What is income tax in Ukraine

Personal income, what is it?

To begin with, it is necessary to find out what is, or who is this, an individual? According to the national legislation of almost every country on every continent of the planet Earth, this term implies an individual in human form who is capable (can make decisions, sign or not sign documents) and, most importantly, is able to bear legal responsibility for their actions or inaction. It is worth noting that this concept is slightly different from the term, a citizen of the country (resident), a foreigner (non-resident), but rather fits the classification, a stateless person, although it combines all the above concepts into one.

We are interested in the question of income! If everything is clear with the money of a legal entity, the enterprise has earned, from the net profit (the difference in the declaration between the loan, obligations) paid taxes and fees to the state budget. As for an individual, his income is the totality of all funds that came to a person’s bank account from various sources, internal, external (foreign) during the reporting period (calendar year). For example, wages from the company in which the citizen works, earnings from trading in securities, profit from the provision of rental services for an apartment or own commercial real estate.

Is it possible to return income tax in Ukraine?

It is no secret that in the United States of America, Canada, Australia, Great Britain, in the countries of the European Union and in most countries of the entire civilized world, there is a practice of income tax refund not only for legal entities, but also for individuals, citizens of the country. The procedure varies from state to state, sometimes simpler, sometimes more difficult, but it is worth recognizing that such a practice exists, which official officials of the Cabinet of Ministers of Ukraine do not want to do. The reason for the silence of this practice in other countries is that it is easier to raise taxes and add new objects of taxation. The heads of the fiscal service, no matter how it is called throughout the history of our independence, under any government, both dictatorial and democratic, pro-European shout from all TV channels, from all social networks on the Internet that we are constantly raising taxes, but look, how high fees are in the same European Union, silent about the fact that there is a developed practice of income tax refund for individuals. For example, it looks like this, a person paid one hundred dollars or euros to the budget, but a water pipe burst in his house, for the repair of which he spent thirty dollars, at the end of the reporting period, that is, at the end of the year the state will return these thirty dollars to him by direct transfer to a bank account or in the form of benefits for the next year.

In Ukraine, income tax is not returned to ordinary citizens under any circumstances! If you paid it, then you can forget about this money forever, even if, God forbid, your house burned down.

Calculation of personal income tax, what should be taken into account?

Referring to the legislation of our country, namely the tax code of Ukraine, every citizen (resident), foreigner (non-resident), person without any citizenship who receive permanent, not permanent, official income on the territory of our state are required to file at the end of the year with the fiscal authorities of your district report on the money earned. Accordingly, after checking and accepting the declaration of income of individuals, a person is obliged to transfer eighteen percent of income tax and one and a half percent of the military tax to the account of the treasury.

In order to simplify your life, save time as much as possible, reduce the cost of accounting services, it is recommended:

Make an appointment at the nearest center for the provision of administrative services, for example, Pechersky district, if you are in the city of Kyiv;
Buy an external, portable SSD drive of the smallest volume, on which a representative of a special service under the Ministry of Digital Transformation will create a digital electronic signature key for you;
Register your own electronic cabinet on the cabinet.tax.gov.ua website;
In the section on the introduction of reporting, select the desired declaration, enter data on earned money from all official sources, and the system will automatically calculate the amount that you must pay to the budget of the state of Ukraine;
Save the document, sign it with a digital barb, send it to the server and wait for the first receipt of acceptance of the document for verification.

Important! Do not leave the electronic cabinet until you are sent a second receipt with the results of processing the data you submitted. If an error is made, the line will turn red, if everything is done correctly, the line will turn green. After that, go to the section on the status of settlements with the budget, find out the number of the current account to which you need to send the payment, and make the payment there using the standard mobile application of your bank.

How to calculate income tax?

In order to correctly draw up an annual declaration on the property status of an individual, without any problems submit it to the fiscal service, it is necessary to write down in the specified document everything that you have, what was, what was sold, what was acquired during the last reporting period, this is cash, assets, real estate, cars, yachts and so on.

