The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Audit of Financial Reporting and Auditing Activities” (hereinafter − the Law). It brings the norms of national legislation in the field of auditing in line with EU legislation, in particular with the provisions of Directive 2006/43/ЄС and Regulation 537/2014.
The Law also clarifies the mechanism for financing the public oversight body (hereinafter − POB), the Audit Chamber of Ukraine (transition to a mixed financing model at the expense of a fixed contribution (3 minimum wages for financing of POB and 0.3 minimum wages − ACU) and the variable component (no more than 2 % of the remuneration amount under the contract from the obligatory audit of the relevant entity).
In addition, the Law defines the requirements for auditors, who have the right to conduct a statutory audit of financial reporting, including a mandatory audit of state unitary enterprises and economic partnerships, in the authorized capital of which more than 50% of the shares belong to the state, political parties (application of the rules and regulations, determined exclusively by this Law).
The law also:
- delayed imposition of penalties and reduced the size of the responsibility of auditors (from 200 minimum wages to 200 non-taxable minimum incomes), as well as penalties for liability for non-publication of financial reporting together with an auditor’s report;
- specified the mechanism of insurance of professional liability of auditors, namely: instead of compulsory insurance, the introduction of civil liability insurance, as required by Directive 2006/43/ЄС;
- specified the list of non-audit services (clarified limits on the simultaneous provision of services for statutory audit and non-audit services);
- implemented requirements of European legislation regarding the certification of auditors (clarified the mechanism for crediting theoretical knowledge to a person who is certified, the requirements for certification are specified depending on the experience of the applicant, etc.).
The law will come into force on 01.01.18 and will be put into effect on 01.10.18, except for sub-para. 1 of para. 9 of sec. X “Final and Transitional Provisions” of this Law on amendments to the Code of Ukraine on Administrative Offenses, which should come into force 12 months after the effective date of this Law.
The State Fiscal Service of Ukraine in its Individual Tax Advice “On Tax Accounting of an Advertising Campaign” of 08.12.17, No. 2908/6/99-99-15-02-02-15/ІПК reported on the procedure for calculating value added tax (hereinafter − VAT) in the case of an advertising campaign such as “unit of goods as a gift”.
Taxpayers interpret the sale of six packages of water at a price of five as two separate transactions:
- supply of five packages of water on a payment basis;
- free of charge supply of one package of water.
Consequently, representatives of the fiscal department recommend to pay VAT from the promotional gift based on the purchase price (for the purchased product) or the usual price (for own products) under para.188.1 of TCU. Of course, in addition, the supplier will be forced to impose VAT and sale of five units of water
impose VAT and sale of five packages of water.
The State Fiscal Service of Ukraine in its Individual Tax Advice “On the calculation of “compensating” VAT obligations, if during the purchase of goods/services the VAT amounts were not included in the tax credit” of 13.09.17, No. 20444/6/99-99-15-03-02-15 explained to taxpayers that compensation for tax obligations on purchases, used in preferential or non-economic activity transactions, should always be charged. The fact that incoming VAT on goods/services purchased has not been included in a tax credit does not affect the appearance of contingent liabilities.
Exception − purchases made before 01.07.15, when there were other rules for a tax credit reflection.
It should be recalled that that para. 198.5 of TCU require accruing a conditional VAT on goods/services:
- purchased for use in non-taxable transactions − on the date of their purchase;
- purchased for use in taxable transactions that begin to be used in non-taxable transactions − on the date of commencement of their actual use, as defined in the primary documents drawn up in accordance with the Law of Ukraine “On Accounting and Financial Reporting in Ukraine”.
If a taxpayer has a tax invoice problem for confirming a tax credit (for example, it is blocked or it is with errors), then the conditional VAT must be accrued after receipt of a properly documented/registered document. That is, in the reporting period in which the buyer had grounds to include VAT amounts in the tax credit. Such recommendations are given by controllers in the category 101.06 ZIR.
