The Parliament of Ukraine registered a new draft bill on withdrawn capital tax
On June 16, the Ukrainian parliament registered draft bill No. 3665 “On Amendments to the Tax Code of Ukraine and some other legislative acts of Ukraine regarding the introduction of withdrawn capital tax to replace corporate income tax”. It was reported on the MP Nina Yuzhanina’s Facebook page.
According to her, the new bill takes into account the norms of the notorious law No. 466. In particular, the bill proposes to remove legal entities from the controllers of foreign companies, leaving individuals only. “According to current standards, the amount of adjusted CFC (controlled foreign company) profit is included both in the total taxable income of an individual and is a separate object of taxation on corporate income tax at a rate of 18% for a legal entity. By changing the model of corporate taxation, we remove this excessive pressure, and also offer a number of other changes aimed at bringing the provisions of Law No. 466 in line with the withdrawn capital tax system.
According to the deputy, the classical model of corporate profit taxation in Ukraine is ineffective. “We face the risk of not receiving the planned revenues of UAH 98.2 billion of income tax in 2020 (before the budget sequestration - UAH 118 billion), but also of being left without tax revenues in 2021.”
If the law is adopted, the withdrawn capital tax can start as early as January 1, 2021. At the same time, Ms Yuzhanina notes that its implementation does not contradict the EU Directive 2016/1164 on the establishment of rules for counteracting tax evasion, as evidenced by Estonia, where corporate income tax was replaced by withdrawn capital tax back in 2000.