Draft Small Tax Code Makes It Through First Reading
On July 5 Verkhovna Rada approved in its first reading the bill On Changing Some Laws of Ukraine on Tax Issues, the so-called little Tax Code. 238 deputies voted for it, and 96 against out of 406 registered at the meeting hall, reports Interfax Ukraine.
The draft law envisions establishing VAT rates for 2002 at 17% (now 20%), the enterprise income tax at 25% (now 30%), and tax on the incomes of physical persons at 10%, 15%, and 25% according to scales agreed upon with the Cabinet of Ministers (today’s progressive scale includes rates from 10% to 40%). Agricultural enterprises are excluded from the VAT, while in the agricultural sphere a special tax regime is established, according to which the tax added on them will remain in their disposal.
According to the document, juridical persons are given the right to make charitable contributions from 2% to 5% of their taxed income for the previous tax year, including it in their gross revenue. In addition, the hotel duty is reduced to 5% of residence cost without taking into account the cost of additional services and ceasing resort tax as of January 2003. Next year taxes on developing viniculture, gardening, and hops growing will be continued, and the incomes from them will be directed to a special purpose account of the State Treasury and then distributed between persons growing perennials according to the order and volumes appointed by the Cabinet of Ministers.
According to the decision, the Parliamentary Committee on Finance and Banking is charged to consider the propositions of the Cabinet of Ministers which had not been included when preparing for the second reading the chapters dealing with the tax scale on physical persons, the order of taxing currency course difference, terms for postponing expenditures to the next tax periods under review, referring to gross expenditures 50% of the cost of vehicles used for business, the training and retraining of specialists, VAT on barter sales, and supplying excised goods to duty free stores. The committee is directed to present the draft for second voting before July 10, 2001 (the last voting day in the current parliamentary session will be July 12).
Entrepreneurs polled by The Day spoke positively of the tax reductions, expressing a persistent desire to get much more from our Solons. They speak about a systemic approach and complex methods. “If all the tax reforms come down to reducing taxes on wage funds without cardinal changes in the current tax system as a whole, no thinking people will ever come out of the shadows,” President of the Kharkiv based Ukrtekhprohres Training, Science, and Production Center and Ph.D. in Economics Viktor MYTSA says. “Of course, the parliament will not be able to approve a full fledged Tax Code now, but it has had enough time for this, which had been spent on political battles. The Tax Code is a basis and foundation, and it should have been ratified as long ago as last year.”
