We provide comprehensive legal services and accounting support procedures for payment of dividends and the distribution of profits made by Ukrainian corporations.
Dividends payout — is a stage of distribution of profits among the owners/shareholders (or members by Ukrainian law). The right of shareholders to participate in the distribution of company profits is determined by article 116 of the Civil Code of Ukraine and article 88 of the Commercial Code of Ukraine. Detailed of dividend payment shall be regulated by company’s articles of association or memorandum of association.
How frequently dividends can be paid? By Ukrainian law dividend payment is possible after the declaration of company’s income or profit to the fiscal/tax authorities and the approval of the income statement. Thus, regardless of the tax system business partnerships can make dividend payments no more than 4 times a year, or one time a quarter.
The procedure of dividend payment in Ukraine.
Dividend payment procedure can be started by company`s supreme body (general meeting of shareholders, owners) and only after it’s decision. Payments are distributed in proportion to the shares. Payment can be carried out both in cash and in the property. Only shareholders that have done their contribution to company`s capital do have the right for dividends.
Taxation of dividends. Ukraine dividend tax.
Dividend tax is a passive income tax. Upon payment of dividends for individuals, the Company acts as a tax agent, holds and transfers taxes on dividends to the fiscal authorities (p. 170.5.2. Art. 170 of the Tax Code of Ukraine). Dividends are not taxable (p. 196.1.6 Art. 196 of the Tax Code of Ukraine) by value added tax (VAT).
Tax rates for individuals depends on company’s tax system. There are two tax rates:
5% of amount – if company is an income tax payer (par. 5.2. art. 167 of the Tax Code of Ukraine);
9% of amount – if company is single (or fixed) tax payers (par. 5.4. art. 167 of the Tax Code of Ukraine).