Today the procedure for dividend income tax regulates pp. 57.11 of the Tax Code of Ukraine of 02.12.2010, № 2755-VІ (hereinafter - TCU). Let’stake a closer look at its norms.
In case of decision for dividend payment, the issuer of profit participation rights accrues and pays the advanced payment of income tax to the budget (except cases provided for by paragraphs 57.11.3 of the TCU (pp. 57.11.2 of TCU). The calculation of advance payment is made on the basic rate of income tax - it is 18% today. Advance payment should be paid to the budget to / or simultaneously with the payment of dividends.
Last year the entire amount of the dividends was the subject to advance payment of income tax. Since 01.01.2015, the tax base is calculated from the amount of the excess of dividends, which are to be paid, over the value of the subject of taxation (income amount) for the corresponding tax (reporting) year, based on which the dividends are paid, and which monetary obligation is redeemed (pp. 57.11.2 of the TCU).
This rule is valid only if the monetary obligation of income tax has been already paid to the budget, otherwise the advance payment is calculated from the total amount of dividends, which are to be paid (pp. 57.11.2 of the TCU).
It is specified in the letter of the SFSU dated 29.01.2015, № 2707/7/99-99-19-02-01-17 “On reporting on corporate income tax, the payment of advance payments of this tax in 2015 and other topical issues”: when paying dividends from 01.01.2015, even based on performance in the previous years, the advance payment of income tax should be calculated from the amount of the excess of dividends, which are to be paid over the value of the subject of taxation for the corresponding tax (reporting) year. Provided that the monetary obligation for this year has been redeemed. If there is an unredeemed monetary obligation, the “dividend” advanced payment is calculated with the entire amount of dividends, which are to be paid.
In addition, it is explained in the above-mentioned letter what to do if the dividends are paid together for several previous years (eg. for 2014, 2013 and 2012). In this case, “the retained income, which accounts for each of these years, according to financial reporting should be compared with the subject to the income tax for the corresponding year”. So, it may be concluded that the accrued dividends for the corresponding year should be compared with the subject of taxation for this year. If the result of this comparison is the greater dividends amount, only the excess is the subject to taxation of the advance payment.
If the dividends are paid for the partial calendar year, to calculate the amount, the subject of taxation proportional to the number of months for which the dividends are paid, should be taken to calculate the amount.
The advance payments of income tax are not required to be paid in the case of dividends payment in favor of the individuals.
Also, the benefit for the collective investment scheme and the income tax payers is reserved, for those institutions and payers which income is exempt from the taxation in accordance with rules of the TCU, in the amount of income exempted from tax in the period for which the dividends are paid. The “dividend” advance installments should not be paid in case of dividend payments in favor of the owners profit participation rights of the parent company (paid in the income amounts of such company, received as dividends from other people) (pp. 57.11.3 of the TCU).
The advance payments of income tax, paid when the dividend payments, would not reduce the amount of monthly advance payments of the income tax. Such “dividend” advance payments could be only classified to the decrease of income tax, calculated in the annual income return.
The dividend payments in favor of individuals on profit participation rights, which have the status of privileged or other status, which provides for the payment of fixed dividend amount or amount, which is greater than the sum of payments, calculated on any other share (profit participation right), issued by that taxpayer, is equivalent to the payment of wages (pp. 57.11.4 of the TCU).
