1. Profit Tax
Legislative and Normative Acts and Statutes that One should Follow:
  1. The Law of Ukraine «0n Taxation of Enterprise Profits» (in edition as of May 22, 1997 with changes and amendments).
  2. Provision on the procedure for registration and bookkeeping of permanent representative offices of non-residents in Ukraine as profit taxpayers, approved by the Decree of the State Tax Administration of Ukraine as of January 16, 1998, No 23 (registered in Ministry of Justice of Ukraine on February 03, 1998, No 63/2503) with changes and amendments.
  3. The procedure for filing tax return on enterprise profit approved by the Decree of the State Tax Administration of Ukraine as of July, 08, 1997, No 214 (regis-tered in Ministry of Justice of Ukraine on August 14, 1997, No 313/2117) with changes and amendments.
  4. The procedure for filing profit tax calculation of a non-resident engaged in business activity on the territory of Ukraine through permanent representative of-fice, approved by the Decree of the State Tax Administration of Ukraine as of July 31, 1997, No 274 (registered in Ministry of Justice of Ukraine on August 28, 1997, No 352/2156) with changes and amendments.
  5. The procedure for presenting reports on withholding and transferring non-residents' profit tax sums to the budget, approved by the Decree of the State Tax Administration of Ukraine as of January 16, 1998, No 28 (registered in Ministry of Justice of Ukraine on January 30, 1998, No 56/2496).


Profit Tax Payers Among Non-Residents are:
Individuals and legal entities created in any organizational or legal form, that receive profits originating from Ukraine, except for establishments and or-ganizations enjoying diplomatic status or immunity in compliance with inter-national treaties of Ukraine or Law, as well as permanent representative offices of non-residents receiving profits originating from Ukraine or providing agent (representative) functions to such non-residents or their founders.

By the term profits originating from Ukraine one shall understand any profits received by residents or non-residents from any of their business activities on the territory of Ukraine, including interests, dividends, royalties and any other passive revenues paid by residents of Ukraine, revenues from providing prop-erty located in Ukraine for lease to residents or non-residents, including mo-bile transportation means ascribed to harbors located in Ukraine, profits from selling real estate objects located in Ukraine, profits received in the form of de-posits and risk insurance and re-insurance bonuses on the territory of Ukraine, as well as profits of resident insurance agents from risk insurance of insured residents outside of Ukraine, other profits from business activities within the customs territory of Ukraine or territories under the Ukrainian customs con-trol.

The permanent representative office shall get registered with a local tax body as profit tax payer before the beginning of its business activity.

The Procedure of Profit Taxation
The Permanent Representative Office of a Non-Resident in Ukraine - is a per-manent business activity location through which the non-resident's business activity is conducted (partially or in full) on the territory of Ukraine. In par-ticular, to permanent representative offices belong: management location, af-filiate, office, plant, factory, workshop, mine, petroleum or gas wells, open-cast pits or other place of prospecting or extraction of natural resources. For the taxation purposes, residents having authorization to act on behalf of a non-resident are equated with permanent representative offices; this entails appear-ance of non-resident's civil rights and liabilities (such as to draw up agreements (contracts) on behalf of the non-resident, maintain (safe-keep) stocks of goods belonging to the non-resident from which stocks they make goods shipments on behalf of the non-resident, except for residents having customs status).

Business Activity of a Non-Resident Conducted through Permanent Represen-tative Office - is any activity of a permanent representative office directed to receiving profits in money, material or non-material form by a non-resident. For the taxation purposes, permanent representative office is equated to tax-payer conducting his/her business activity irrespective of such non-resident. This means that the profit received by a non-resident from business activity conducted through permanent representative office is a profit that the perma-nent representative office would obtain as a result of its business activity irre-spective of the non-resident (chart1).

Chart 1.


Other profits originating from Ukraine received by non-resident are taxed according to the following rates (table I):

Table 1.
  Profit Form Tax Rate
(%}
1. Interests from bonds and exchequer liabilities 30%
2. Profit from operations with passive (discount) bonds or exchequer li-abilities 30%
3. Interest, profit (discount) from state securities sold (placed) by non-residents outside the territory of Ukraine 0%
4. Interest from loans received by Ukraine (credits or state overseas loans) 0%
5. Payment of transportation affreightment charges 6%
6. Profit in the form of insurance deposits, insurance payments or insur-ance bonuses for risks re-insurance 15%
7. Profit in the form of insurance deposits, insurance payments or insur-ance bonuses for risks insurance 30%
8. Rendering of advertising services 30%
9. Dividends repatriation tax 15%
10. Interests repatriation tax 15%
11. Royalties repatriation tax 15%
12. Other profits repatriation tax 15%
In case if provisions of an international agreement of Ukraine stipulate lower rate of profit (income) tax for non-residents, then tax sums overpaid to the budget are entered in account of future payments or refunded to the non-resident following his request.


lime-frame for paying tax
Tax for profit received by non-residents engaged in business activity in Ukraine through permanent representative office is paid to the budget not later than the twentieth of the month that follows the reporting quarter.
Resident or permanent representative office of a non-resident who makes on behalf of non-resident any payment from profit originating from Ukraine is obliged to pay tax on this profit before/or simultaneously with this payment.

Reporting Records Submitted to Tax Office:
Depending on procedures for accounting profits and expenditures of a non-resident engaged in business activity in Ukraine through a permanent repre-sentative office, one of the following reporting records can be applied:
  • Enterprise's profit tax return;
  • Calculation of separated gross profits, taxable profit and profit tax of a non-resident engaged in business activity in Ukraine through a permanent representative office, on the basis of drawing up a separated balance of finance/business activity;
  • Calculation of taxable profit arid tax for profit of a non-resident's perma-nent representative office made by the tax office.
Non-residents having right to advantages in compliance with international agreements of Ukraine submit additional reporting records on profits exempt from taxation or taxed according to special rates grounded on international agreements of Ukraine. Residents and permanent representative offices of non-residents in Ukraine withholding and transferring to the budget tax on profits received by non-resident from sources in Ukraine are obliged to submit Report on withholding and transfer to the budget of non-residents' profit tax. These reporting documents shall be submitted not later than the 25-th of the month that follows the reporting quarter.