Law of Ukraine № 4015-IX as of 10.10.2024 “On amendments to the Tax Code of Ukraine and other laws of Ukraine on ensuring balanced budget revenues during the martial law” (hereinafter – Law № 4015) made changes the Tax Code of Ukraine (hereinafter – Code), particularly added it with provisions regarding specifics of determining the minimum tax liability.
Paragraph 74 Sub-section 10 Section XX “Transitional Provisions” of the Code establishes that determining the minimum tax liability in a period from January 1, 2024 to December 31 of year in which the martial law will be cancelled or abolished, introduced by Decree of the President of Ukraine “On introduction of the martial law in Ukraine” № 64/2022 as of 24.02.2022, approved by the Law of Ukraine “On approval of Decree of the President of Ukraine “On introduction of the martial law in Ukraine” № 2102-IX as of 24.02.2022, amount of the minimum tax liability, determined according to Sub-paragraphs 38 1.1.1 and 38 1.1.2 Article 38 1 of the Code, cannot be less than 700 UAH per 1 hectare, and for land plots in area of which share of arable land is at least 50 percent – 1400 UAH per 1 hectare.
In order to bring the Corporate income tax declaration, form of which was approved by Order of the Ministry of Finance of Ukraine № 897 as of 20.10.2015 (with changes made by Order of the Ministry of Finance of Ukraine № 101as of 20.02.2023) with changes and additions (hereinafter – Declaration), the State Tax Service of Ukraine has developed a draft order of the Ministry of Finance of Ukraine “On approval of changes to form of the Corporate income tax declaration” (hereinafter – draft order), in which particularly Annex MPZ-Z to line 02 MPZ-Z of Annex MPZ to line 06.2 MPZ of the Declaration, are set out in a new version taking into account requirements of Paragraph 74 Sub-section 10 Section XX of the Code.
Annex MPZ-Z to the Declaration provides for an updated Calculation of the minimum tax liability, which is compiled by the taxpayers – owners, tenants, users on other terms (including emphyteusis terms) of land plots classified as agricultural land and is calculated for each land plot. Determining the minimum tax liability by the payer in a period from January 1, 2024 to December 31 of year in which the martial law is cancelled or abolished, amount of the minimum tax liability must be calculated according to Sub-paragraphs 381.1.1 and 381.1.2 Article 381 of the Code and cannot be less than 700 UAH per 1 hectare, and for land plots in area of which share of arable land is at least 50 percent – 1400 UAH per 1 hectare.
Draft order approved by the Ministry of Finance of Ukraine on 10.01.2025 was published on the State Tax Service’s web portal (www.tax.gov.ua) in the "For the public" section, sub-section "Interaction with the public" > "Consultations with the public" > "Drafts of the non-regulatory acts" "2025" for the public discussion.
Draft order is currently being prepared for submission to the Ministry of Justice of Ukraine for the state registration.
Paragraph 46.6 Article 46 of the Code stipulates that if as a result of changes in taxation rules, tax reporting forms change, until determination of new forms of declarations (calculations) that come into force for preparation of reports for the tax period following the tax period in which they were published, forms of declarations (calculations) that were in force before such determination are valid.
In addition, Paragraph 46.4 Article 46 of the Code stipulates that if the taxpayer believes that the tax declaration form determined by the central executive body that ensures formation and implementation of the state financial policy increases or decreases tax obligations, contrary to norms of the Code on such tax or levy, such taxpayer has a right to indicate this fact in a specially designated place in the tax declaration.
If necessary, the taxpayer may submit, together with such tax declaration, additions compiled in any form, which will be considered as integral part of the tax declaration. Such addition is submitted with explanation of reasons for its submission. Taxpayer who submits reporting in the electronic form has to submit such addition in the electronic form.
Please note that the corporate income tax payers based on the results of their activities for 2024 must calculate and declare the minimum tax liability in annex MPZ of the current Declaration form. At the same time, in columns 3 - 5 of table 1 and table 2 of annex MPZ-Z to line 02 of the MPZ-Z annex to the MPZ Declaration, payers reflect the corresponding indicators: “NGOd/NGO”, “M”, “S” to calculate amounts of the minimum tax liability according to Sub-paragraphs 38 1.1.1 and 38 1.1.2 Article 38 1 of the Code for each land plot. In order to comply with requirements of Paragraph 74 Sub-section 10 Section XX of the Code, the payer additionally calculates the minimum allowable value of amount of the minimum tax liability for each land plot (not less than 700 UAH per 1 hectare, and for land plots in area of which share of arable land is not less than 50 percent – 1400 UAH per 1 hectare). Column 6 of the MPZ-Z annex to the Declaration reflects amount of the minimum tax liability that is of the greatest importance (either calculated according to Article 38 1of the Code or according to Paragraph 74 Sub-section 10 Section XX of the Code).
To calculate the minimum tax liability, the coefficient "K" is applied, which is 0.05 according to Sub-paragraphs 38 1.1.1 and 38 1.1.2 Paragraph 381.1 Article 38 1 of the Code.
At the same time, it should be taken into account that temporarily, to calculate the minimum tax liability, the coefficient "K" is applied with value:
0.04 – for the tax (reporting) years 2022 and 2023 (Paragraph 67 Sub-section 10 Section XX of the Code);
0.057 – from the tax (reporting) year 2025 and for subsequent years, ending with year in which the martial law is cancelled or abolished (Paragraph 67 1 Sub-section 10 Section XX of the Code).
Therefore, for the tax (reporting) year 2024, the coefficient "K" is applied – 0.05.
Total value of amount of the minimum tax liability is transferred to line 02 MPZ-Z of the MPZ annex to line 06.2 MPZ to the Declaration.
Payers may submit addition to the Declaration with relevant explanations of calculation of the minimum tax liability, taking into account Paragraph 74 Sub-section 10 Section XX of the Code.
After the state registration in the Ministry of Justice of Ukraine and entry into force of Order of the Ministry of Finance of Ukraine “On approval of changes to the Corporate income tax declaration form”, the taxpayers will be able to submit a clarifying Declaration in an updated form for the reporting (tax) period 2024, with a detailed indicators for calculating the minimum tax liability reflected in the MPZ-Z annex, taking into account provisions of Paragraph 74 Sub-section 10 Section XX “Transitional provisions” of the Code.
At the same time, it should be informed that in case of self-correction by the taxpayer, in compliance with procedure, requirements and restrictions specified in Article 50 of the Code, of errors that led to an underestimation of tax liability in the reporting (tax) periods that fall during the martial law, such taxpayers are exempted from accrual and payment of financial sanctions provided for in Paragraph 50.1 Article 50 of the Code, and fines (Sub-paragraph 69.1 Paragraph 69 Sub-section 10 Section XX of the Code).