(Coopers & Lybrand Times, Issue No. 23)

On the 25 March 1997 a new law on Motor Vehicle Taxation (dated 18 February 1997) came into effect replacing the previous law dated 11 December 1991.

The new law clarified the definition of the taxpayer and established new tax rates for various transport vehicles including some types of marine vehicles.

Under the new law the taxpayer is defined as an individual or corporation owning a transport vehicle which is registered in the Ukraine, regardless of the owner's place of residence.

The tax rate for motor vehicles depends on the engine capacity regardless of engine type. The rates in respect of cars are as follows:

Engine Capacity (CC)           Tax Rate (ECU per 100cc)

up to 1,000                     0.68
1,001 - 1,500                   1.14
1,501 - 1,800                   1.36
1,801 - 2,500                   1.81
in excess of 2,501              4.55

For mini-vans with at least 10 seats and trucks the tax rate is ECU 0.45 per 100cc of engine capacity.

The tax rate for marine vehicles depends on the length of the vehicle.

Tax should be paid to the local authority where the taxpayer is registered. 90% of the tax collected by the tax authorities should be used for improvement of roads and environmental protection. 10% is allocated for the financing of the road police department in which the vehicle is registered.

The legal entity which owns a transport vehicle is required to submit to the Local Tax Administration by 15 March of the reporting year a calculation of the tax due in the reporting year.

Tax is payable in Ukrainian currency by the date of the obligatory safety inspection. Normally the deadline for the annual safety inspection of cars owned by a legal entity is 1 July.

Penalty Regime

Non payment/underpayment of tax leads to a 200% fine based on the amount of underpaid tax. Failure to submit a calculation of the tax due may result in a penalty of 50% of amount of tax due to the state. Daily penalty for late payment of tax is calculated as 120% of the current interest rate of the National Bank of Ukraine.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Vladimir Didenko on +(380) 44 244 5478/9 or enter a text search 'Coopers & Lybrand' and 'Business Monitor'.