As part of Ukraine’s strategy to improvement of investment climate in Ukraine, on the 23rd March 2017 the Ukrainian Parliament has introduced changes to the Tax Code of Ukraine, that reduce the dividends tax rate from 18% to 9 %, applicable to dividends which are paid to individuals (residents and non-residents of Ukraine) by:
- legal entities which do not pay corporate income tax (legal entities on Simplified Tax Regime);
- legal entities, registered overseas;
- collective investment funds.
As a result, after the amendments:
- if an individual receives dividends from Ukrainian legal entity on Simplified tax regime, OR from a legal entity, registered overseas, OR from a collective investment fund, personal income tax (PIT) will be 9 % plus 1.5 % military tax (total – 10.5 % tax);
- if an individual receives dividends from Ukrainian legal entity which pays corporate income tax (general tax scheme), then PIT on dividends will be 5 % plus 1.5 % military tax (total – 6.5 % tax).
The new rules apply retroactively from the 1st of January 2017 and only to the dividends received by individuals (residents and non-residents of Ukraine).