Corporate income tax advance contribution for foreign exchange offices is introduced

The Verkhovna Rada of Ukraine adopted the Law of Ukraine № 2720-ХХ as of 03.11.2022 "On amendments to the Tax Code of Ukraine and other laws of Ukraine regarding the taxation specifics of activities involving trade in currency values in cash form" (hereinafter – Law).

Law introduced the income tax taxation specifics for financial institutions that trade in currency values in cash form (currency exchange), namely, an obligation to pay a fixed amount of advance income tax contribution for each structural unit.

Income tax advance contribution will be required to be paid monthly (not later than the last working (banking) day of the current month) in the following amounts:

three minimum wages, established by the Law as of January 1 of the reporting (tax) year for each foreign currency exchange office in a settlement with a population of more than 50 thousand residents;

one minimum wage, established by the Law as of January 1 of the reporting (tax) year for each foreign currency exchange office in a settlement with less than 50 thousand residents or outside the settlement.

At the same time, the taxpayers during 2023 will pay the following advance contributions, taking into account the following peculiarities:

• with application of 0.33coefficient from January 1, 2023 to June 30, 2023;

• with application of 0.66 coefficient from July 1, 2023 to December 31, 2023.

Advance income tax contributions will be made for each foreign currency exchange office entered in Register of Foreign Currency Exchange Offices as of the 1st of the current month, which is maintained by the National Bank of Ukraine.  

Herewith, amount of advance corporate income tax contributions paid during the reporting (tax) period will reduce the corporate income tax liability calculated on the basis of results of such reporting (tax) period at rate determined by Paragraph 136.1 Article 136 of the Tax Code of Ukraine (hereinafter –Code) in amount that does not exceed amount of accrued tax liability for such tax (reporting) period.

If the advance contribution amount paid in advance during the reporting (tax) year exceeds amount of accrued tax liability for such tax (reporting) year – amount of such excess is not carried over to reduce tax liabilities of the following tax (reporting) periods.

Amount of advance income tax contributions will not be subject to refunding to the taxpayer as excess and/or erroneously paid tax liabilities, will not be credited against other taxes and levies, and will not be subject to provisions of Article 43 of the Code.

Failure to pay advance income tax contribution is subject to liability in the form of a fine in the amount specified by Article 124 of the Code.

Information about foreign currency exchange offices entered in the Register of Foreign Currency Exchange Offices as of the first day of the current month, indicating their location and business entity on whose behalf relevant foreign currency exchange office has a right to trade foreign currency in cash form, is submitted by the National Bank of Ukraine by the 10th (inclusively) of the current month to the central executive body that implements state tax policy.

Specified changes will enter into force on January 1, 2023.