Law of Ukraine No. 3050-ХХ as of 11.04.2023 "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding exemption from payment of the environmental tax, land payment and tax on immovable property other than land for destroyed or damaged immovable property" (hereinafter - Law No. 3050) entered into force on 06.05.2023.
Law changed mechanism for determining list of territories where hostilities are (were) taking place or temporarily occupied by the russian federation (hereinafter - List of territories). According to the Law, the list of territories is determined according to procedure established by the Cabinet of Ministers of Ukraine (Paragraph 2921.1 Article 2921, Paragraph 10 Sub-section 8 and Sub-paragraph 69.33 Paragraph 69 Sub-section 10 Section XX "Transitional Provisions" of the Tax Code of Ukraine (hereinafter - Code)).
Resolution No. 1364 of the Cabinet of Ministers of Ukraine as of 06.12.2022 (hereinafter - Resolution No. 1364) determines some issues of forming list of territories where hostilities are (were) taking place or temporarily occupied by the russian federation. In particular, Paragraph 1 of Resolution No. 1364 defines executive authority (Ministry for Reintegration of Temporarily Occupied Territories), which is delegated authority to approve the list of territories, as well as defines components of the list of territories, requirements for the format of territories by which these territories are reflected in the list, and approved form of the list of territories.
Given the above specified, in context of the Law No. 3050, Resolution No. 1364 can be considered to have established procedure for determining the list of territories.
In this regard, the List of territories, approved by Order of the Ministry for Reintegration of the Temporarily Occupied Territories of Ukraine No. 309as of 22.12.2022, registered in the Ministry of Justice of Ukraine on 23.12.2022 under No. 1668/39004 (hereinafter - Order No. 309), may be applied for payment of the single tax of Group IV in the respective territories.
Law No. 3050 regulated issue of establishing local taxes and/or levies and/or providing tax benefits for payment of local taxes and/or levies in territories where local self-government bodies temporarily do not exercise their powers. Relevant military administrations and military-civilian administrations have a right to make decisions in such territories (amendments to Paragraph 12.3 Article 12 of the Code).
Sub-paragraph 69.33 Paragraph 69 Sub-section 10 Section XX "Transitional Provisions" of the Code stipulates that the single tax of Group IV is not charged and paid on the area of agricultural land and/or water fund land owned by agricultural producer or provided for use, including under lease terms, in territories where such agricultural land and/or land are located or lands of the water fund, where active hostilities are ongoing or territories temporarily occupied by the armed forces of the russian federation:
| - | 2022 - from March 1 for the tax periods when active hostilities are taking place on territories where such agricultural land and/or water fund lands are located or territories temporarily occupied by the armed forces of the russian federation, until the date of end of active hostilities on such territories or temporary occupation by the russian federation (except for territories on which conduction of active hostilities or temporary occupation by the russian federation has been completed by May 1, 2022, since they are not subject to Sub-paragraph 69.33 Paragraph 69 Sub-section 10 Section XX "Transitional provisions"); |
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| 2023 - for tax periods when active hostilities are taking place on territories where such agricultural lands and/or lands of the water fund are located or territories temporarily occupied by the armed forces of the russian federation, until the date of termination of active hostilities or temporary occupation of such territories by the russian federation |
As an exception, Sub-paragraph 69.33 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Code does not apply to the specified land plots located in territories where conduction of active hostilities or temporary occupation by the russian federation is completed by May 1, 2022.
For purposes of the single tax payment of Group IV in 2022, Order No. 309 is applied to the extent of presence of a certain territory in the List of territories approved by Order No. 309 in its current version (with amendments). Dates of the start and end of active hostilities or temporary occupation are not taken into account.
Dates of the start and end of active hostilities or temporary occupation in 2023 are determined according to data of the List of territories, approved by Order No. 309 in the current version (with amendments).
