Parliament adopts law on return to pre-war taxation

The Verkhovna Rada of Ukraine (Parliament) has adopted in its entirety the draft law No. 8401, which returns the taxation system to the pre-war state. The law will come into force on August 1, 2023.

According to MP Yaroslav Zheleznyak, 239 MPs supported the document, Ukrinform reports.

"After long discussions, the Parliament supported the tax bill No. 8401 in general. The adoption of this draft law is an important condition stipulated by the agreement with IMF," the statement said.

The version of the draft law prepared for the second reading stipulates the abolition of the 2% single tax (ST) from August 1, 2023.

A taxpayer will have the right to submit an application for refusal to apply the 2% ST, indicating which taxation system they wish to switch to. Without submitting such an application and if the taxpayer does not indicate the preferred system in the application, they will be automatically transferred to the system they were in before choosing the 2% ST.

In addition, taxpayers who switched from the 2% ST to the general system in 2023 have the right to switch again in 2023 to the simplified system of their choice. In this case, if the application is submitted before September 1, 2023, such a taxpayer will be considered an ST payer from August 1, 2023.

The draft law also partially lifts the current moratorium on inspections for excisable goods (alcohol, tobacco, and fuel), gambling, and financial services starting August 1.

The liability for violations with cash registers will be reintroduced from October 1. There is immunity from financial liability for cash register violations (except for excisable goods trade violations) if they were committed in frontline territories (including combat areas).

As reported, IMF expects Ukrainian authorities to adopt laws to improve governance and fight corruption within the agreed timeframe in the next phase of the Extended Fund Facility program.