25 Dec 2023 17:25

Ukrainian Finance Ministry drafts bill amending taxation rules for insurers

MOSCOW. Dec 25 (Interfax) - The Ukrainian Finance Ministry has proposed excluding services linked to the insurance business of insurance brokers and insurance agents from the list of non-VAT taxable operations but adding to this list other intermediary services involving the sale of insurance and/or reinsurance products by insurance and/or reinsurance brokers.

This initiative is contained in a bill amending the Ukrainian Tax Code the way to update the taxation rules for insurance operations in Ukraine, which is available on the Finance Ministry's website, Ukrainian media reported.

The purpose of this bill is to bring the Ukrainian Tax Code in line with the Ukraine's insurance law and to create conditions conducive to the proper functioning of the insurance market, an explanatory note to the bill said.

As for the corporate profit tax, it is proposed to impose a tax on internal incoming reinsurance operations for insurers to minimize 'unconventional' insurance and tax evasion, as well as to adjust the taxation procedure for operations with non-residents under insurance contracts for those leaving Ukraine to avoid tax proceedings into non-residents' payments under insurance contracts.

As for the personal income tax, the bill proposes setting a procedure for determining the size of redemption under an insurance contract when calculating financial obligations in foreign currency, the explanatory note said. It also proposes taxing the amount of an insurance payout to beneficiaries and heirs using the rules and rates valid for the inheritance tax. At the same time, a beneficiary shall be treated on a par with an heir.

The bill requires approval from the Economy Ministry, the National Bank of Ukraine, the Digital Transformation Ministry, the State Tax Service and the State Regulatory Service, as well as a legal evaluation by the Justice Ministry.