Published 16 August 2016. Some rules have changed since; ask us for the current position.
In its letter No. 04-27/10-465 of 10 May 2016, the Verkhovna Rada Committee on Tax and Customs Policy set out its own position on reducing the pre-tax financial result by the amount of dividend income (subparagraph 140.4.1 of the Tax Code of Ukraine, Податковий кодекс України).
In the committee's view, a corporate income tax payer that receives dividends may apply this adjustment and reduce its pre-tax financial result by the dividend income accrued from any corporate income tax payer.
The authors of the letter also insist that the recipient's right to this reduction should not depend on whether the company paying the dividends actually paid the advance corporate income tax due on the payment.
This is where the committee and the Ministry of Finance differ sharply. The Ministry takes the view that the reduction applies only where the corporate income tax payer received dividends from:
- corporate income tax payers for which subparagraphs 57.1¹.2 and 57.1¹.3 of the Tax Code set special rules for paying advance tax on dividends, except payers whose profits are tax-exempt and collective investment institutions;
- single tax payers who pay advance corporate income tax.
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