Can a legal entity – single tax payer, who use taxation peculiarities during the martial law in Ukraine, provide and receive charitable assistance?

Law of Ukraine № 2120-IX as of 15.03.2022 "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding validity of norms during the martial law" amended the Tax Code of Ukraine № 2755-VI as of 02.12.2010 with changes and amendments (hereinafter – TCU), in particular, with new Paragraph 9 to Sub-section 8 Section XX "Transitional Provisions" of the TCU, which stipulates that temporarily, from April 1, 2022 until the termination or abolition of the martial law on the territory of Ukraine, provisions of Section XIV of the TCU are applicable taking into account the specified peculiarities.

Sub-paragraph 9.4 Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the TCU stipulates that the single tax payer’s income of Group III, who use special taxation peculiarities established by this Paragraph, is determined according to requirements of Article 292 of the TCU.

In particular, Paragraph 292.1 Article 292 of the TCU stipulates that income of the single tax payer – legal entity is any income, including income of representative offices, branches and departments of such legal entity received during the tax (reporting) period in a monetary form (cash and/or non-cash); tangible or intangible form, defined in Paragraph 292.3 Article 292 of the TCU.

Basic principles of charitable activities in Ukraine are regulated by the Law of Ukraine № 5073-VI as of 05.07.2012 "On charitable activities and charitable organizations" with changes and amendments (hereinafter – Law № 5073).

Article 1 of Law № 5073 defines that charitable activity is voluntary personal and/or property assistance to achieve goals defined by this Law, which does not involve the benefactor receiving a profit, as well as payment of any remuneration or compensation to the benefactor on behalf of or on behalf of the beneficiary.

It should be noted that the benefactor is an able-bodied natural person or legal entity under private law, who voluntarily carries out one or more types of charitable activities (Paragraph 5 of Part 1 Article 1 of Law № 5073).

Article 5 of Law № 5073 establishes that benefactors can jointly or individually carry out charitable activities on the basis of voluntary choice of one or more of the following types:

- free transfer of funds and other property to the ownership of beneficiaries, as well as free assignment of property rights to beneficiaries;

- free transfer of right to use and other real rights to property and property rights to the beneficiaries;

- free transfer of income from property and property rights to beneficiaries;

- free provision of services and performance of works for the benefit of beneficiaries;

- charitable joint activities and performance of other contracts (agreements) on charitable activities;

- public collection of charitable donations;

- management of charitable endowments;

- execution of wills, testamentary refusals and inheritance contracts for charitable activities;

- charity auctions, non-monetary lotteries, contests and other charitable events not prohibited by the law.

Herewith, Paragraph 1 of Part 1 Article 1 of the Law № 5073 stipulates that the recipients (beneficiaries) of charitable assistance may be individual, non-profit organization or territorial community, as well as legal entities to achieve goals provided for by this Law.

Article 13 of the Law № 5073 stipulates that charitable organization can be created as a charitable society, charitable institution or charitable fund, taking into account peculiarities defined by the Law № 5073 and other laws of Ukraine.

Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the TCU stipulates that there are no restrictions for legal entities paying the single tax with special taxation peculiarities during the martial law in Ukraine regarding provision and receipt of charitable assistance to achieve goals provided for by the Law № 5073.

More information is in the “Knowledge Base” of public information and reference resource