Ukraine adds one more country to a growing list that have adopted a flat tax. The advice they received was that incentives and revenue would rise and the underground economy and tax evasion would decline (see " The Flat Tax at Work in Russia: Year Two"). News reports suggest that Ukraine officials consulted with their Russian colleagues. Ukraine's finance minister is also seeking a reduction in VAT, from 20% to 15%. Following further in Russia's footsteps, the tax rate on company profits was previously reduced, from 30% to 25% (see " Further Extending Russia's Tax Reforms"). Dividends and interest on bank deposits will be taxed at a lower 5% rate beginning January 1, 2005. (See " The Flat Tax at Work in Russia") The 13% flat tax replaces five brackets of 10, 15, 20, 30, and 40%. On May 22, 2003, Ukraine's parliament, taking a page from Russia's playbook, overwhelmingly voted into law a 13% flat tax on personal income to take effect on January 1, 2004.
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