Ukraine’s parliament adopts new tax code

The Verkhovna Rada, Ukraine’s parliament, passed a new tax code yesterday, with 269 deputies of 348 registered voting in favor. Key provisions of the legislation are to go into effect as of January 1, 2011, with other provisions to be staggered. The new code cuts the corporate profit tax from 25% to 16% by 2014, shaves the value-added tax from 20% to 17% by 2014 and increases the personal income tax maximum bracket to 17% (from flat 15% rate before). It also lowers the total dividend tax from 25% to 16%, bond income tax for individuals from 15% to 5% and dividend tax for individuals from 15% to 5%, while increasing the deposit tax for individuals (for deposits over UAH 2 mln and monthly salaries over UAH 1,844) from 0% to 5% effective since 2015. Parliament considered took two days to consider the law and almost 5,000 proposed amendments to it, with thousands of protestors from on their doorstep. Small and medium-sized business owners contend the new law will drive them into the shadows and have promised to continue fighting its implementation. The tax code now goes to President Viktor Yanukovych for his signature, the last formal step in the adoption of the law.  The IMF expects the new tax rules to be broadly neutral for budget revenues in the nearest future.