Tax amnesty in 2021: what the President proposed

From July 1, 2021 to July 1, 2022, Ukraine must conduct a one-time (special) voluntary declaration of assets of individuals.

The President of Ukraine submitted to the Verkhovna Rada draft Law No. 5153 "On Amendments to the Tax Code of Ukraine regarding the stimulation of unshadowing of the income and raising the tax culture of citizens by introducing voluntary declaration by individuals of their assets and paying a lump sum to the budget."

Today, March 2, the Verkhovna Rada included this project on the agenda of the current session and voted for a reduced procedure for its consideration.

The essence of the so-called tax amnesty is as follows. Individuals (both citizens and foreigners who were obliged to pay taxes in Ukraine, but did not do this at one time) have the right to submit a one-time declaration indicating the assets they own on the basis of the right of private property.

The opportunity is provided to all persons except those who, according to the legislation on the prevention of corruption, were required to submit a declaration.

The highlight is that, along with the usual declaration, the project provides the possibility of submitting a voluntary declaration impersonal (without identifying the declarant), which will be carried out through a notary. However, close persons of officials will not take advantage of this opportunity again.

The declaration will not include information about the sources of origin of the assets. At the same time, only objects located abroad will need documentary confirmation of the cost.

Assets that an individual must declare include:

- currency values (except for funds in cash);

- security papers;

- movable and immovable property, including objects of construction in progress;

- shares (common shares) in the property of legal entities located (registered) both in Ukraine and abroad.

After declaring, the person has the obligation to pay the fee:

- 5% in relation to currency values placed on bank accounts in Ukraine and the rights of monetary claims against residents of Ukraine under certain conditions, as well as other assets registered in Ukraine;

- 9% in relation to currency values placed on accounts with financial institutions abroad and the rights of monetary claims on non-residents of Ukraine under certain conditions, as well as other assets (including movable and immovable property, property and corporate rights, financial instruments) held by abroad;

- 2.5% at the par value of government bonds of Ukraine with a maturity of more than 365 days without the right to early redemption, purchased by the declarant in the period from January 1, 2021 to June 20, 2022 for the submission of a one-time declaration.

If the citizen observes these conditions (declaration and payment of the fee), the state guarantees the absence of tax claims in connection with the acquisition of assets, non-disclosure of information specified in the declarations. It will also be prohibited to use this data as evidence in criminal proceedings, cases of administrative offenses, civil and administrative cases.

However, the draft law provides for the amount of assets within which it is not necessary to submit a declaration (by default, it is considered that all taxes have been paid). These assets include:

- an apartment with a total area not exceeding 120 sq. meters, or property rights, confirmed by the relevant documents, for such an apartment in an apartment building of unfinished construction, or a residential building registered in accordance with the established procedure in Ukraine, with a total area not exceeding 240 sq. meters, or a residential building under construction with a total area not exceeding 240 sq. meters, provided that such an individual has ownership of a land plot of the corresponding designated purpose;

- non-residential buildings for non-commercial purposes and / or non-residential buildings under construction for non-commercial purposes with a total area not exceeding 60 sq. meters;

- land plots, the size of which does not exceed the free transfer rate specified in Article 121 of the Land Code of Ukraine;

- one vehicle for personal non-commercial use, which at the end of the period of one-time (special) voluntary declaration belonged to an individual on the right of ownership (except for a vehicle designed to carry 10 people or more, a passenger car with an engine displacement of at least 3000 cubic cm and / or the average market value of more than 375 times the minimum wage established by law as of January 1, 2021, a motorcycle with an engine displacement of more than 800 cubic cm, an airplane, a helicopter, a yacht and a boat);

- other assets, except for those indicated above, the total value of which as of the date of the end of the one-time (special) voluntary declaration does not exceed 400 thousand UAH.