Ukraine/ 5.1 General legislation  

5.1.5 Tax laws

The Law on Charity and Charitable Foundations, which came into force in 1997, grants tax exemptions for funds voluntarily transferred to the state budget, local budgets or to non-profit organisations up to a maximum of 4% of the taxable income. Under the conditions of a shadow economy (whose share of the Ukrainian economy is estimated at more than 60% by independent experts) this measure, which is not supported by other political or social measures, has proven to be inefficient. A new Law on Charity and Sponsorship is still under development. In 2006, the Ministry of Culture submitted the draft Law on Arts Patronage for public discussion. At the moment, there is no separate law on non-profitable organisations, especially in the cultural sphere. The Law on Culture (2011) establishes that "with the aim to attract additional financial resources for development, the government shall create favourable taxation conditions for physical and legal entities allocating their money for the development of culture".

There is no special VAT rate for cultural products or cultural services. According to the Law on State Support to Book Publishing (2003), Ukrainian book producers are exempt from VAT since 2005. In 2009, the Law was extended to 2015. At the same time, the law exempted imported book production from paying VAT as well. The cheapest books (price per 1 kilo) are imported from Poland (USD 2.9), China (USD 3.3), Russia (USD 4.3); the most expensive – from France (USD 50.9), Finland (USD 41.2). The following countries have the highest specific weight in the book import trade in Ukraine: Russia (73%), China (10.7%), Poland (6.56%), and Byelorussia (1.8%). Therefore, in spite of tax preferences, Ukrainian books have not become more accessible to readers or libraries in Ukraine.

On 18 February 2010, the Parliament approved the amendments to the Law on Cinematography, by which Ukrainian film production will be exempt from VAT for the next 5 years.

The Law on Culture envisages (Article 13) the support of national producers in culture by creating favourable taxation conditions and providing government financial assistance for producing and distributing books, films and other kinds of cultural products in Ukrainian, inside and out of Ukraine. According to the new Tax Code (2010), book producers and film makers are exempt from VAT to 2015, and film studios (producers of national films) are exempt from land tax.

There are no specific tax breaks or other such benefits for artists.

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