We did not have time to move away from the news about the FOP fifth group for IT, but we are already happy to hear new “ideas” on how to simplify the life of the sector.
Maybe we should start with an explanatory note to make it easier to understand what will be discussed:
“In 2013, Ukraine ranked 68th in the ranking of information and communication technologies development of the International Telecommunication Union of the United Nations among 157 countries.
At the same time, according to World Bank estimates, by 2015, Ukraine could rank sixth in the world in terms of IT-exports, subject to further targeted state support to the software industry.
Export of Ukrainian IT services in 2013 is estimated at almost 1.4 billion dollars, which is almost 28% more than last year’s figure, but does not exceed 1% of the world’s total”
Does anyone else think that this explanation gives some distorted data? It feels like that we were lost in space and time. There are either old researches, or an error in dates …
The purpose of the draft law
The main purpose of the new draft law is to make Ukraine the TOP outsourcing country of the world and overtake India, Brazil, Belarus, Georgia and Romania! According to lawmakers, Ukraine is attractive only due to the fact that the IT market “sits” on a single tax and uses groups of FOPs. But this does not in any way increase the capitalization of companies and their investment attractiveness. And, of course, less money goes to the budget.
Pills for IT
The new law will elaborate an “emergency box” for IT professionals, namely:
💊 Until January 1, 2025, hired employees in IT will pay 9% of the personal income tax, and 5% of the single social fee of the salary
💊 Classifier of professions will show who employees of the IT sector are in fact, and will introduce a special procedure of registration of such subjects of the software industry.
💊 There are minimum amounts of taxes to be paid:
-PIT – UAH 1502. This amount was calculated as the rate of 18% tax on two minimum wages. Consequently, with the increase of the latter, the proposed restriction will also increase.
-single social fee – UAH 1837. (the base rate of SSF is 22% from two minimum wages), the maximum is limited to UAH 13,770. (the same 22% but from 15 minimum wages). Authors of the draft honestly admit that such an approach will be economically profitable for salaries equal to 9-66 minimum wages. That is from UAH 37 thousand to 275 thousand.
It seems that everything sounds very nice, but in order to receive such benefits, companies will need to get registered as a subject of the software industry. In order to confirm the right to apply preferential taxation, the supervising authority must conduct a documentary unscheduled audit restricted to travel abroad for the payer. The question remains, how will this audit take place?
Draft law No. 10094-1 looks very much like a continuation of the sensational bill about group 5 of the FOP No. 10094, or as the alternative.
Changes are coming, but the question remains: what is better for IT – group 5 or employment relations. We hope that our lawmakers will find a compromise and “improve” our life in the right direction.
If you have any questions – write to us!
All the best!