The Ukrainian Taxation Law defines different categories of individuals which are liable to personal tax income. Besides residents, who are taxed on the basis of worldwide income, non-residents are also taxed as long as they make income in the Ukrainian market including employment in the country’s territory. For residents and their worldwide income, double tax treaties apply as to avoid double taxation.
The income tax rate is the same for all categories (with few exceptions), and it stands at 18% covering regular salaries including benefits covered by civil and employment agreements, foreign income, and unspecified income that is not defined under any other law.
Furthermore, the 18% tax rate also refers to income from investment earnings, dividends, interests, and royalties. Corporate income taxpayers (residents) are also not exempted from dividend tax payments, but they only pay a 5% rate, not including mutual funds. A new law is on the way to tax non-resident corporate taxpayers, and the rate will be reduced to 9% of their dividends incomes, whereas for now, it stands at 18%. Tax withholding is performed by tax agents and employers.
In 2014, upon the Ukrainian clash with Russian supporters, a 1.5% military tax was introduced. The tax regulation stays in force until the Ukrainian Military Forces are reformed.
Corporate Income Tax
Worldwide income is also subject to taxation on corporate income tax. The tax encompasses corporate profits made by residents in and outside the country and non-residents who are permanently established in Ukraine, whereby they are taxed on the profit they make only in Ukraine.
The corporate income tax is identical to the personal income tax equalling 18%. Non-residents are mostly taxed at 15% (if not specified otherwise for a particular reason). Some non-residents are exempted under the double taxation treaty, whereof, a total of 72 such treaties are in force in the country, giving enough space to non-residents to apply for an exemption.
Insurance Companies and Gambling Industry
Insurance companies are subject to the regular 18% rate plus 3% on personal income, and they are exempted from a special corporate income tax. This represents a benefit for insurance companies who gain the right to keep more of their profits to themselves.
Gambling operators like lotteries pay a 10% rate, while the standard 18% is imposed on bookmakers and casinos, and these rates to not reduce taxable profit in contrary to insurance companies.