for the automatic budgetaryrefund are optimizedand simplified, in particular, it can be applied not only by the exporters, but also by those who invested in fixed assets morethan UAH 3,000,000 during last 12 months; 

§  the right for VAT refund can now be claimed in the same reporting month where excess of VAT input arises,i.e. based on the VAT returnof the reportingperiod. 

§  The indicated amendments re VAT shall come in force from 1 January 2015. 

Excise duty 

·         Excise rates for the range of goods have been increased: 

§   raw tobacco and tobacco waste; 

§   cigars; 

§   cigarettes with filters and withoutfilters; 

§   tobacco and tobaccosubstitutes. 

·         The excise duty on alternative motor fuel is introduced until 1 January2015. 

Natural resources duty 

·         The reduced rates for the productsharing agreements on oil and condensate are abolished. 

·         As a temporarymeasure, until 1 January 2015 the rates of the naturalresources duty for the extraction of certainmineral resources, namely, ferrous,nonferrous and alloyingmetals, oil and condensates, naturalgas, are increased. 

Military duty 

·         Temporarily, until 1 January 2015 the new obligatory payment is introduced - the militaryduty. 

·         The rate of the duty is 1,5%. 

·         The tax base: 

§   salary; 

§  other  compensatory or  incentive payments and remunerations accrued to the  taxpayer in connection with employment and under civil law agreements; 

§   winning in state or non-state lottery;