We are closely following the developments around draft law №11416 “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding Taxation During Martial Law.” It has caused quite a stir and has prompted the government to seek dialogue with businesses and society.

As a result of searching for alternatives and compromises, the revised government draft law №11416-d has been prepared and is planned to be submitted to the Committee and the Parliament for voting.

The main changes since yesterday: • increase in the military tax rate from 1.5% to 5%; • establishment of a military tax for individual entrepreneurs (FOPs) of the 1st and 2nd groups at 10% of the minimum wage; • establishment of a 1% military tax for the 3rd group of single taxpayers; • introduction of monthly advance payments for gas stations (with revised provisions here).

What’s new: • a 50% corporate tax rate for banks in 2024; • an increase in the corporate tax rate for financial companies to 25%; • monthly reporting on personal income tax (PIT). There is no provision for a 1% turnover tax or VAT increase in the document.

“Our Association, as a representative organization for small and medium-sized operators in the petroleum products market, was most concerned about the introduction of monthly advance payments for gas stations. The government has not abandoned this idea. So, what is being proposed in this regard:

1. Taxpayers engaged in the retail trade of fuel are required to make advance corporate tax payments for each retail fuel sales location, as recorded in the Unified Register of Licensees and Fuel Circulation Locations (as of the 1st of the current month). This initiative is stipulated in paragraph 141.14 of Article 141 of this Code. Accordingly, Article 137 of the Tax Code of Ukraine (hereinafter also referred to as TCU, the Code) is proposed to be supplemented with a new paragraph 137.12.
2. Taxpayers engaged in the retail trade of fuel must pay, no later than the last business (banking) day of each month, an advance corporate tax payment (as per subparagraph 141.14.1 of paragraph 141.14 of Article 141 of the Code).
3. The amounts of advance payments for gas stations are determined by subparagraph 141.14.2 of paragraph 141.14 of Article 141 of this Code and will depend on whether the retail fuel sales location also engages in the sale of alcoholic beverages and tobacco products,” explains Alina Potapovich, a member of our association’s legal council.

For retail fuel sales locations that do not engage in the retail sale of alcoholic beverages and/or tobacco products, the following advance payment amounts are set: a) 60 thousand UAH for each location where one or more types of fuel (motor gasoline, heavy distillates, liquefied gas) are sold (except in cases where only liquefied gas is sold); b) 30 thousand UAH for each location where only liquefied gas is sold.

For retail fuel sales locations that do sell alcoholic beverages and/or tobacco products (regardless of the business entity to which the license has been issued), higher advance payments are foreseen:

a) 80 thousand UAH for each location where one or more types of fuel (motor gasoline, heavy distillates, liquefied gas) are sold (except in cases where only liquefied gas is sold); b) 40 thousand UAH for each location where only liquefied gas is sold.

Importantly, the advance corporate tax payments made under paragraph 141.14 of the TCU are an integral part of the corporate tax, as stated in subparagraph 141.14.3 of paragraph 141.14 of Article 141 of this Code.

Thus, the amount of advance corporate tax payments made during the reporting (tax) period reduces the corporate tax liabilities calculated based on the results of such reporting (tax) period at the base (standard) rate (defined by Article 136 of this Code), but not exceeding the amount of accrued tax liabilities for the reporting (tax) period.

If the amount of advance tax payments made during the reporting (tax) year exceeds the accrued corporate tax liabilities for that tax year, the excess amount cannot be carried forward to reduce tax liabilities in subsequent reporting periods.

The amount of advance corporate tax payments is not refundable to the taxpayer as overpaid or mistakenly paid tax liabilities and cannot be credited against other taxes and fees (mandatory payments). The provisions of Article 43 of this Code do not apply to it.

For failure to pay the agreed amount of advance corporate tax payments within the period specified in subparagraph 141.14.1 of paragraph 141.14 of Article 141 of the TCU, the taxpayer will be subject to penalties as defined by Article 124 of this Code.

If this draft law is supported in the plenary session of the Verkhovna Rada of Ukraine, the changes will take effect on October 1, 2024. This will significantly alter the conditions for doing business and affect the livelihood of small fuel sector businesses in the regions.