Determination of the minimum tax liability for individuals
Law of Ukraine № 1914 as of 30.11.2021 "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine on ensuring balance of budget revenues" introduced concept of the minimum tax liability for taxpayers-individuals who own and/or use (rent, sublease, emphyteussis, permanent use) land plots classified as an agricultural land.
Paragraph 64 Section XX "Transitional Provisions" of the Tax Code of Ukraine (hereinafter – Code) stipulates that the first year for which the minimum tax liability must be determined is 2022.
Payer of part of the minimum tax liability is a resident who owns and/or uses (rents (subleases), on the emphytheusis terms, permanently uses) land plots classified as an agricultural land (Sub-paragraph 162.1.11 Paragraph 162.1 Article 162 of the Code).
Sub-paragraph 170.14.3 Paragraph 170.14 Article 170 of the Code stipulates that determination of the total minimum tax liability for individuals, who are not registered as individuals-entrepreneurs, is carried out by the controlling bodies at tax address of such individuals by July 1 of year following the reporting year.
Please note that taxpayers pay to the budget only positive value of the difference between amount of the total minimum tax liability and amount of taxes, levies, and payments paid during the tax (reporting) year related to production and sale of their own agricultural products and/or ownership and/or use (lease, sublease, emphyteusis, permanent use) of land plots classified as an agricultural land.
Total amount of taxes, levies and payments paid during the tax (reporting) year for taxpayer-individual includes: personal income tax (hereinafter – tax) and military levy on income from the sale of own agricultural products; land tax for land plots classified as an agricultural land (Sub-paragraph 170.14.5 Paragraph 170.14 Article 170 of the Code).
Therefore, for the first time, individuals who are not registered as individuals-entrepreneurs will receive tax notification-decision with a detailed calculation of the annual tax liability amount from the tax for land plots classified as an agricultural land by 07.01.2023.
It should be noted that in case of transfer of land plots for lease (sublease), emphytheusis or other use (when such relationships are established according to current legislation), the minimum tax liability is determined for tenants, users of such land plots on other terms in manner specified by the Code.
That is, for individuals who, according to norms of the Civil Code of Ukraine, Land Code of Ukraine and the Law of Ukraine № 161 as of 06.10.1998 "On the land leasing" have formalized relationships regarding the transfer of agricultural land for lease (sublease), emphytheusis or other use, the minimum tax liability is not determined by the controlling body. In such case, tenant pays the minimum tax liability for such land.
Calculated amount of the minimum tax liability is determined according to formulas established by Article 381 of the Code, depending on the available normative monetary valuation of the corresponding land plot or the normative monetary valuation of 1 hectare of arable land in the Autonomous Republic of Crimea or in region, taking into account indexation coefficient determined according to procedure established by the Code for land payments; coefficient and number of calendar months during which land plot is owned, leased, used on other terms (including emphyteusis terms) by the taxpayer.
Please note that according to Paragraph 67 of Section XX "Transitional Provisions" of the Code, coefficient of 0.04 is temporarily used to calculate the minimum tax liability for the tax (reporting) years 2022 and 2023.
Amount of tax in part of the positive value of difference between amount of the total minimum tax liability and the total amount of paid taxes, levies and payments is distributed by the controlling body in proportion to the specific gravity of each land plot area classified as an agricultural land, and is paid (transferred) to local budgets according to location of such land plots.
If the taxpayer agrees with the total minimum tax liability from the personal income tax determined by the controlling body and/or calculated amount of the annual tax liability, such taxpayer is obliged to pay amount of tax specified in relevant tax notification-decision within 60 days from the date of its delivery (Sub-paragraph 170.14.6 Paragraph 170.14 Article 170 of the Code).
Sub-paragraph 170.14.6 Paragraph 170.14 Article 170 of the Code stipulates that in case of disagreement of the taxpayer with the general minimum tax liability determined by the controlling body and/or amount of the annual tax liability calculated in relevant tax notification-decision, such taxpayer has a right, according to procedure established by Article 42 of the Code, within 30 days from the date of delivery of tax notification-decision apply to the controlling body for reconciliation of data used to calculate amount of tax with provision of supporting documents, in particular regarding:
land plots owned and/or permanently used or leased by the taxpayer (sublease, emphyteussis), their normative monetary value and area;
amount of income received from the sale of own agricultural products;
amounts of paid taxes, levied and payments.
