Taxpayer’s right for the tax rebate

Tax rebate for individuals who are not registered as business entities is a documented amount (value) of expenses of a resident taxpayer in connection with the purchase of products (works, services) from residents – individuals or legal entities during the reporting year, which is allowed to reduce its total annual taxable income received as a result of such reporting year in the form of wages, in cases specified by the Tax Code of Ukraine (hereinafter – Code).

Taxpayer’s right for the tax rebate is defined in Article 166 of the Code. List of expenses allowed for inclusion in the tax rebate includes:

- amount of funds paid for benefit of domestic institutions of preschool, out-of-school, general secondary, vocational (technical) and higher education to compensate for the cost of obtaining appropriate education of the taxpayer and / or his / her family member of the first degree;

- part of interest paid on a mortgage loan, in manner prescribed by Article 175 of the Code;

- amount of funds or value of property transferred in the form of donations or charitable contributions to the non-profit organizations that meet conditions set out in Paragraph 133.4 of the Code, not exceeding 4 percent of its total taxable income for reporting year;

- amount of insurance payments (insurance premiums) and pension contributions paid by the taxpayer to the resident insurer, private pension fund, banking institution under the long-term life insurance contracts, private pension provision, pension contract with private pension fund and contributions to bank pension deposit account, pension deposits and accounts of participants of banking management funds of such taxpayer and members of his / her family of the first degree of kinship in amounts maximum size of which is set in Sub-paragraph 166.3.5 Paragraph 166.3 Article 166 of the Code;

- payment for assisted reproductive technologies under legislative conditions, but not more than amount equal to one third of income in the form of wages for the reporting tax year;

- payment for public services related to adoption of a child, including payment of state duties;

- amount of funds paid in connection with re-equipment of vehicle belonging to the taxpayer, using the motor fuel, bioethanol, biodiesel, compressed or liquefied gas, other types of biofuels;

- amount of rent in the form of rent under the lease agreement (apartment, house), executed according to requirements of applicable law, actually paid by the taxpayer who has status of internally displaced person subject to requirements established in Sub-paragraph 166.3.9 Paragraph 166.3 Article 166 of the Code;

- payment of funds for construction (purchase) of affordable housing, as defined by law, including the repayment of preferential mortgage loans granted for such purposes and interest thereon.

Paragraph 166.4 Article 166 of the Code determines restrictions on application of the tax rebate:

tax rebate may be granted only to a resident who has registration number of the taxpayer’s account card, as well as to a resident – individual who due to religious beliefs refused to accept registration number of the taxpayer’s account card, officially notified relevant supervisory authority and has a note in passport;

total amount of tax rebate accrued to the taxpayer in the reporting tax year may not exceed amount of taxpayer’s annual total taxable income, accrued as wages, reduced taking into account provisions of Paragraph 164.6 Article 164 of the Code;

if the taxpayer has not exercised right to accrue the tax rebate as a result of the reporting tax year by the end of tax year following the reporting year, such right will not be transferred to the following tax years.

Sub-paragraph 166.2.1 Paragraph 166.2 Article 166 of the Code stipulates that the tax rebate includes expenses actually incurred by the taxpayer during the reporting tax year, confirmed by relevant payment and settlement documents, including receipts, fiscal or commodity checks, profitable cash orders identifying seller of products (works, services) and a person who applies for tax rebate (their buyer (recipient), as well as copies of contracts, if any, which must reflect cost of such products (works, services) and payment for such products (works, services).

Copies of documents specified in Sub-paragraph 166.2.1 of this Paragraph (except for electronic settlement documents) are provided with property and income tax declaration (hereinafter – declaration); originals of these documents are not sent to the supervisory authority but are subject to storage by taxpayer during the statute of limitations established by this Code (Sub-paragraph 166.2.2 Paragraph 166.2 Article 166 of the Code). 

As follows, in order to confirm right for the tax rebate, the taxpayer must provide declaration with copies of primary documents, in particular, but not limited to: payment and settlement documents (receipts, payment orders, income orders, etc.), contract for the provision of service (works, products) (if any), documents that will identify the taxpayer and family members of the first degree of kinship (if right for the tax rebate for education or insurance of a family member of the first degree of kinship).

Grounds for accrual of tax rebate with indication of specific amounts are reflected by the taxpayer in the annual tax declaration, which is submitted by December 31, inclusively of the next tax year.

Paragraph 49.1 Article 49 of the Code stipulates that tax declaration is submitted for the reporting period within the time limits established by the Code to supervisory authority where the taxpayer is registered.

Payers can submit declaration in one of the following ways:

personally or by a person authorized to do so;

send by mail with a delivery notification and description of attachment but not later than 5 days before the deadline for submission declaration;

by means of electronic communication in the electronic form in compliance with requirements of the Law of Ukraine “On electronic documents and electronic document management” and of the Law of Ukraine “On electronic trust services” (not later than the last hour of the day when the deadline for submission of declarations expires).

In order to increase level of voluntary income declaration and improve administration quality, the STS has introduced electronic service in the private part of the “E-Cabinet” “Property and income tax declaration” (EC for citizens / Property and income tax declaration), which provides declaration and its sending to the supervisory authority in electronic form.

Declaration form and instructions for its completion are posted on the official web portal of the State Tax Service in section “Individuals” (https://tax.gov.ua/fizichnim-osobam/podannya-deklaratsii-pro-/forma-deklaratsii/) and “Citizens declaration” (https://tax.gov.ua/others/deklaruvannya-gromadyan).