Tax regulation in the field of construction activities
The construction industry in Ukraine is one of the key sectors of the economy that requires clear tax regulation. The tax policy in this area is aimed at striking a balance between filling the state budget and creating favorable conditions for the development of the construction business. Let’s consider the main aspects of tax regulation that affect construction companies.
The main taxes in construction
- Corporate income tax. Construction companies operating under the general taxation system pay corporate income tax. The rate is 18% (according to Article 136 of the Tax Code of Ukraine). The specifics of determining the tax base take into account the specifics of income and expenses in construction, such as the costs of purchasing materials, labor and equipment rental.
- VAT (value added tax). Construction is subject to VAT at a rate of 20% (Article 193 of the Tax Code). Transactions for the supply of residential properties upon completion of construction are exempt from VAT (clause 197.1.14 of the Tax Code). This rule is important for real estate developers and buyers.
- Single tax for small businesses. Small construction companies can operate under the simplified taxation system. Depending on the group chosen, the single tax rates vary, for example, for group 3 the rate is 5% of income (excluding VAT) or 3% (including VAT).
- Land and real estate taxes. Businesses pay land tax on land used for construction and real estate tax on completed projects (in accordance with Article 266 of the TCU).
Specifics of regulation
In the construction sector, compliance with construction norms and standards is important, as they directly affect the cost structure and, consequently, the tax base.
For example, expenses that do not comply with the requirements of the State Building Code may be recognized by the tax authorities as unreasonable. Regulations governing the payment of taxes on special types of work, such as the extraction of natural resources for construction purposes (sand, gravel), should also be taken into account.
Legislative initiatives
The Ukrainian government is constantly amending tax legislation to stimulate the construction industry. For example, tax incentives are being introduced for energy efficiency projects and affordable housing construction. For up-to-date information, it is important to follow the changes in the Tax Code of Ukraine.
Benefits of working with professionals
To optimize the tax burden and comply with legal requirements, construction companies are advised to contact experienced lawyers. GlobalBud Ukraine offers qualified support in the field of tax regulation of construction. Our lawyers and engineers will help you
- prepare documents for tax reporting;
- optimize costs in accordance with the current legislation;
- avoid penalties through proper record keeping.
Contact GlobalBud Ukraine for high-quality legal and accounting services, as well as consultations in the field of construction. We will provide reliable support for your business!
