Determination of the minimum tax liability for individuals-entrepreneurs

Paragraph 177.14 Article 177 of the Tax Code of Ukraine (hereinafter – Code) stipulates that individuals-entrepreneurs – owners, tenants, users on other conditions (including emphytheusis conditions) of land plots classified as agricultural lands, who produce their own agricultural products, as well as heads of family farms, including in relation to land plots, owned by members of such family farm and used by such family farm are required to submit annex with calculation of the total minimum tax liability as a part of the annual tax declaration.

Paragraph 64 Section XX "Transitional Provisions" of the Tax Code of Ukraine (hereinafter – Code) stipulates that the first year for which the minimum tax liability must be determined is 2022.

Annex of the minimum tax liability to the property and income tax declaration, in particular, must indicate the following:

cadastral numbers of land plots, which are used by the entrepreneur to carry out entrepreneurial activities and for which the minimum tax liability is determined, their normative monetary evaluation and area;

amount of the total minimum tax liability, amount of the minimum tax liability for each land plot separately;

total amount of taxes, levies and payments paid by the taxpayer, control over deduction of which is entrusted to the controlling bodies, related to production and sale of own agricultural products and/or to the ownership and/or use (lease, sublease, emphytheusis, permanent use) of land plots classified as agricultural land and expenses for lease of land plots during the tax (reporting) year determined according to Paragraph 177.15 Article 177 of the Code;

difference between amount of the total minimum tax liability and total amount of paid taxes, levies, payments and costs for renting land plots.

Paragraph 177.15 Article 177 of the Code stipulates that amount of paid taxes, levies, payments and costs for the land lease includes:

1) personal income tax (hereinafter – tax) and military levy on the net taxable income from sale of own agricultural products;

2) tax and military levy on the income of individuals who are in employment or civil-law relations with the taxpayer (except for income paid for the purchase of products from individuals), income under contracts of lease, sublease, emphyteussis of agricultural land plots;

3) single tax (in case of transition from the simplified taxation system to the general one in the tax (reporting) year);

4) land tax for land plots classified as agricultural land used in entrepreneurial activities;

5) rent payment for the special use of water;

6) 20 percent of costs for the rent payment for land plots classified as agricultural land, lessors of which are legal entities and/or which are in state or communal ownership.

Amount of paid taxes, levies, payments and expenses for the lease of land plots does not include amounts of taxes, levies, payments paid by mistake and/or in the excess in the tax (reporting) year.

In case of using land plot with the emphytheusis right, the personal income tax and military levy paid during execution of payments under such emphytheusis contract are annually taken into account in a proportion calculated in proportion to the annual amount of accrued depreciation on an intangible asset in the form of a right to use land plot under the emphytheusis contract (Paragraph 177.16 Article 177 of the Code).

Paragraph 177.20 Article 177 of the Code stipulates that amount of tax in a part of the positive value of such difference is not taken into account in the total amount of paid taxes, levies, payments and costs for rent of land plots in the next tax (reporting) year.