The draft bill 5600 changes the rules of taxation when sailing agricultural land. If earlier, according to the Tax Code of Ukraine, taxation was provided on the sale of shares at a rate of 5%, then with the entry into force of the draft bill 5600, the first sale of shares will be taxed at a rate of 0%. At the second sale of land, the tax rate will be 5%, the third one - 18%.

 "This is a general rule that will be applied to every real estate purchase of which is taxed, including land plots. What was the problem before? In the past, these benefits applied to land plots that met the requirements of land for free privatization, which is less than 2 hectares. However, the average share size is 4 hectares. Accordingly, there were problems. All shares, regardless of their size, also had to be taxed. But now all these controversial issues are behind - the amendments will enter into force after bringing into effect of the law," the UAC Deputy Chairman Mykhailo Sokolov explained.

At the same time, when selling a third plot of land, it will be possible to deduct the costs incurred for its acquisition from the tax base.

"The tax rate of 18% will be calculated from the difference between the purchase price and the sale price. But there are some specific cases when, for example, a land plot with an unfinished construction object is bought, or property rights are bought. In this case, it does not mean the cost of land, but all the costs incurred in the land plot acquisition. Therefore, when the owner sells it as a single property complex, he will pay taxes from the difference between the sale and purchase price of a land plot and its real estate. At the same time, if the sale price is less than the purchase one, you will not have to pay anything,” the UAC Deputy Chairman said.

The draft bill 5600 is currently awaiting signature by the President and will enter into force in 2022.

We will remind, in the end of November the parliament approved in the second reading the draft bill 5600 which introduces a number of changes connected with the real estate taxation. In particular, the concept of minimal tax liability is being introduced - a mechanism that ensures the payment of those taxes that have already been established and must be paid.

Tuesday, 7 December 2021


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