How is the taxation of cash currency trading activities structured?

The State Tax Service has explained how taxation is applied to activities involving the trading of currency values in cash form.

According to paragraph 137.11 of Article 137 of the Tax Code of Ukraine dated December 2, 2010, No. 2755-VI, taxpayers engaged in the trading of currency values in cash form are required to pay advance payments on corporate income tax for each foreign exchange point registered in the Register of Foreign Exchange Points as of the first day of the current month.

The advance payments and corporate income tax due to be paid to the taxpayer's budget, for those engaged in the trading of currency values in cash form, are determined in accordance with paragraph 141.13 of Article 141 of the Tax Code of Ukraine (TCU).

Taxpayers involved in the trading of currency values in cash form must pay, on a monthly basis, no later than the last operational (banking) day of the current month, advance income tax payments for each foreign exchange point registered as of the first day of the current month, in the amount specified in subparagraph 141.13.2 of paragraph 141.13 of Article 141 of the TCU.

For taxation purposes, a foreign exchange point is understood to be a structural/separate subdivision established by the taxpayer, which, according to the Law of Ukraine dated June 21, 2018, No. 2473-VIII "On Currency and Currency Operations," as amended, is authorized to trade currency values in cash form for the purpose of conducting foreign currency transactions in cash form.

The Law dated October 10, 2024, No. 4015-IX "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine to Ensure the Balance of Budget Revenues During Martial Law" introduced changes, particularly to subparagraph 141.13.2 of paragraph 141.13 of Article 141 of the TCU, which stipulates that as of January 1, 2025, advance payments on corporate income tax will be paid in the following amounts:

a) equivalent to six hundred euros based on the official exchange rate of the hryvnia set by the National Bank of Ukraine on the first day of the first month of the calendar quarter in which the advance payment is made, for each foreign exchange point located in a settlement (excluding the city of Kyiv) with a population exceeding 50,000, according to statistical data on the population of Ukraine posted on the website of the specially authorized central executive authority in the field of statistics as of January 1 of the year preceding the current year;

b) equivalent to seven hundred euros based on the official exchange rate of the hryvnia set by the National Bank of Ukraine on the first day of the first month of the calendar quarter in which the advance payment is made, for each foreign exchange point located in the city of Kyiv;

c) equivalent to two hundred euros based on the official exchange rate of the hryvnia set by the National Bank of Ukraine on the first day of the first month of the calendar quarter in which the advance payment is made, for each foreign exchange point located in other settlements not specified in subparagraphs "a" and "b" of subparagraph 141.13.2 of paragraph 141.13 of Article 141 of the TCU, or outside of settlements.

According to subparagraph 141.13.3 of paragraph 141.3 of Article 141 of the TCU, advance payments on corporate income tax made in accordance with paragraph 141.3 of Article 141 of the TCU are an integral part of the corporate income tax.

The amount of advance payments on corporate income tax made during the reporting (tax) period reduces the tax liabilities for corporate income tax calculated based on the results of that reporting (tax) period at the basic (standard) rate defined in Article 136 of the TCU, not exceeding the amount of the accrued tax liability for that tax (reporting) period.

If the amount of the advance payment made during the reporting (tax) year exceeds the amount of the accrued tax liability for that tax (reporting) year, the excess amount is not carried forward to reduce tax liabilities in subsequent tax (reporting) periods.

The amount of advance payments on corporate income tax is not subject to refund to the taxpayer as overpaid and/or erroneously paid tax liabilities, cannot be credited against other taxes and fees (mandatory payments), and is not subject to the provisions of Article 43 of the TCU.

The monetary obligation in the form of an advance payment on corporate income tax is considered agreed upon at the moment such obligation arises, determined by the calendar date established by subparagraph 141.13.1 of paragraph 141.13 of Article 141 of the TCU for the deadline for paying the advance payment on corporate income tax to the respective budget.

If the taxpayer fails to pay the agreed-upon amount of advance payment on corporate income tax within the timeframe specified by subparagraph 141.13.1 of paragraph 141.13 of Article 141 of the TCU, such taxpayer is subject to liability in the form of a fine as defined in Article 124 of the TCU.

The National Bank of Ukraine shall provide, by the 10th day (inclusive) of the current month, to the central executive authority implementing state tax policy, information on the foreign exchange points registered in the Register as of the first day of the current month, indicating their location and the business entity on behalf of which the respective foreign exchange point is authorized to trade currency values in cash form. This information is provided in the manner determined by the National Bank of Ukraine in coordination with the central executive authority implementing state tax policy (subparagraph 141.13.5 of paragraph 141.13 of Article 141 of the TCU).