Step-by-step instruction:

In the third column of the tenth line, you must indicate the amount that was earned over the past year from all sources;
The fourth and fifth columns of the same line indicate the amount of budgetary deductions that the tax agent paid for the resident at the time of the transaction. For example, you sold shares, securities worth one hundred thousand hryvnias through an online exchange. In such a transaction, the exchange automatically removes its commission, personal income tax from the client account and immediately transfers it to the treasury account;
The sixth and seventh columns indicate the amount of budgetary deductions (income tax, military tax), which the resident must transfer to the state of Ukraine independently. For example, you sold an object of movable or immovable property (an apartment, a car), earned one million hryvnias. With this sum, you will have to pay eighteen percent of the tax on individuals and one and a half percent of the military tax to the treasury on your own.

Important! Do not engage in government tax evasion. Because when concluding a deal with a notary, when making changes through the registers of the Cabinet of Ministers, all information about the money you have earned is momentarily sent to the servers of the fiscal authorities. So that the official knows before you when, how much you have to transfer to the country’s budget.

Who is exempt from income tax?

The income of an individual that is not included in the total annual taxable income is displayed in the same declaration, line eleven.

Here, you can enter the following:

Money received from the implementation of financial and economic activities on a simplified taxation system. This is an individual entrepreneur who quarterly pays a fixed rate to the state budget, for example, five percent and a single social contribution;
Funds received from the sale (exchange) of movable and/or immovable property. This refers to a one-time alienation of private property over the past year. If the sale is made twice or more, it falls under the permanent commercial activity;
Other income that is not subject to taxation. For example, money received from charitable organizations for non-commercial purposes, repaid debts for previous reporting periods, and so on and so forth.

Important! After entering into the inheritance, becoming the full owner of movable, immovable property or business, the heir is obliged to indicate his new property in the declaration at the end of the year, paying all mandatory fees from it.

How not to pay income tax?

As mentioned in the previous sections, the practice of exemption from payment of state fees is not developed in Ukraine. Moreover, the official is quite hostile to the Ukrainian taxpayer, putting in the first place not the well-being of the person, but the budget. This is especially true for the unified social contribution that a private entrepreneur pays for himself on his own, whether he works or is on vacation, this does not interest anyone, the company makes deductions for a hired employee. But if the entrepreneur pays a fixed amount from the minimum wage, then the employee is calculated from the full salary.

There are several completely legal or partially legal ways that allow you not to pay taxes on individuals:

Cryptocurrency, it is also a decentralized currency that allegedly no one controls (using online payments, a virtual wallet, selling, buying goods or services, you are not in the tracking system of fiscal authorities, which receive information about a resident from a notary, from a bank through your identification code);
To work informally, that is, the registration of an LLC is not needed, as well as the registration of a private enterprise. This method involves the implementation of trade for cash, non-cash, through a personal bank card using the bank’s mobile application for bookkeeping, and free or paid ad sites to advertise their goods, services;
IE registration. Everything is simple here, by registering this type of legal entity, you start working officially, you can conclude contracts, with a signature, a seal. The advantage is that you can switch to a simplified system and pay the state, three, five percent of the turnover every quarter. Minus, you will have to monthly deduct a single social contribution from the minimum wage.

The above methods are good, they allow you to avoid paying tax on individuals, the third way of working allows you to do it officially. But the problem is that in all these cases it is not necessary to count on large investments, especially foreign ones, and business expansion. Large corporations are built only in the white economy, especially in those countries where, initially, low tax rates, such as Singapore in its best years. It is important not to confuse with an offshore zone, this is a completely different system.

When to pay income tax?

There is no single answer to this question, it all depends on the status of the financial and economic operation. Some deductions must be made instantly, for example, when selling shares, securities, but the main taxes are paid at the end of the reporting period, that is, at the end of the year, and more specifically, by April of the new year, all issues on deductions to the state treasury will have to be closed.

Those fees that are transferred to the budget of Ukraine instantly or at the end of the current month are often paid by the so-called tax agent for a citizen. It can be an exchange, any other trading platform or a banking organization, for example, when you withdraw money in the form of cashback in monobank, the bank instantly, automatically transfers eighteen percent of income tax and one and a half percent of the military tax to the treasury account, and it comes to your personal account eighty and a half percent of the cashback system.

