4. Peculiarities of Income Taxation of Foreign Citizens
Foreign citizens shall be understood as persons residing at the territory of Ukraine who do not have Ukrainian citizenship. The ground for attributing a person to a certain state is his/her passport or other document replacing it. The absence of such a document gives grounds for regarding such a person as person without citizenship. The legal status of foreigners on the territory of Ukraine is regulated by the Law as of February 4, 1994 «0n Foreigners' Legal Status».

Persons defined as foreigners are those belonging to citizenship of other state and are nor citizens of Ukraine, as well as persons without citizenship (not be-longing to citizenship of any state). Foreigners can immigrate to Ukraine for permanent residence in accordance with due procedures or for job placement for a determined period, as well as for temporary residence on its territory. They have the same rights and freedoms, carry out the same duties than citizens of Ukraine if other is not stipulated by the Constitution, the Laws of Ukraine or in-ternational agreements.

A particular category of foreign citizens includes heads and members of diplo-matic representative offices and other persons enjoying privileges and immuni-ties. Their legal status is regulated by international treaties and statements of in-ternal legislation.
Legislative and normative Acts and Statutes that One should Follow:
Income tax is levied from citizens on the ground of the Decree of the Cabinet of Ministers of Ukraine as of December 26, 1992 No 13-92«0n Income Tax on Citizens» with changes and amendments, on the ground of which Instruction «0n In-come Tax on Citizens» with changes and amendments was worked out and ap-proved by the Decree of the Central State Tax Inspection of Ukraine as of April 21, 1993 No 12.
Peculiarities of income taxation of foreign citizens and persons without citizen-ship are defined in Article 15, 16 of the Decree.

Foreign Citizens are Income Tax Payers
Besides citizens of Ukraine and persons without citizenship income tax pay-ers are foreign citizens having or not having permanent place of residence in Ukraine.
Citizens of Ukraine, foreign citizens and persons without citizenship resid-ing in Ukraine not less than 183 days in a calendar year in total belong to citi-zens having permanent place of residence in Ukraine.

Income Taxation of Citizens not Having Permanent Place of Residence in Ukraine
From incomes that are to be paid from sources in Ukraine to citizens not having permanent place of residence in Ukraine the tax is withheld from the source of income by the rate of 20%.
The said taxation rate is applied when other is not stipulated by international treaties on avoiding double citizens' income taxation.

Object of Income Taxation of Foreign Citizens Having Permanent Place of Residence in Ukraine
Income received from different sources on the territory of Ukraine is con-sidered to be object of income taxation of foreign citizens.
    Object of income taxation of foreign citizens having permanent place of residence in Ukraine is:
  • income received on the main place of employment;
  • income received on the secondary employment place;
  • income received from providing entrepreneurial activity;
  • other incomes;
Table 2.
Taxable income of foreign citizens .' includes: Taxable income of foreign citizens does not include:
sums of wages raises paid for residing in Ukraine sums withheld by foreign citizens' em-ployer for payments to state social security and pension security funds;
-sums paid as compensation of expenses for children's education in schools, food, holi-day trips of members of a taxpayer family and other similar purposes; sums paid as compensation of expenses for renting living premises, for car maintenance and official needs;
  sums paid as compensation of expenses for renting living premises, for car maintenance and official needs;
Sums paid by enterprises, establishments and organizations in form of ex-penses compensation for business trips to technical specialists - foreign citizens - in connection with their work in Ukraine, are not included to taxable income of foreign citizens if payment of these sums is stipulated by the corresponding external economic contract.
Considered all above mentioned, sums paid additionally to wages for each day of staying in Ukraine are not viewed as compensation for business trip ex-cept for cases when such expenses are connected with travelling of foreign citi-zens within or outside the territpry of Ukraine. Such payments are considered as a wage's raise and is taxed on the common grounds,

