Import Procedures

Ukraine recently introduced the “Single Window” electronic data exchange system that allows customs authorities to automatically exchange information about the goods entering Ukraine, simplifying customs procedures and reducing the time for clearance.
After the importer submits scanned copies of the required documents (see below) together with an electronic communication, an authorized officer of the controlling body shall decide on the completion of the relevant state control or the need for additional review or other actions within four working hours after receipt of the electronic message and scanned documents.  If no decision are taken, the system automatically forms a decision on the implementation of the appropriate type of state control.

According to the Ukrainian Customs Code the declarant or his authorized representative should provide in the customs declaration the information on:

• Documents certifying the authority of the person submitting the customs declaration;
• Foreign trade agreement (contract) or other documents confirming the right of possession, use and/or disposal of goods;
• Transportation documents;
• Commercial documents available to the person submitting the declaration;
• If necessary, documents confirming compliance with non-tariff regulation of foreign economic activity;
• Documents confirming compliance with the restrictions arising from the use of protective, antidumping and countervailing measures (if such restrictions exist);
• In certain cases documents confirming the country of origin;
• If necessary, documents confirming the payment and / or secured payment of customs duties;
• If applicable, documents confirming the right to benefits for customs duties payment, full or partial exemption from customs duties under the chosen customs regime; and
• If necessary, documents confirming the change of customs duties payment terms;
• Imported products are subject to radiological control which is, in most cases, performed at the customs.

A Certificate of Origin is required when preferential customs duty rates are applied, when certain quantitative restrictions on movement of goods across the customs border of Ukraine are applied, and if it is required by Ukrainian law or international treaties.

Specific Import Procedures

The government of Ukraine updates the list of products subject to import and export licensing every year. The latest list included, among others: pharmaceuticals, paints and lacquers, dyes, hygiene products, cosmetic products, pedicure and manicure products, shaving aerosols and deodorants; lubricants, waxes, shoe polishes, insecticides, solvents, silicone, fire extinguishers and the chemicals that fill extinguishers; refrigerators and freezers, air-conditioners, humidifiers, and other selected industrial chemical products; fungicides, insecticides, herbicides, and plant growth adjusters.
The Ministry of Economic Development and Trade is the authority that generally grants the authorizations, but there may be exceptions (i.e. the State Service of Ukraine on Medicines and Drugs Control for medicines; the Ministry of Agriculture and Food Industry for agricultural chemicals, seeds, veterinary medicines; etc.).

Furthermore, the Ukrainian government strictly controls and restricts the transit, import, and export of weapons, narcotics, chemical and hazardous substances, and certain pharmaceutical and communications products.

Distribution channels

According to the Ukrainian State Statistics Service, Ukraine’s retail trade turnover (excluding motor vehicles) in 2020 was UAH 854.73 billion, a 9.8% increase compared to 2019. Ukraine’s food retail sales grew by 14.1% in 2020 (USDA). Independent retailers account for around 20 percent of total retail sales, while outdoor markets account for around 30 percent. Less than half of the overall retail market is controlled by chains, reflecting the considerable development opportunities that remain in Ukrainian retail. Retail superstore chains are available in the main Ukrainian cities and primarily specialise in Fast Moving Consumer Goods (FMCG), consumer electronics, Do-it-Yourself (DIY), automotive parts and accessories, cosmetics and toiletries, pharmaceuticals and health care goods.

The major international retailers in the Ukrainian retail FMCG market are Metro Group, Auchan, Rewe Group (Billa), and Spar. The top four national FMCG retailers in the market are the Fozzy Group, ATB Market, Retail Group, and Furshet. Regionally, the top retailers include: Tavria V and Kopeika in southern Ukraine; and Pakko, Barvinok, and Kolibris in western Ukraine. The most popular FMCG outlet formats that opened in Ukraine in the recent years were discounters, corner shops, and supermarkets. Domestic retailer Fozzy continues to expand its number of retail outlets in Ukraine. In mid-2016 the group launched a new discount retail outlet 'Thrash' and by the end of the year had 30 stores in cities including Kiev, Mykolaiv, Odessa and Rivne. Within the category of consumer electronics and household appliance chains - currently, the largest household appliances and electronics market players are Foxtrot, Eldorado, and Comfy. These chain operators sell most of the consumer electronics and household appliances through their retail outlets located throughout Ukraine. “Do-It-Yourself” chains - The national chain Epicenter remains the leading DIY player, with a market share of around 50 percent. The only foreign player in the market is Leroy Merlin (part of Groupe Adeo), which operates three stores in Kiev. Branded Apparel and Footwear - Multiple national premium fashion outlet chains sell branded clothing and footwear including Argo, Top Brand, Helen Marlen Group, and Melon Fashion Group, Intertop is a Ukrainian chain for branded footwear.

