Actual questions – answers about the tax discount for certain types of expenses

Question:

According to results of 2022, can the personal income tax payer take advantage of a right to tax discount for expenses incurred for the purchase of shares (other corporate rights), issuer of which is a legal entity that has acquired status of the Diia City resident?                                                                                                

Answer:

Sub-paragraph 166.3.10 Paragraph 166.3 Article 166 of the Tax Code of Ukraine (hereinafter – Code) stipulates that the personal income tax payer (hereinafter – PIT) has a right to include in tax discount in the reduction of taxable income based on the outcome of reporting tax year calculated in the form of salaries, reduced taking into account provisions of Paragraph 164.6 Article 164 of the Code, or in the form of dividends, except for amounts of dividends that are not included in calculation of the total monthly (annual) taxable income, expenses, particularly in the form of amount of the taxpayer's expenses for the purchase of shares (other corporate rights), issuer of which is a legal entity that has acquired status of the Diia City resident according to Part 3 of Article 5 of the Law of Ukraine № 1667-IX as of 15.07.2021 "On stimulating development of the digital economy in Ukraine" (hereinafter – Law № 1667), provided that such expenses were incurred by the taxpayer before issuer acquired status of the Diia City resident or during a period when such Diia City resident met requirement established by Paragraph 3 of Part 3 Article 5 of the Law № 1667.

The taxpayer’s right to tax discount for expenses incurred for the purchase of shares (other corporate rights), issuer of which is a legal entity that has acquired status of the Diia City resident according to Part 3 of Article 5 of the Law № 1667 arises based on results of 2022, subject to compliance with requirements established by Sub-paragraph 166.3.10 Paragraph 166.3 Article 166 of the Code.

Question:

Is it possible according to results of 2022 to use right to tax discount for expenses incurred for treatment services on the basis of Sub-paragraph 166.3.4 Paragraph 166.3 Article 166 of the Code?

Answer:

Paragraph 1 Section XIX of the Code stipulates that Sub-paragraph 166.3.4 Paragraph 166.3 Article 166 of the Code enters into force on January 1 of year following the year in which the law on obligatory state social health insurance enters into force.

As of 01.01.2023, the law on obligatory state social health insurance did not enter into force, therefore tax discount for expenses incurred by the taxpayer in favor of health care institutions to compensate for the cost of paid services for treatment of such taxpayer or a family member of the first degree of kinship (Sub-paragraph 166.3.4 Paragraph 166.3 Article 166 of the Code), according to the outcome of 2022 is not provided to the taxpayers.

Question:

Are expenses of the personal income tax payer for treatment and purchase of medicines and/or medical devices necessary for treatment of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus included in tax discount? 

Answer:

Paragraph 20 Sub-section I Section XX "Transitional Provisions" of the Code stipulates that according to result of 2022 exercising right to tax discount according to provisions of Article 166 of the Code, expenses for treatment of the acute respiratory disease of COVID-19 caused by the SARS-CoV-2 coronavirus are fully included in tax discount of the personal income tax payer in the reporting tax year, as well as purchase of medicines and/or medical devices necessary for treatment of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus, according to an extract from the medical card of an outpatient (inpatient) patient or an extract from Register of medical records, referral records and prescriptions in the electronic health care system, vaccination costs for prevention of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus and expenses for payment of the insurance payments (insurance contributions, insurance premiums) paid to a resident insurer under insurance contracts in case of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus of such taxpayer and his/her family members of the first degree of consanguinity.

Question:

Are amounts of funds or cost of property included in tax discount of the personal income tax payer, transferred in the form of donations or charitable contributions during the martial law to the non-profit organizations?

Answer:

New Paragraph 21 was added to Sub-section 1 Section XX "Transitional Provisions" of the Code by the Law of Ukraine as of 15.03.2022 2120-IX "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding the effect of norms during the martial law".

Paragraph 21 Sub-section 1 Section XX "Transitional Provisions" of the Code stipulates that according to results of 2022 exercising right to tax discount according to provisions of Article 166 of the Code, amount of funds or cost of property transferred by the personal income tax payer in the form of donations or charitable contributions to the non-profit organizations, which on the date of transfer of such funds and property met conditions specified in Paragraph 133.4 Article 133 of the Code, are included in tax discount in amount not exceeding 16 percent of the amount of his/her total taxable income for such reporting year.