Rates of Income Taxation of Foreign Citizens
Incomes of foreign citizens having permanent place of residence in Ukraine are subject to income taxation according to rates established by Article 7 of the Decree and by terms set by the corresponding sections for taxation of similar incomes of citizens of Ukraine.
  1. Income tax on the aggregated taxable income of citizens as of the main employment (service, education) place is computed according to the following rates (table 3):
    Table 3.
    Monthly aggregated taxable inc< non-taxable minimums) Rates and amounts of the tax
    Up to 17 hryvnias (from income amounting to one no taxable minimum) Not taxed
    18 hryvnias - 85 hryvnias (from 1 to 5 non-taxable minimums) 10% from the income sum that exceeds the amount of one non-taxable minimum
    86 hryvnias - 170 hryvnias (from 5 to 10 non-taxable minimun 6 hryvnias 80 kopeks +15% from the sum exceeding 85 hryvnias
    171 hryvnias - 1 020 hryvnias (from 10 to 60 non-taxable minimums) 19 hryvnias 55 kopeks + 20% from the sum exceeding 170 hryvnias
    1 021 hryvnias - 1700 hryvnias (from 60 to 100 non-taxable minimums) 189 hryvnias 55 kopeks + 30% from the sum exceeding 1 020 hryvnias
    1 701 hryvnias and more (more than 100 non-taxable minimums) 393 hryvnias 55 kopeks + 40% from the sum exceeding 1 700 hryvnias


  2. From sums of royalty paid to heirs repeatedly (not once), the tax is com-puted to sources of payment irt total amount of the aggregated taxable yearly income according to rates statbd in point 1 of this Article, multiplied by two but not more than 70%.

  3. From income sums received by citizens on the secondary employment place and by citizens not having permanent place of residence in Ukraine, the tax is computed to sources of payment according to 20% rate.

* The amounts of the fixed tax are established by the corresponding local rada depending on the territorial location of the trade place and cannot be less than 20 hryvnias and more than 100 hryvnias for a calendar month for citizens engaged on their own in entrepreneurial activity. (Ar-ticle 14, point 1 of the Decree).
* Personal incomes of owners of private companies are taxed according to procedures and on terms stipulated by Section IV of the Decree Peculiarities of Taxation of Incomes from Pro-viding Entrepreneurial Activity and Other Incomes»).
Procedure for Levying and Paying Tax
Foreign citizens having permanent place of residence in Ukraine and re-ceiving incomes in Ukraine as well as abroad, submit returns on received in-comes in form No 9 (Amendment to Instruction «0n Income Tax on Citizens») to tax office in their activity location in Ukraine according to procedure established by the Decree.

Considered all above mentioned, the return on estimated incomes during the current year shall be submitted by foreign citizens within one month from the day of their arrival to Ukraine irrespectively of the income sources. Then the return on received incomes shall be submitted on the quarterly base in 15 days term after the end of the quarter.

After the termination of the year, the return on actually received incomes shall be submitted before February 1 of the following year, in which total sums of the received income, expenses and paid tax are stated.

In case of suspending business activity during the calendar year and depar-ture of foreign citizens from Ukraine, the return on actually received incomes shall be submitted not later than within one month after the departure date. The tax is assessed from foreign individuals' incomes by a tax office on the grounds of income returns submitted at the location of business operations in Ukraine. The document for tax payment is payment notification sent to tax-payer by a tax office. The tax payment during year is carried out in equal parts within the follow-ing terms: before March 15, before May 15, before August 15, before Novem-ber 15.

Additional payment according to tax assignments for the accounting year is carried out within one month from the day of receiving the payment notifica-tion from a tax office. The tax sum paid in excess by the taxpayer's wish is re-turned to him/her or credited on his/her written request to the future pay-ments. The tax returning is carried out not later than within one month after the day of performing the final calculation.

Tax exemptions are granted to foreign citizens in the same amounts and on the same grounds than to the citizens of Ukraine (Article 5 of the Decree). Foreign citizens having right to exemptions for children, are obliged to add to their return the corresponding documents confirming the presence of depend-ants when submitting return to a tax office for the first time.

The documents are confirmed by a competent body of the country where the taxpayer had permanent place of residence before coming to Ukraine, and in case when the dependant remains of the territory of Ukraine, the documents are to be submitted according to procedure established for the citizens of Ukraine.
The levying of tax on the foreign citizens can be suspended or restricted by the correspondent international agreements.