Draft law elaborated

The Ministry of revenues and duties of Ukraine prepared a draft law "On Amending Article 172 of the Tax Code of Ukraine to improve the procedure of determining the income from the alienation of immovable property" that will regulate the calculation of taxes and charges when dealing in sale and purchase of real estate, the Ministry’s press service informs.

Draft law №2539 was registered in the Verkhovna Rada of Ukraine 5 July 2013.

The Ministry officials are certain these amendments will allow to avoid ambiguous interpretation of the law, as well as to reduce the time required to calculate taxes and charges payable under such transactions.

Currently, when selling and purchasing real estate, individuals pay tax on personal income, tax on mandatory pension insurance and state duty. However, the tax base of each of these charges varies.

Personal income tax is paid on the price in the purchase agreement, but not less than the appraised value of such property. Pension insurance fee is collected from the contract value of immovable property, and state duty - from the contract amount.

Draft law № 2539 establishes same tax basis for all taxes and fees at property sale. It will be calculated on the value specified in the purchase agreement, but not less than the appraised value of the property.

When paying relevant taxes and charges, the property’s estimated value determined by a valuation entity, may be used, Ministry experts explain. That is, if it meets all legal requirements.

The draft law does not change current taxes and charges paid at purchase and sale, procedure and timing of payment.