Publication date: 25.06.2024
Taxation and tax benefits for business during the war period
Introduction
Wartime poses unique challenges for businesses and the country's economy as a whole. To maintain the stability and functioning of enterprises, the state may introduce various tax measures. In this article, we will review the main aspects of taxation and tax benefits for business during the wartime period as defined by Ukrainian legislation.
The main part
Legal and regulatory framework
The Constitution of Ukraine
The Constitution of Ukraine lays down the foundations of the tax system, including the principles of fair taxation and protection of taxpayers' rights (Article 67).
Tax Code of Ukraine
The Tax Code of Ukraine regulates all aspects of taxation, including taxation under martial law, tax benefits and exemptions.
Law of Ukraine "On the Legal Regime of Martial Law"
This Law defines the legal framework for the functioning of state bodies and regulation of various spheres of public life during martial law, including taxation.
Key tax measures to support business
Reducing the tax burden
During wartime, the state may introduce measures to reduce the tax burden on business, in particular:
Reduction of tax rates
Temporary reduction in the rates of major taxes, such as corporate income tax, personal income tax, and VAT.
Deferred tax payments
Providing an opportunity to defer the payment of tax liabilities without incurring penalties and fines.
Cancellation or reduction of advance payments
Temporary abolition or reduction of advance tax payments for companies that suffered significant losses during the war period.
Tax benefits and exemptions
The state may provide various tax benefits and exemptions to support businesses, including:
Tax exemption
Temporary exemption of certain categories of companies from certain taxes, such as income tax or land tax.
Preferential taxation
Establishment of reduced tax rates or special tax regimes for companies operating in strategic
industries or affected by military operations.
Tax credits
Providing tax credits to businesses to support their financial stability and ensure that they can meet their tax obligations in the future.
Support for small and medium-sized businesses
Simplification of tax administration
In order to support small and medium-sized businesses (SMEs), the government can take measures to simplify tax administration, among other things:
Simplified tax reports
Introducing simplified tax reporting forms and reducing the volume of reporting documents for SMEs.
Electronic tax administration
Expanding the capabilities of electronic tax administration, allowing businesses to file reports and pay taxes online.
Benefits for newly established enterprises
In order to stimulate economic activity and create new jobs during the wartime period, the state may provide tax incentives to newly established enterprises:
Tax exemption for a certain period
Exemption of newly established enterprises from paying basic taxes for the first year of operation or provision of preferential taxation conditions.
Providing tax incentives for investors who invest in the creation of new businesses or the expansion of existing production facilities.
Special tax regimes under martial law
Introduction of special taxation regimes
Under martial law, the state may introduce special taxation regimes for certain categories of businesses or regions affected by military operations:
Priority economic development zones
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Establishing special tax regimes for areas affected by hostilities to stimulate their recovery and development.
Preferential taxation for defense companies
Providing tax incentives to companies that manufacture defense products or provide services to ensure the country's defense capability.
Special measures for the agricultural sector
The agricultural sector of the economy may suffer significant losses during wartime, so the state may introduce special tax measures to support agricultural enterprises:
Reduction of land tax rates
Temporary reduction of land tax rates for agricultural enterprises affected by the hostilities or having difficulties with land cultivation.
Preferential taxation of income
Providing preferential taxation of income from the sale of agricultural products to support the financial stability of agricultural enterprises.
Monitoring and control over the fulfillment of tax obligations
Reduction of tax audits
To reduce administrative pressure on businesses during wartime, the government may limit the number of tax audits:
Moratorium on tax audits
Establishment of a moratorium on scheduled tax audits for companies affected by military operations or operating in strategic industries.
Simplified inspection procedures
Introduce simplified procedures for tax audits to reduce the time and resources required for their conduct.
Supporting transparency and accountability
To ensure transparency and accountability in the field of taxation, the state may implement measures to increase the transparency of tax procedures:
Electronic services
Expanding the capabilities of electronic services for filing tax reports, obtaining advice and resolving tax-related issues.
Information support
Providing information support to companies on changes in tax legislation, new tax regimes and benefits.
Conclusion.
Taxation and tax incentives for business during the wartime period are important tools for maintaining economic stability and the functioning of enterprises. The main areas of regulation include reducing the tax burden, granting tax benefits and exemptions, supporting small and medium-sized businesses, introducing special tax regimes, and monitoring and controlling the fulfillment of tax obligations. Effective application of these measures will help maintain economic activity, restore the affected regions and strengthen the country's defense capabilities.
