Income tax

Which taxes for income are to be paid by foreigners in Ukraine? A foreigner who came to Ukraine with intentions of getting revenue (earn money) or opening accounts in banks, should obtain an identification number from the State register of natural entities - taxpayers. The same obligation rests on him and when he has objects of taxation, according to current legislation (international or Ukrainian), and is obliged to pay taxes and other mandatory payments for them.

Only income earned within the country is the subject of taxation under the local tax law of that country, while any income earned abroad is exempt from tax in that country.

In accordance with paragraph 10 of Art. 170 of the Tax Code of Ukraine (TCU), income originating from Ukraine, which are accrued (paid, delivered) to non-residents (people who do not have permanent residence in the country (less than 183 days) are taxed according to the rules and rates set for residents in Article 167 of TCU.

The tax rate is 15% on taxable income:

  • obtained in the form of salary and other incentive compensation payments or other payments and fees paid (provided) to the taxpayer in respect of labor relations and civil contracts;
  • gains in public and non-monetary lottery winnings player (member) received from the organizer of gambling.

If the total amount received by the taxpayer in the reporting month tax revenues tenfold higher than the minimum wage prescribed by law as for January the 1st of the tax year (as for January the 1st, 2012 - 1073 UAH., according to Article 13 of the Law of Ukraine "On the State Budget of Ukraine for 2012 "), the tax rate is 17% for the excess amount including tax, paid at the rate of 15%.

The tax rate is 5% on taxable income accrued as:

  • interest on current or deposit (savings) bank account;
  • interest or discount income on personal savings (deposit) certificates;
  • interest on the deposit (deposit) credit union members in the credit union;
  • in other cases expressly specified by the relevant rules of TCU.

The tax rate is 30% of base on taxable income accrued as a winning sum or prize (except in governmental and non-governmental monetary lottery and winning player (member) received from the organizer of gambling) in favor of residents or non-residents.

Wages determined under paragraph 164.6 statti164 TCU, which says that in calculating of income in the form of payroll the tax base is defined as wages, reduced by the amount of a single payment on compulsory social insurance premiums to Accumulation Fund and in cases stipulated by law - mandatory insurance contributions to private pension fund, which by law are paid by the employee's salary and on the amount of tax benefit if there is any.

If the income with originating in Ukraine is paid to non-resident by another resident, it is credited to an non-resident’s account opened in the resident bank, the mode of which is set by the National Bank of Ukraine. In case of income payment to a non-resident by a non-resident in cash or in non-cash the non-resident – the income recipient is obliged to charge and pay (transfer) by himself a tax to the budget within 20 calendar days after the receipt of income, but not later than the expiration of his stay in Ukraine. If the income originating from Ukraine is paid to non-resident by the resident - legal entity or self-employed individual - is considered a resident agent for nonresident tax on such income.

According to the results of the tax year in which the foreigner has acquired the status of a resident of Ukraine, he must feel in an annual tax declaration that includes income originating in Ukraine and foreign income.

The legal information is provided here by the courtesy of “Alla Konyaeva & Partners” (Ancor SW Agency Consulting & Executive Search Agency).

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