Tax incentives for the IT industry of Ukraine: to whom, for what, and for what

    Today, the Verkhovna Rada adopted a law that will reduce the tax burden on the Ukrainian IT industry. Unfortunately, tax rates were not as attractive as they were lobbied by representatives of the IT-Ukraine association. Throughout the year, while the law was in the Verkhovna Rada and approved by the relevant ministries, the benefits in it decreased.

    What did the Verkhovna Rada accept today? The Law “On Amendments to Section XX“ Transitional Provisions ”of the Tax Code of Ukraine regarding the specifics of taxation of software industry entities”.

    To take advantage of the benefits, the company must obtain a certificate of registration as an entity that applies tax features in the Tax Office at its location.

    Who are the benefits

    Companies that during all 4 previous quarters met all these criteria:

    1. Income from the production of IT products or the provision of IT services (see below for IT services and IT products) amounted to at least 70% of gross income company.

    2. The value of fixed assets and intangible assets exceeds 50 minimum wages. That is, now it is approximately 7 55 thousand UAH. (MW = 1094 UAH.).

    3. The company has no tax debts.

    4. There is no court decision declaring the company bankrupt.

    For newly created companies that exist for at least 2 quarters, an indicator of economic activity for the period of actual activity of the subject is used.

    Types of IT products and IT services

    1. Production, sale or rental of software, its translation or adaptation.

    2. all types of programming (coding, modification, testing), technical support, software documentation, software settings

    3. consultations on computerization, planning and development of computer systems, advice on the types and configuration of computer hardware, analysis of user information needs and finding the most optimal solutions, advice on the creation of software products and so on

    4. activities for the management of computer equipment, including the provision of services on local governance and customer computer systems.

    5. Creation and implementation of information technology complexes, systems and networks, software installation, development of cryptographic information protection tools.

    6. data processing, posting information on web sites and related activities, including database activities.

    What benefits are provided

    1. For 10 years (from January 1, 2013 to January 1, 2023), operations to provide software products created as a result of economic activity are exempted from taxation by value added tax (for a list of types of activities, see above in “Types of IT- goods and IT services ").

    2. Corporate income tax reduced to 16%.

    3. The tax rate on personal income will be 5%.

    via watcher

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