Ukraine; ua; eur

ES Official document

Report from our correspondent Yulia Logunova, DLA Piper ECE:ANA:UA:13.3.2., 13.8., 13.9., 13.10., 14.5. 1_4; VAT 1_5; Other Taxes

Single social contribution to apply from 2011

On 8 July 2010, the Parliament adopted law No. 2464 introducing the single social contribution, which will replace four existing types of social security contributions: pension, temporary disability, unemployment and professional injury contributions. The single social contribution will apply from 1 January 2011. Tax base The tax base for employers and employees is the total payroll. If a person is engaged under a civil law contract, the tax base is the fee payable under such contract. The tax base for private entrepreneurs and self-employed individuals (notaries, lawyers, doctors, artists etc) is the gross taxable income as defined for personal income tax purposes. Private entrepreneurs who have opted for the simplified tax regime may define the base for the single contribution at their own discretion, subject to the cap and floor requirements explained below. Cap and floor The tax base for all categories of insurers is capped at fifteen

times the amount of the subsistence minimum established by law for employable persons. For private entrepreneurs and self-employed individuals, the tax base may not be less than the minimal salary.

Rates The standard rates of the single contribution are: For employers from 36.76% to 49.7% depending on the industry and the level of professional hazard; For employees 3.6% applicable as a withholding; For persons engaged under civil law contracts 2.6% withholding, unless they are registered as private entrepreneurs or self-employed individuals, in which case no withholding is due. Special rates are established for governmental and municipal bodies, scientific and educational institutions, military forces, airline personnel, handicapped workers and some other categories of payers. Private entrepreneurs and self-employed individuals may either select the minimal 34.7% rate which effectively covers only pension security, or opt for voluntary coverage under other types of social security. In the latter case, the rate increases up to 38.11%, depending on the scope of the coverage. Administration The Pension Fund will administer the single contribution, keep the registry of payers, conduct audits, and distribute the collections among the other social security funds.

Compliance Single contribution is due for payment simultaneously with the payment of salary or other income to which it applies, by in any event not later than by the 20th day of the month following the reporting period. The standard reporting period is a calendar month. For civil contractors and private entrepreneurs the reporting period is a calendar year. The Pension Fund will adopt the reporting procedures in due course. Penalties Interest on overdue payment accrues at a rate of 0.1% per diem. In addition, a 10% penalty for late payment or non-payment of the contribution applies. Penalty for the understatement of the single contribution is 5% for each reporting period but no more than 50% of the understatement. Penalties are also envisaged for the failure to register with the Pension Fund, to submit reporting and to keep proper accounting records. Banks may be penalized for the failure to ensure simultaneous payment of the single contribution with the payment of salaries and other income.