The taxation system is an essential part of any country’s economy. It is a way for the government to collect funds to finance public services and infrastructure. In Ukraine, there are several types of taxes, including income tax, value-added tax, and excise tax. However, in recent years, there has been a lot of discussion about the taxation of real estate, land, and a unified tax for individual entrepreneurs (IEs) in the fourth group.
The taxation of real estate and land has been a topic of debate for many years in Ukraine. In 2013, the government introduced a new tax on real estate, which replaced the previous property tax. This new tax is based on the cadastral value of the property and is paid by the owners of residential and non-residential properties. The cadastral value is determined by the State Register of Real Property Rights and is updated every three years. The tax rate varies depending on the location and type of property, but it cannot exceed 1.5% of the cadastral value.
The introduction of this tax has caused a lot of controversy among property owners. Many argue that the cadastral value does not reflect the real market value of the property and, therefore, the tax is unfair. Others believe that the tax is too high and puts an additional burden on property owners. However, the government argues that the new tax is more transparent and fair compared to the previous property tax, which was based on the outdated Soviet-era norms.
In addition to the real estate tax, there is also a tax on land in Ukraine. This tax is paid by the owners of land plots and is calculated based on the land’s area, location, and intended use. The tax rate is set by local authorities and cannot exceed 3% of the land’s normative monetary value. The normative monetary value is determined by the State Land Cadastre and is updated every year. The tax on land is also a source of controversy, as many argue that the normative monetary value does not reflect the real market value of the land.
To simplify the taxation system for individual entrepreneurs, the government introduced a unified tax for IEs in 2017. This tax is paid by IEs in the fourth group, which includes small businesses with an annual income of up to 5 million Ukrainian hryvnias (UAH). The unified tax is calculated based on the number of employees and the type of activity of the IE. The tax rates range from 1% to 5% of the minimum wage, depending on the type of activity. This tax also includes the payment for the use of natural resources, such as land and water.
The introduction of the unified tax has been welcomed by many small business owners, as it simplifies the tax reporting process and reduces the tax burden for small businesses. However, some argue that the tax rates are still too high, and the government should consider further reducing them to support small businesses.
In conclusion, the taxation of real estate, land, and individual entrepreneurs in Ukraine has been a topic of discussion for many years. While the introduction of the new real estate tax and the unified tax for IEs has been met with some criticism, the government argues that these changes are necessary to modernize the tax system and make it more transparent and fair. As the economy continues to develop, it is essential for the government to regularly review and adjust the tax system to support economic growth and ensure a fair distribution of tax burden among citizens.
