Amnesty of capital is coming to Ukraine! But the conditions have changed

On 15 June 2021 the VR voted in the second reading in favor of Draft law №5153¹ on the amnesty of capitals

The voted draft is very different from the concept of the declaration adopted in the first reading (see our newsletter dated 3 March 2021). The final text of the law is not available yet. Below we outline the main changes and novelties regarding the amnesty of capitals campaign, which should come into force after the signing of the law by the President of Ukraine and its official publication:

• Personalized declaration only
• Period - from 1 September 2021 to 1 September 2022
• In addition to a one-off charge at stipulated rates², the possibility of paying the charge in three equal instalments annually at increased rates of 6% / 11.5% / 3% has been introduced. Temporarily, from 1 September 2021 to 1 March 2022, a reduced rate applicable to foreign assets will be used - 7%, and with "instalments" - 9.5%
• The charge payment period has been increased to 30 calendar days after the submission of the special declaration. Under the "instalments" payment regime, the second and third parts are paid before 1 November 2023 and before 1 November 2024, respectively, but the liability for non-payment (late payment) of any part of the fee is significantly increased
• Assets located or registered in the territory of the aggressor state or having sources of origin from such country cannot be declared
• Terms of special declarations audits are extended: in-house - up to 60 calendar days, in order to confirm the correctness of the rate used - 365 days, and unscheduled documentary on-site inspection is provided in case of violations, as well as recalculation of liabilities (at a rate of 18%).

Draft law №5153 also amends the taxation of income from "tax-free" liquidation:

• military tax (at the rate of 1.5%) must be paid before and after 1 January 2022
• income in cash is subject to financial monitoring measures to establish the sources of such income

However, the changes proposed by Draft law №5153 regarding the taxation of income from the sale of real estate, as well as the postponement of the start date for CFC Rules to 1 January 2023 were not supported by legislators.

The law has yet to enter into force, but we suggest that you begin to consider using the amnesty of capital to legalize your assets in Ukraine and / or abroad. PwC Ukraine experts are ready to provide more detailed information and assist you in this process, in particular, by analyzing tax and other consequences that occurred before 1 January 2021, in which a risk of violation of tax or currency legislation may potentially exist, as well as developing a “simulation tool” for the base and tax liabilities calculation under "amnesty" declaration. Contact our team!

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¹ _{On changes to the Tax code of Ukraine concerning stimulation of de-shadowing of incomes and increase of citizens’ tax culture with introduction of voluntary declaration by individuals of the assets belonging to them and payment of a one-off charge to the budget}

² _{5% for Ukrainian assets / 9% for foreign assets / 2.5% for purchased domestic government bonds (OVDP)}