Over 6,000 businesses are engaged in selling pharmaceuticals. Pharmaceuticals are sold through about 20,000 private and state-owned pharmacies and pharmacy retail points About 20-30 percent of pharmacies are publicly owned. Many regions and municipalities have been looking to expand or launch so-called 'social pharmacies', which stock essential medicines and charge little or no mark-up.

Distribution market players

Since 1991, when Ukraine declared independence from Russia, the retail industry has grown, with a dozen chains nationwide and a few strong regional players. Some retailers operate diverse chains of stores that differ by size and brand. According to the Ukrainian Statistics Agency, in 2020, there were:

•    7,730 grocery stores of less than 120m2
•    1,859 specialty food stores
•    2,676 convenience stores, from 120m2 to 400m2
•    2,016 supermarkets, from 400m2 to 2500m2
•    142 Hypermarkets, over 2500m2

Retail Sector Organisations

Ukrainian Retail Association

Consumption Taxes

Nature of the Tax

Podatok Na dodanu Vartist (PDV) (Value Added Tax)

Tax Rate

20%

Reduced Tax Rate

A 7% VAT applies to supplies of pharmaceuticals and healthcare products; supplies of certain services related to admission to shows, theatres, concerts, museums, zoos, exhibitions and similar cultural events.
Domestic supplies and imports of agricultural products classified under the following HS customs tariff headings are subject to a 14% reduced rate: 1001, 1003, 1005, 1201, 1205, 1206.
Exports, international transportation services, and processing and repairs of imported movable property that is subsequently exported from Ukraine are zero-rated.

Other Consumption Taxes

Excise duties are levied on alcohol, alcoholic beverages, beer, tobacco and tobacco products, cars, car bodies, motorbikes, electricity, liquefied gas, petrol, diesel fuel, other fuel material, and electric power.
A local transport tax of UAH 25,000 per year is charged on owners of passenger cars with an average market value exceeding 375 minimal salaries as of 1 January of the reporting year (i.e., UAH 2,662,500 for 2024) and less than five years old. The Ministry of Economic Development and Trade of Ukraine must annually publish, before 1 February of the reporting year, a list of vehicles subject to the transport tax, including the brand, model, year of production, engine displacement, and fuel type.

Corporate Taxes

Company Tax

18%

Tax Rate For Foreign Companies

A company is deemed to be resident in Ukraine for tax purposes if it was incorporated in Ukraine.
A permanent establishment is defined - in accordance with OECD's model - as a fixed place of business through which the business activity of a non-resident company is wholly or partly carried out in Ukraine (it includes a place of management, affiliate, office, server, etc.). As of 1 January 2022, a foreign company that has its place of effective management in Ukraine may apply to become a Ukrainian tax resident.
Currently, Ukraine does not permit the registration of branches for foreign legal entities. Instead, foreign companies can establish representative offices, akin to unincorporated branches. Operations conducted through a representative office are considered as business activities carried out via a Permanent Establishment and may be liable for Corporate Income Tax (CIT) at the standard rate.

Capital Gains Taxation

Capital gains are treated as ordinary income and taxed at the standard corporate tax rate.

Main Allowable Deductions and Tax Credits

Most expenses incurred relative to the activities of the company are deductible for tax purposes. Assets with a value greater than UAH 20,000 and a useful life of more than one year are subject to depreciation. Depreciation is determined monthly based on different depreciation calculation methods (linear, decreasing, variable, exceptional). Goodwill cannot be amortised for tax purposes.

Organisational and start-up expenses are fully deductible and are not subject to a cap. Interest is also deductible (restrictions apply to interest paid to non-residents) as are fines and penalties (except for those paid to companies that do not pay corporation tax or are subject to a 0% tax rate). Taxes, with the exception of corporation tax, withholding taxes and non-recoverable VAT, are deductible. Employers can deduct obligatory Ukrainian social security insurance contributions, including state pension contributions charged on payroll expenses. There are no limitations on deducting the employer's payments to non-state pension organizations. R&D expenses are also deductible.

