Ukraine, located in the heart of Eastern Europe is the second largest country in Europe after Russia. It is bordered by Poland, Slovakia, Hungary, Moldova and Romania to the west, Russia to the north-east, Belarus to the north and the Black Sea and the Azov Sea to the south.
Ukraine has a comprehensive transport system and it also is readily accessible by land and air.
Ukraine is a member of the European Bank for Reconstruction and Development (EBRD) and joined the World Trade Organization (WTO) in May 2008. The country is also a member of the United Nations, the Council of Europe, the International Monetary Fund (IMF), the World Bank, as well as a number of other international organizations. Ukraine also cooperates with the Organisation for Economic Cooperation and Development (OECD), however, it is not a member. In addition, Ukraine has concluded numerous bilateral agreements concerning trade, the avoidance of double taxation.
There are two types of joint stock companies in Ukraine: the open joint stock company (PuAT) and closed joint stock company (PrAT). In accordance with the current legislation, an open joint-stock company has transferable shares, registered at the Stock Market. The closed joint stock company has transferable shares only between its members. A closed joint stock may be transformed into an open joint stock company only after its shares are registered at the Stock Market and the changing the company’s charter. The capital of the joint stock company is divided into shares and the member’s liabilities depends on the number of own shares.
The minimum share capital of a joint stock company is the equivalent of at least 1250 minimum salaries from the date of registration ((the minimum amount equals to approximately USD 76,000). The number of participants can be more than 100 persons and the shareholders can be either physical persons or legal entities.
In order to establish a joint stock company, the founders need to make a notification of their intent to create a joint-stock company, subscribe for shares, hold a statutory meeting and conclude an agreement for servicing the issue of shares with the Central Securities Depository of securities.
Ukraine holds the 43-rd position in Doing business rating when it comes to taxation issues.
There are two systems that can be used by business entities in Ukraine:
- the general tax system;
- a simplified tax system.
The general tax system is used by most companies. This system requires business entities to pay 18% of the net profit. In case the amount of services rendered during a calendar year is more than 1 000 000 UAH (the equivalent of approximately 33.000 EUR), the company has to register as a VAT- payer.
A business entity is required to register for VAT in the following cases:
- If their sales for the past 12 months has exceeded UAH 300000 (= 59405.9 USD)
- If the person supplies goods and services on the customs territory of Ukraine using computer networks;
- If the person imports goods and services into the customs territory of Ukraine for the purpose of using or consuming them in the customs territory of Ukraine.
The simplified tax system addresses to small businesses. This system can only be chosen by those entities that have a turn over of less than 5 000 000 UAH per year (the equivalent of approximately 165.000 EUR), secondly, not all types of business activity are allowed to use this system.