Article 67 of the Constitution of Ukraine stipulates that everyone is obliged to pay taxes and levies in manner and amounts established by the law. Every year, all citizens submit declarations of their property status and income for the previous year to tax inspectorates at their residence place according to procedure established by the law.
Procedure for submitting property and income declaration (hereinafter – tax declaration) and taxation of the individuals’ income is established by Section IV of the Tax Code of Ukraine (hereinafter – Code).
A certain part of the individuals’ income is income in the form of salaries. On such income, as on many other types of income, tax is withheld and paid by the tax agents, usually employers.
Attention! Tax agent regarding the personal income tax is a legal entity (its branch, office, other separate subdivision), self-employed individual, representation of a non-resident – legal entity, investor (operator) under a product sharing agreement, who is required to accrue, maintain and pay tax provided for in Section IV of the Code to the budget on a behalf and from individual’s income paid to such individual.
However, in some cases, individuals need to independently calculate amount of tax (levy) by submitting tax declaration to the tax authority, which must contain calculation of the personal income tax amount (hereinafter – tax) and military levy payable to the budget.
At the same time, the Code not only establishes this obligation, but also provides the taxpayer with opportunity to submit tax declaration when individual has a right to receive the tax discount and refunding of the overpaid tax in connection with emergence of this right.
Therefore, cases in which taxpayers are required to independently calculate amount of tax (levy) payable to the budget based on results of the reporting tax year by submitting tax declaration to the tax authority are established by Section IV of the Code, which include:
- receipt of certain types of income, which are not subject to taxation upon payment, but are not exempted from taxation (Sub-paragraph 168.1.3 Paragraph 168.1 Article 168 of the Code) (amounts of debt for which statute of limitations has expired; non-targeted charitable assistance in the excess of established norm; additional benefit, etc.);
- receipt of income from individual who is not the tax agent (from other individuals (residents or non-residents)) (Sub-paragraph 168.2.1 Paragraph 168.2 Article 168 of the Code) (inheritance; gifts; income from renting property to another individual, income from sale (exchange) of movable and immovable property, in cases provided for by the Code, etc.);
- foreign income (Sub-paragraph 170.11.1 Paragraph 170.11 Article 170 of the Code);
Tax declaration must also be submitted by:
- individuals, who receive income from entrepreneurial activities, except for individuals who chose the simplified taxation system (Article 177 of the Code);
- individuals involved in independent professional activity (Article 178 of the Code);
- foreigners who, based on results of the reporting year, have acquired status of a resident of Ukraine must reflect income with their source of origin in Ukraine and foreign income (Sub-paragraph 170.10.4 Paragraph 170.10 Article 170 of the Code);
- taxpayers – residents who leave abroad for permanent residence, not later than 60 calendar days preceding the departure (Paragraph 179.3 Article 179 of the Code).
Along with that, the Code provides for cases in which the taxpayer is exempted from submitting tax declaration. This applies to payers who received income:
- from tax agents, which, according to Section IV of the Code, was not included in the total monthly (annual) taxable income;
- exclusively from tax agents, regardless of the type and amount of accrued (paid, provided) income, except for cases expressly provided for in Section IV of the Code;
- income from sale (exchange) of property, gifts, not taxed according to this Section, is taxed at a zero rate and/or upon notarization of contracts for which tax was paid according to Section IV of the Code;
- in the form of inheritance objects, which, according to Section IV of the Code, are taxed at a zero tax rate and/or from which tax has been paid according to Paragraph 174.3 Article 174 of the Code.
In addition, Paragraph 179.4 of the Code defines circle of individuals who are exempted from obligation to submit tax declaration.
Taxpayers are exempted from obligation to submit tax declaration regardless of the type and amount of income received by taxpayers who are:
- minors or incapacitated individuals and who at the same time are fully dependent on other individuals (including parents) and/or the state as of the end of the reporting tax year;
Important! Tax declaration on a behalf of taxpayer who is a minor or individual recognized by the court as incompetent must be submitted by a guardian or custodian (one of parents) to the controlling body at the minor’s residence place (individual recognized by the court as incompetent).
- under arrest or detained or sentenced to imprisonment, in captivity or imprisonment in the territory of other states as of the end of a deadline for submitting tax declaration;
- wanted as of the end of the reporting tax year;
- in military service as of the end of the reporting tax year.