Attention! Order No. 309 in section I approved territories of possible hostilities (part one) and territories of active hostilities (part two), in section II approved territories of Ukraine temporarily occupied by the russian federation. Therefore, for purposes of the single tax payment of Group IV according to Sub-paragraph 69.33 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Code apply only to the list of territories of active hostilities and temporarily occupied by the russian federation.
Also, Law No. 3050 (Paragraph 2921.1 Article 2921 of the Code) defines taxation peculiarities of the single tax of Group IV for land plots that are:
in conservation;
contaminated with explosive objects;
unsuitable for use due to the potential threat of their contamination by explosive objects.
Single tax of Group IV is not calculated and paid:
1) for land plots under conservation:
| Basis (presence of all listed components): |
| - decision of relevant executive authority or local self-government body, which disposes land plots of state and communal property according to powers specified in Article 122 of the Land Code of Ukraine, on the approval of working project by the land management regarding conservation of the land plot; - information/data of the State Land Cadastre; |
| exemption period: | land of state and communal property | from the first day of a month in which decision was made to the last day of a month in which land and soil protection measures are completed according to information of the State Land Cadastre; |
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| privately owned land | from the date of entering information into the State Land Cadastre about land and soil protection measures until the last day of a month in which land and soil protection measures are completed according to the State Land Cadastre information; |
2) for land plots contaminated with explosive objects:
| Basis | - inspection of the land plot by mine countermeasures operators. |
| exemption period: | from the first day of a month on which date of the beginning of survey of the land plot falls to the last day of a month in which such land plots are recognized as suitable for use; |
3) for land plots located in territories where active hostilities are (were) being conducted or temporarily occupied by the russian federation, contaminated with explosive objects:
| Basis (presence of all listed components): | - approved List of territories; - decision of local self-government body, military administration or military-civilian administration to establish tax benefits for payment of local taxes and leies in relation to the land plot based on the taxpayer's application; - payer's application to local self-government body, military administration or military-civilian administration about the potential contamination of the land plot with explosive objects, on the basis of which decision was made to establish tax benefits for payment of local taxes and levies; |
| exemption period: | from the first day a the month following the month in which active hostilities or temporary occupation of relevant territory ended (including when date of start of the survey of dangerous area by mine action operators comes after the date of an end of hostilities or temporary occupation of relevant territory) until the last date of a month in which such land plots are recognized as suitable for use; |
4) for land plots unsuitable for use due to the potential threat of their contamination by explosive objects:
| Basis (presence of all listed components): | - decision of village, settlement city council, military administration or military-civilian administration to grant tax benefits for payment of local taxes and levies based on the taxpayer's application; - payer's application to village, settlement city council, military administration or military-civilian administration, on the basis of which decision was made to grant tax benefits for payment of local taxes and levies; |
| exemption period: | from the first day of a month in which decision date falls to the last day of a month on which the earlier date falls: – or the last day of the term for which exemption from paying local taxes and/or levies was granted according to the adopted decision (including taking into account changes made to such decision); – or the cancellation date of relevant decision, – or the date of start of the survey of the land plot by operators of mine action activities, - or recognition of the land plot as suitable for use. |
Decisions made on the basis of taxpayers' applications to declare land plots unsuitable for use due to the potential threat of their contamination by explosive objects are not subject to requirements regarding the prohibition of establishment or adoption of decisions on the establishment of benefits (according to changes made to Sub-paragraph 12.3.7 Paragraph 12.3 Article 12 of the Code).
