The State Fiscal Service of Ukraine through the Office of large taxpayers warned against the mistakes made by the taxpayers when preparing the reports on controlled transactions.
The taxmen drew the attention to the most common clerical mistakes made by the taxpayers when registering the controlled transactions in “Information on person that takes part in the controlled transactions”:
1. Line “Full name of entity” should be same as the one mentioned in the contract (treaty), customs declaration, tax invoices, tax invoice annex to line 23 pf the income tax declaration.
2. Line “Country’s code” where the nonresident is registered should comply with the classification of countries approved by the State Statistics Service of Ukraine “On approval of the Statistical Classification of the Countries” (as amended) No. 426 of December 30, 2013.
3. In case the line “Code of entity’s attachment” (except for codes 512–515 and 517–518) the annex “Information on entity’s attachment” should be filled.
4. Column 3 “Code of the transaction’s type” must reflect the code of transaction’s type.
Annex 4 to the Procedure that establishes the exhaustive list of transaction types codes, namely: good – code 201, intangible assets – code 202, securities – code 203, service – code 204, banking service – code 205, finance service (except for banking service) – code 206, work – code 207, financing by a non-resident of the permanent representative office current activity in Ukraine = code 208.
5. In case column 3 “Code of the transaction’s type” contains code 204 – service, column 6 “Code of the service according to the Classification of foreign economic service” must be filled in taking into consideration the type of activity (IT-service, credits, maintenance, transportation, construction, etc.).
6. In case the value of column 3 “Code of the transaction’s type” contains code 201 – good, column 5 is filled in accordance with the Ukrainian Commodity Coding System (УКТ ЗЕД).
7. The common mistake is the reflection in column 9 “Code of the transaction’s party” of itself, not the non-resident.
8. The interest rate for financial transactions and intangible assets (credits, royalty) must be reflected in column 16 “Price (rate) per unit (without VAT) (in contract/agreement currency)”.
9. Footing of column 20 “Total cost of transactions (excluding indirect taxes) (UAH)” of the annex to the report on controlled transactions must comply with value of column 4 “Total amount of controlled transactions with counteragent” of the report on controlled operations.
10. Correct data in column 25 “Party examined”.
When choosing among such methods of transfer pricing as: resale price method (302), cost-plus method (303), transactional net margin method (304), if the payer choses oneself as the party examines then “1” is indicated, and when the non-resident is examined – “0”. In addition, profitability ration indicated in column 23 “Digital value of profitability ration of controlled operations” is the profitability ration of the examined party.
Such clerical mistakes made by the payer results in failing of logical control by submitted Report on controlled transactions that in its turn may draw the excessive attention by the tax office and untimely registration of the report.
The National Bank of Ukraine in its letter “On setting a cashier limit for an enterprise” No. 50-0006/42074 of August 14, 2019 informed that the enterprises located in areas where is no bank must bring in cash to put in bank account not less than per five working days (subitem 3 i. 45 Chapter V of the Regulation on the conduct of cash transactions in the national currency in Ukraine approve by NBU order No. 148 of December 29, 2017)
These enterprises determine the cash limit five times as much as average daily cash flow or withdrawal.
In the same time, cash is not considered above limit on the day of its receipt if;
- it was submitted in the amount that exceeded the established limit to the servicing banks no later than the next working day;
or
- it was withdrawn by the enterprise according to the legislation (without prior submission to the bank and simultaneous withdrawal) the next day for the enterprise’s need.
For determining the cashier limit the enterprise must observe the NBU guidelines, as the NBU establishes the procedure for conduct of cash transactions by enterprises and organization (art. 33 of Law of Ukraine “On National Bank of Ukraine” No. 679-ХІV of May 20, 1999.)
The National Bank of Ukraine has informed on this official site that starting September 25, 2019 the banks have the right to round off the amounts of cash transactions. This decision was made considering the proposals by the banking community based on the requisition of coins of small denomination.
In particular, Ukrainian banks will be able to round off the amounts of cash transactions for each cash document under the grounds provided by the Ukrainian legislation, and in accordance with rules laid down in the item 4 of Regulation of the Board of the National Bank of Ukraine “On optimization of circulation of coins of small denomination” No. 25 of March 15, 2018.
The results of round off are other bank’s operational income/expenses.
Respective rules are contained on Regulation of the Board of the National Bank of Ukraine “On amendments to Regulation of the Board of the NBU No. 82 of June 20, 2019” No. 117 of September 24, 2019 that is effective of September 25, 2019.
Let us remind, that starting October 1, 2019 the small coins of 1, 2, 5 denomination won’t be used. So, all cash transactions must be conducted by the banks in amounts that are multiple of the smallest denominations in circulation which is 10 kopecks.
The round off of total amounts of cash payments for goods (works, services) in the cheque are made following such rules:
- the amount that end with 1-4 kopecks is rounded down to the nearest amount that end with 0;
The cashless transfers do not need round off.
The Fund of the Social Insurance of Ukraine (hereinafter – Fund) has informed on its official site that the employers cannot make the decision on welfare payments for the employees at the expense of the Fund. This information is provided in p.3 art. 30 pf Law of Ukraine “On mandatory state social insurance” No. 1105-XIV of September 23, 1999 (hereinafter – Law No. 1105).
Law No. 1105 clearly specifies that the decision on aid payment and social insurance is made by the social security committee (commissioner) of the enterprise, entity or organization.
Such committee (commissioner) performs the functions under the Regulation on temporary disability insurance committee (commissioner), approved by Resolution of the Board of the Fund of the Social Insurance of Ukraine No. 13 of July 19, 2018 (hereinafter – Regulation No. 13).
The rights, obligations and authority of the committee (commisioner) on social insurance are laid down in items 2.1, 2.2 and subitem 3.1.1 of Regulation No. 13.
Thus, among other things, the commission has the right to consider the grounds and the correctness of the issuing and filling the temporary disability leave, which is the basis for providing financial support; check on compliance by the insured persons with the treatment regime prescribed by a doctor for the period of temporary disability. In case of violation of the regime established by a doctor, the insured person loses the right to receive financial support at the expense of the Fund on the temporary disability leave from the day of such violation.
The commission (commissioner) has the right to make decisions about the provision or refusal to provide the financial support (temporary disability assistance, including care for a sick child, pregnancy and childbirth, burial allowance) and provides it to the employer for payments, accounts settling and more.
The most frequent violations in the preparation of the temporary disability leaves include the fact that the information “place of work: name of company, institution, organization“ does not indicate the address of the enterprise (institution). Let us note, that in the letterhead of the temporary disability leaves the entry regarding the place of work is limited only to “place of work: name of company, institution, organization” and does not contain any columns to fill in the address of the company. However, in accordance with paragraph 3.1 of Instruction No. 532, it is necessary to specify the name and location of the enterprise, institution, organization (in full).
Temporary disability leave issued in violation of Instruction No. 532, must be returned to the employee for registration of temporary disability leave in accordance with the current legislation.
