Law No. 1914 introduces significant changes to the Tax Code, aiming to promote competition and help balance revenues to the State Budget. Mykola Hulko, Adviser on Municipal Finance and Management of the Regional Office of U-LEAD with Europe in the Cherkasy oblast, told about this in more detail.
As he noted, this Law is also designed to eliminate and/or limit unjustified benefits to certain types of business activities (elimination of legalised tax evasion schemes), as well as to level the competitive field.
According to him, the changes to the Tax Code provide for a number of innovations regarding tax administration, repayment of tax debt, corporate income tax, value-added tax, income taxation of individuals, simplified taxation system, excise tax and licensing of excise goods, as well as rent.
“The minimum tax liability (MTL) is introduced in order to combat shadow cultivation of rented agricultural land and attract additional revenues for the local budget. If the amount of the total MTL is less than the amount of all the taxes paid and land rent costs, the taxpayer declares a negative value of the total MTL and does not pay it de facto,” said Mr Hulko.
What else is important to know about the minimum tax liability? If the amount paid in taxes for a year is less than the total MTL, the taxpayer will need to pay the difference. The tax legislation does not establish a separate liability for the MTL, but failure to pay or late payment of the MTL will lead to penalties.
“It is also important for municipalities that most of the funds paid as the MTL for the use of agricultural land will go to local budgets based on the location of the plot,” the advisor said.
The U-LEAD Programme has held a number of events to provide local self-government bodies with expert clarifications regarding the minimum tax liability. Their goal is to help municipalities in studying the legal framework and specifics regarding the payment of the MTL for 2022. They have also explained the procedures for calculating the minimum tax liability and the relationships between the supervisory bodies with the local self-government and taxpayers in terms of reporting and liability for failure to pay or late payment of the MTL.