The State Fiscal Service of Ukraine in its Individual Tax Advice “On the emergence of tax obligations on excise tax on transactions for writing off the amount of fuel lost during transportation” of 15.12.17, No. 3022/6/99-99-15-03-03-15/ІПК responded to questions about the emergence of tax liability for excise duties on transactions for cancelling the amount of fuel lost during transportation.
The main argument of the controllers: the total amount of fuel sold and written off by the business entity does not exceed the amount of the received fuel from other tax payers for which the excise tax has been paid. Consequently, such a taxpayer of excise tax has no taxable object in the reporting period, defined by para. 213.1.12 of TCU.
At the same time, despite the absence of an obligation to pay a fuel excise tax, the taxpayer must be accounted for excise taxes on all types of received and sold (spent) fuel. At the same time, information on the total amount of fuel lost both within and beyond the established rates of losses is indicated in columns 9 and 10 of Annex 11 to the declaration.
The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Procedure for Taxation of VAT Transactions of Supply of Non-Residents to Residents of Advertising Services” of 08.12.17, No. 2898/К/99-99-15-03-02-14/ІПК reminded that the recipient of non-resident services are not always obliged to pay VAT. In particular, when it is about receiving advertising services, everything depends on the place of delivery. Therefore, if a resident receives advertising services abroad, there is no the subject to VAT. And if a non-resident has provided advertising services in the territory of our country, the recipient must accrue and pay VAT to the budget.
Such tax liabilities are reflected by VAT payers in line 6 of the declaration. And if the duty to pay VAT fell on the shoulder of a non-payer of VAT, he/she needs to submit Calculation of tax
obligations accrued by the recipient of services not registered as a VAT payer, supplied by non-residents, including their permanent representations, not registered tax payers, at customs territory of Ukraine. Since such a document belongs to the tax reporting, it is necessary to submit it within 20 calendar days following the month of receipt of non-resident services.
The State Fiscal Service of Ukraine in its Individual Tax Advice “On the adjustment of the financial result before tax in the event of the liquidation of a part of a separate object of fixed assets” of 11.12.17, No. 2926/6/99-99-15-02-02-15/ІПК reported: in the case of liquidation of a part of a separate object of fixed assets (hereinafter − FA) for the company, correcting the financial result on the difference under sec. III of TCU, it is necessary to apply the difference under para. 138.1 and 138.2 of TCU.
The Supreme Economic Court of Ukraine by its resolution of 04.12.17 in the case No. 11/173-06 named one of the methods of legalizing of unauthorized constructions the recognition by the court of the right of ownership to self-constructed real estate. For this, the owner of the land plot provides it in the prescribed manner to a person under the already built real estate.
However, such a way of legitimizing self-construction does not always work. For example, judges of the Supreme Economic Court of Ukraine in its decision of 04.12.17 in the case No. 11/173-06 refused to recognize the ownership of self-construction, despite the lack of objections of the owner of the plot and building construction standards compliance.
This was substantiated by the fact that the developer did not comply with the legal procedure for the execution of construction works and the commissioning of the facility. That is, he/she did not provide the court with any evidence of the existence of his/her permit documents for the right to perform construction works, did not comply with the established procedure for resolving land development issues.
The Supreme Economic Court of Ukraine by its resolution of 04.12.17 in the case No. 908/320/17 recognized: the lack of budgetary funds is not the reason for the dismissal of labor departments and social protection from fulfilling obligations to compensate for the average earnings of workers called for military service. It is about compensation for 2014-2015, since from January 1, 2016, the average earnings of workers mobilized should be paid by companies at their own expense (Art. 119 of the Labor Code of Ukraine).
However, some companies are still trying to get compensation for 2014-2015. Thus, the Economic Court of Zaporizhzhia region by a decision of 13.04.17 in the case No. 908/320/17 satisfied the company’s claim to recover from the city labor and social protection of compensation of average earnings to mobilized workers, which was paid back in October-December 2015. The court determined that the company fulfilled its obligations to save the place of work and payment of average earnings to mobilized workers and informed the labor administration of the amount of such payments by submitting reports in the prescribed form.
Consequently, the Supreme Economic Court of Ukraine agreed with the findings of the local court and left its decision on the satisfaction of the claim unchanged.
