Can levy rate for the one-time (special) voluntary declaration be reduced?

Press service of the State Tax Service of Ukraine, published 18 August 2021 at 11:16 Chapter: News

According to the First paragraph of Sub-paragraph 8.3 Paragraph 8 Sub-section 9 Copy 4 Section XX “Transitional Provisions” of the Tax Code of Ukraine as of 02.12.2010 № 2755-VI with changes and amendments (hereinafter – the TCU), the amount of levy for the one-time (special) voluntary declaration (hereinafter – the Levy) for declared objects is determined by applying to Levy’s accrual base, determined according to Paragraph 7 Sub-section 9 Copy 4 Section XX “Transitional Provisions” of the TCU, rates of 2.5% regarding the nominal cost of government bonds of Ukraine with a circulation period of more than 365 days without right of early repayment, acquired by the declarant in a period from 01.09.2021 to 31.08.2022 before submission of the one-time (special) voluntary declaration (hereinafter – the Declaration).

Alternatively, the taxpayer may choose rate of 3% with payment of tax liability in three equal parts annually (Second paragraph of Sub-paragraph 8.3 Paragraph 8 Sub-section 9 Copy 4 Section XX “Transitional Provisions” of the TCU).

That is, the Levy rate can be reduced from 5% (9%) to 2.5% in case of application of a special privilege by purchasing government bonds of Ukraine with a circulation period of more than 365 days without right of early repayment.

For example if individual who has assets received (acquired) from income from which taxes or fees have not been paid or not in full amount according to the TCU can “transfer” such assets into cash with subsequent acquisition of these state bonds.

If such “conversion” takes place in a period from 01.09.2021 to 31.08.2022 before the submission of Declaration, the declarant has right to indicate the nominal cost of such bonds and pay the Levy at 2.5% rate (instead of 5% or 9% provided for funds on bank accounts). Alternatively, the taxpayer may choose 3% rate with payment of tax liability determined from the nominal cost of such bonds in three equal parts annually.