Law No. 3050 determines the possibility of clarifying the single tax obligations of Group IV, declared before the entry into force of the Law No. 3050, by submitting clarifying calculations to previously submitted tax declarations by the single tax payers of Group IV (legal entities) for 2022 and 2023:
| Tax | Obligations to be clarified/adjusted | Period during which adjustment is possible |
| For land plots located in territories of active hostilities (which are not completed by May 1, 2022) or in territories of Ukraine temporarily occupied by the russian federation, included in the List of territories | ||
| Single tax of Group IV (legal entities) | declared single tax liabilities of the Group IV for 2022 and/or 2023 | in 2022: for a period from March 1 until the date of termination of active hostilities or temporary occupation by the russian federation in territories defined by Order No. 309 (except for territories where active hostilities or temporary occupation by the russian federation ended by May 1, 2022, as they are not subject to Sub-paragraph 69.33 Paragraph 69 Sub-section 10 Section XX "Transitional provisions"); in 2023: for a period from January 1 until the date of termination of active hostilities or temporary occupation by the russian federation in territories defined by Order No. 309; |
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| For 2023 tax obligations are specified according to the start and end periods of active hostilities or temporary occupation in the respective territories. |
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| For land plots located in territories that do not belong to the List of territories | ||
| Single tax of Group IV (legal entities) | declared for relevant past tax (reporting) periods single tax liabilities of Group IV on areas of land plots, which are recognized as being in conservation and/or contaminated with explosive objects | during a period of land plots in conservation; for a period when the land plots were contaminated with explosive objects |
In case that the single tax of Group IV, determined by Clause 1 of Sub-paragraph 69.33 Paragraph 69 Sub-section 10 Section ХХ "Transitional Provisions" of the Code, accrued, but not paid and not corrected by the taxpayer by submitting clarifying tax declarations for relevant period, then the specified tax liabilities are not considered as tax debt and are subject to cancellation.
Application of fines and penalties.
Procedure for the payer to fulfill obligations during the martial law, in particular, regarding compliance with deadlines for payment of taxes and levies, submission of reporting, is established by Sub-paragraph 69.1 Paragraph 69 Sub-section 10 Section XX "Transitional Provisions" of the Code (hereinafter - Sub-paragraph 69.1).
Clause 14 of Sub-paragraph 69.1 stipulates that in case of self-correction by the taxpayer, in compliance with procedure, requirements and restrictions specified in Article 50 of the Code, errors that led to an understatement of tax liability in the reporting (tax) periods falling during the martial law, such payers are exempted from accrual and payment of fines provided for in Paragraph 50.1 Article 50 of the Code, and a penalty.
That is, taxpayers of the single tax Group IV, who will submit to the controlling authorities clarifying tax declarations for reporting (tax) periods falling during the martial law, will not be charged with fines and penalties.
Please note that Law No. 3050 amended Sub-section 8 of Section ХХ "Transitional Provisions" of the Code with Paragraph 10, which defines certain application features of provisions of Sub-paragraph “a” of Sub-paragraph 4 Paragraph 291.4, Sub-paragraph 291.51.3 Paragraph 291.51 Article 291, Sub-paragraph 298.8.4 Paragraph 298.8 Article 298 and Sub-paragraph 4 Paragraph 299.10 Article 299 of the Code.
Therefore, for a period from March 1, 2022 to the first day of a month following the date of an end of hostilities or temporary occupation in relevant territory, for the single tax payers of Group IV, in the ownership or use, including under lease conditions, which are land plots (land shares) located in territories of active hostilities or in territories of Ukraine temporarily occupied by the russian federation, restrictions on the possibility of being the single tax payer of Group IV if the business entity has a basic (reporting) as of January 1 of the year of the tax debt is applied exclusively at the time of registration of the business entity as the single tax payer, and not at the time of confirmation of status of the single tax payer Group IV.
In addition, the Law No. 3050 defines conditions that give a right to acquire/confirm status of the single tax payer of Group IV in case that share of agricultural production is less than 75 percent, but equal to or greater than 50 percent.
As follows, business entities in which share of the agricultural production for the previous tax (reporting) year is at least 50 percent (inclusively) have a right to acquire or confirm status of the single tax payer of Group IV, provided that such payers have at least 30 percent of the total area of agricultural lands and/or lands of the water fund in previous tax (reporting) year were located for at least six months in territories where hostilities are (were) taking place, or in territories temporarily occupied by the armed forces of the russian federation.