What tax preferences are donated to the Ukraine’s IT sector

16.08.2012

We would like to remind that earlier on our web-site the news on introducing of tax preferences to the Ukraine’s IT sector was published. However, the President Victor Yanukovich in May 2012 put a veto on this law approved by the Parliament. On 30^th July 2012 a renewed law was adopted that will enter into force on 1^st January 2013.

As it was planned, 10-year tax holidays are provided for software developers (exemption from VAT for transactions of software products delivery from 1^st January 2013 to 1^st January 2023). Precisely, under the category of software the following products fall: operating systems, encryption programs, websites and online services, etc. Currently the VAT rate of 20% is established in relation to goods and services of IT sector.

The rate of corporate tax for IT sector is finally stabled at the level of 5% (instead of 21%).

Furthermore, for the period of 1 January 2013 – 31 December 2017 the size of the common social contribution is set:

• for employers – 36,76% of the size of two minimum wage multiplied by the number of employees based on the number of working days;
• for employees – 3,6% of the size of two minimum wage based on the number of working days.

The renewed law introduces the following amendments:

• it is prohibited to conduct out planned audit of companies that meet the necessary requirements for IT companies;
• companies which refuse from 10-year tax holidays are exempted from taxation of the State agency of science, innovations and information (they are obliged to file an application for tax preference to the tax authority, moreover, the article on passing the additional VAT inspection).

Expert’s opinion

The policy of the Ukrainian authorities relating to the IT sector is elaborate enough as it is directed at increasing of investment attractiveness. From year to year conducting of business in this direction in Ukraine is becoming more and more profitable which is reflected in the statistics: the annual cost of Ukraine IT services is approximately USD 1,5 bn. And by 2016 the export of program software is considered to reach the export of metallurgical products.
It should be especially noted that the Government implements methodical measures as the law was adopted after the successful half-year experiment of 2011 on application of 0% VAT rate for goods and services provided by IT sector, that led to 40% growth of industry.

On the basis: http://www.kmu.gov.ua/control/

Julia Akhmetova ( paralegal of Moscow office Honest & Bright)