The general meeting of the participants adopted a decision on dividend payment for three years (2017–2019). Can I pay dividends in three years? What are the tax consequences for the issuer (the third group single tax payer) and the legal entity (also the third group single tax payer) and resident individuals?
Dividends can be paid from both the net profit of the current reporting period and the net profit of the previous periods (years), which remained undistributed. There are no restrictions. Therefore, the general meeting of participants may decide to pay dividends in a few years. In this case, the protocol must record the distribution of profits for each year separately.
As for taxation, it should be made according to the rules in force at the time of dividend payment. It should be reminded that from January 1, 2018 for the third and fourth groups of single tax payers the obligation to accrue and pay the advance payment in case of dividend payment has been abolished. That is, the payers of the single tax of the third and fourth groups do not accrue and pay to the budget advance contributions from income tax in the case of payment of dividends from January 1, 2018, including on the results of financial and economic activities for the periods up to January 1, 2018 Only the payers of income tax are obliged to do so.
In view of the abovementioned, no tax consequences arise for the corporate tax issuer – single tax payer.
At the same time, he is entrusted with the functions of a tax agent to withhold and pay into the budget the personal income tax (hereinafter – PIT) and the military levy on the amount of dividends belonging to natural persons. It is important to bear in mind that dividends are subject to personal income tax and military levies at the time of their accrual, not payment (subitem 170.5.4 of the Tax Code of Ukraine (hereinafter – the Tax Code). In other words, the dividends accrued in 2020 for 2017–2019 should be subject to the applicable rates in 2020, namely: 9% PIT, 1.5% military duty of the dividend.
The payment of the PIT to the budget is made simultaneously with the payment of dividends. As a result, participants-physical persons will receive not the entire amount of accrued dividends, but excluding PIT and military fees.
A legal entity which a single tax payer will take care of taxation of its income in the form of dividends and paying a single tax to the budget. The single tax payer includes the entire amount of dividends received in taxable income for the respective quarter and subjects it to a single tax at the rate of 3 or 5% (subitems 292.1, 293.3 of the Tax Code).