Donations to charities are only deductible up to 70% and are capped at 4% of the previous year's taxable income. This rate is raised to 8% for donations to NGOs involved in sports and physical culture. Following the introduction of martial law, the scope of recipients eligible for charitable assistance has been expanded, and the limitation on the deductibility of costs has been adjusted. The added recipients include the Ukrainian armed forces, other military units formed under Ukrainian laws, the Ministry of Internal Affairs, a central executive power body responsible for civil defence, state/communal health protection institutions, and local health protection authorities. Additionally, the deduction limit of 4% of the previous year's taxable profit does not apply to specific goods and services provided for free to non-profit organizations. These goods and services include special personal protective equipment (helmets, body armour), technical observation devices, medicines and medical devices, personal hygiene products, food, and other items, as determined by the Cabinet of Ministers of Ukraine.

Large taxpayers in Ukraine can carry forward tax losses with certain limitations. Specifically, they can utilize up to 50% of accumulated tax losses from previous years in their current tax return. Any unused tax losses are carried forward to future periods until fully utilized. If tax losses are less than 10% of the positive tax base, they may be fully utilized. Ukrainian tax legislation does not allow for refunds of losses carried back.

Resident companies would increase the taxable basis for corporate income tax by 30% of the value of goods, works and services sold to residents of low-tax jurisdictions and foreign companies having special legal forms.

Enterprises in the aircraft industry in Ukraine may benefit from temporary corporate income tax exemptions. Incentives are also available for entities founded by public institutions for disabled people. Companies engaged in green tariff power supply activities can use the cash method for corporate income tax determination until 2024. A special tax regime, "Diia City," exists for IT companies and tech start-ups. Diia City residents can choose between the standard corporate income tax regime with an 18% rate on adjusted profits or a special regime with a 9% tax on certain payments (e.g., dividends). Additionally, a reduced 5% individual income tax rate applies to salaries of Diia City employees, gig specialists, and remuneration for work under service agreements and transfer of rights to such works.

Other Corporate Taxes

Until 31 December of the year following the end of martial law, no payment is due for land occupied or under military operations as determined by the Cabinet of Ministers of Ukraine. Separate taxes apply to buildings and land. Land tax is imposed on owners/users at rates generally up to 12% for legal entities and up to 3% for individuals, based on the land's estimated value depending on location and use. Legal entities, including nonresidents, owning residential or nonresidential real estate are subject to a tax of up to 1.5% of one minimum wage as of 1 January of the reporting year per square meter owned. If the total area of real estate owned exceeds 300 m² for apartments and/or 500 m² for houses, the tax amount increases by UAH 25,000 per property per year.

Salary or similar employment compensation paid to an employee is subject to a unified social security contribution at a rate of 22%. The remuneration for these purposes is capped at 15 times the minimum wage, which was UAH 8,000 per month as of 1 April 2024.
A mandatory pension fund contribution applies to certain transactions at rates of 1% for land/buildings, 3%/4%/5% for vehicle purchases, 10% for the governmental plate mark on jewellery, and 7.5% for the usage of mobile services.

State duty is imposed on the transfer of real estate and vehicles. A local transport tax of UAH 25,000 is charged on owners of passenger cars with an average market value exceeding 375 minimal salaries (i.e. UAH 2,512,500 for 2023) and less than five years old.

Companies that discharge contaminants into the environment or dispose of waste are subject to an environmental tax, whose rate varies according to the level of contamination. Companies engaged in extracting mineral resources are subject to specific taxation.

Further taxes may be levied at the discretion of the local authorities.

Other Domestic Resources

State Tax Service of Ukraine

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed

See the list of tax treaties signed by Ukraine

Withholding Taxes

Dividends: 0 (residents)/15% (non-residents); Interest: 0 (residents and interest income received from government securities)/5% (paid to non-residents on loans made to Ukrainian residents from qualifying Eurobond issuance proceed)/15% (non-residents); Royalties: 0 (residents)/15% (non-residents).
These rates may be lower under a tax treaty.