Those fees that are transferred to the budget at the end of the reporting period (by April 1 of the new year) you pay yourself by filling out a tax return as an individual, a citizen of Ukraine. This is also called voluntary declaration of income, movable, immovable property, business assets, yachts, and so on. Simply put, everything that you have earned officially, where the transactions went through a notary, must be indicated as profit, income tax, military duty. What you have not officially earned, you enter into the declaration of your own free will, in good conscience.

Important! If you decide to indicate unofficial income in the report, clarify the opinion of the counterparties from whom you received money on this so that you do not inadvertently expose them to the fiscal authorities.

How is income tax calculated?

Let us immediately indicate that in this section of the article we will talk about the salary of an employee, because it is for the employee that the employer deducts tax from individuals, military duty, and a single social contribution to the treasury. But let us immediately indicate that other incomes of a person who works for a particular company, not related to the activities of this company, a resident, a non-resident must pay for himself.

Let’s proceed directly to the procedure for calculating income, other taxes, fees for a hired employee:

Money from the sold goods, rendered services goes to the bank account of the enterprise;
The firm purchases new means of production to ensure uninterrupted economic activity;
20% VAT is paid on the difference between income and expenses, other obligatory fees are paid;
From the money that remains, pay salaries to employees;
Income tax, military tax, unified social contribution are deducted from the wages of employees, as of 2022, this is 41.5%, 58.5% of the face value comes to the employee’s card.

Let’s look at this with an example. The organization earned 100,000 UAH, buys raw materials for 10,000, with 90,000 that remain pays 20% VAT, 72,000 remains. % of the single social contribution, total, 41.5%, in money, 8300, the net income that a person will receive in his hands will be 11,700 UAH.

How to pay personal income tax face?

To solve this problem, the easiest option would be to cooperate with a company that provides comprehensive accounting services. Thus, it will be possible to avoid fines and unnecessary invitations to law enforcement agencies of Ukraine. But this is in cases where a citizen or a foreigner with the right to work in our country is engaged in permanent financial and economic activities, for which there is no need to register a company. For example, renting movable, real estate, leasing assets, trading in shares, securities.

If an individual does not conduct daily business operations, then hiring a remote accountant does not make sense. It is cheaper to calculate and pay taxes, fees yourself using step-by-step instructions:

Print out an extract from your bank account, mark and count the money that was officially received from legal entities, on the basis of previously concluded purchase, sale, service agreements;
Enter information about your profits in the annual declaration, broken down by category (from which activity or from which asset the funds were received);
Send a report through an electronic office or personally take it to the district tax office, at the place of registration in Kyiv or any other city;
Through the banking application on your mobile phone or directly through the cash register, transfer the required amount to the Treasury account.

Important! If you decide to submit the declaration not through the online office, but personally to the inspector, it is recommended to attach a receipt for payment of state taxes and fees.

When to pay income tax on wages?

If a person is formally registered for a position in a particular corporation, then usually wages are accrued to him in the first days of the month and in the middle of the month in advance. It is not necessary to make deductions to the state budget on your own, for employees, this is done by the accounting department. A hired employee receives a net profit on a bank card from his activities under a civil law contract, which he previously concluded with a company, an employer. Payroll taxes are paid monthly until the twentieth of the following month, for example, fees from a January salary are paid until the twentieth of February.

The second option is if a person cooperates with an enterprise, that is, performs the function of a hired employee, but is registered as an individual entrepreneur. Here he must pay the tax himself, but in practice this function still falls to the corporate accountant. But taxes are deducted not to the regional fiscal service of the organization, but to the tax office for registering the place of residence of a resident. There is another third option, this is when a citizen officially works for a company and, in addition, he has a IE registered, then he pays income tax on wages every month, on legal entities every quarter. But the unified social contribution is charged only once, every month, for example, if the single social contribution is paid from the salary, then it is no longer necessary to pay it with the individual entrepreneur and vice versa.

What is income tax in Ukraine