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Concerned Countries Come Together

Kitty Miv, Editor
09 March, 2022

In this week's column, we're still looking at mitigation measures, albeit of a different kind, as various countries have attempted to introduce tax policy supports in relation to the unfolding crisis in Ukraine.

We begin with Estonia, where the Ministry of Finance has announced it will allow unlimited tax-free donations to Ukraine.

"Already today, a significant amount of donations can be made to charities tax-free. We now want to temporarily exclude donations made in support of Ukraine and Ukrainians from the limit," explained Minister of Finance Keit Pentus-Rosimannus.

Donations and gifts to charities and public benefit organizations are largely tax-free. Under current law, taxpayers can donate up to three percent of their salary or ten percent of profit tax free.

Poland has also announced that it will be introducing various tax relief measures to support the humanitarian aid response to the Ukraine crisis.

Poland is to exempt refugees arriving in Poland from Ukraine with an exemption from inheritance and donation tax on aid they receive. Without the exemption, they would otherwise have been liable for tax on donations received worth more than PLN4,902. Such individuals will also be exempt from personal income tax on assistance received, including funds, accommodation, or food. The exemption covers both assistance from natural persons as well as companies and non-governmental organizations during the period February 24 to June 30, 2022.

Further, those making donations to support the humanitarian efforts will be exempt from personal and corporate income tax on those donations, and they will be able to deduct the costs incurred in providing such goods and services, in the period February 24 to December 31, 2022.

Finally, a VAT zero rate is introduced for supplies of goods and services to organizations involved in providing assistance to refugees, with effect from February 24.

And last but not least, in Ukraine itself, at a special plenary session held on March 3, 2022, lawmakers approved a law to suspend tax enforcement proceedings and to exempt donations from tax.

The Ukrainian parliament, the Rada, passed a total of 14 laws and one resolution, in response to the introduction of martial law in Ukraine from February 24, 2022.

The Law on Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine Concerning the Peculiarities of Taxation and Reporting during Martial Law (Bill no. 7125) provides that existing tax audits will be suspended and no new tax audits will commence during the period of martial law.

The law further provides that any required tax filings need not be filed until 90 days after martial law is lifted.

The law additionally provides that any goods or services, including excisable goods, donated for the benefit of the armed forces and territorial defense units are considered to be outside the scope of taxation.

Until next week...


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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