The State Tax Service of Ukraine has reminded that on May 23, 2020 Law of Ukraine “On Amendments to the Tax Code of Ukraine to Improve Tax Administration, Eliminate Technical and Logical Inconsistencies in Tax Legislation” No. 466-ІХ of January 16, 2020 (hereinafter – Law No. 466), which amended, in particular, items 46.2 and 49.4 of the Tax Code of Ukraine (hereinafter – the Tax Code).
These changes stipulate that income taxpayers who, in accordance with Law of Ukraine “On Accounting and Financial Reporting in Ukraine” No. 996-XIV of July 16., 1999 (hereinafter – Law No. 966) are required to publish annual financial statements and annual consolidated financial statements together with the auditor's report must be submitted to the controlling body:
- together with the tax return for the relevant annual tax (reporting) period, the statement of financial position (balance sheet) and profit and loss statement and other comprehensive income (statement of financial performance), prepared before the audit of the financial statements by the auditor;
- annual financial statements together with the auditor's report, which is subject to publication, no later than June 10 of the year following the reporting year. In case of non-submission (late submission) of the annual financial statements together with the auditor's report, which is subject to publication, the liability provided for in items 120.1 of the Tax Code is applied for the submission of tax returns (calculations).
Given that these changes to item 46.2 of the Tax Code came into force on May 23, 2020 and the deadline for filing a tax return on corporate income tax (hereinafter – the Return) and financial statements for the reporting period (2019) has passed, for the first time the norm of this clause on the mandatory submission of annual financial statements together with the audit report no later than June 10 of the year following the reporting year, applies in 2021 for the reporting year 2020.
That is, income taxpayers who, in accordance with Law No. 996, are required to publish annual financial statements and annual consolidated financial statements together with the auditor's report, submit to the controlling authority:
- together with the tax return for the tax (reporting) period (2020), the statement of financial position (balance sheet) and profit and loss statement and other comprehensive income (statement of financial performance), prepared before the audit of the financial statements by the auditor;
- annual financial statements for 2020 together with the auditor's report no later than June 10, 2021.
If the indicators of the annual financial statements published together with the audit report have changed compared to the indicators of the statement of financial position (balance sheet) and income statement and other comprehensive income (statement of financial performance), which were submitted together with the Return for 2020, and such changes have affected the performance of such annual Return, income taxpayers who are required by Law No. 996 to publish annual financial statements and annual consolidated financial statements together with the auditor's report, submit a clarifying Return to the annual Return for 2020 within no later than June 10, 2021.
In addition, item 49.4 of the Tax Code in accordance with the amendments made by Law No. 466 stipulates that the financial statements, statement of financial position (balance sheet) and statement of profit and loss and other comprehensive income (statement of financial performance) submitted in accordance with first and second paragraphs of item 46.2 of the Tax Code, are submitted in electronic form in compliance with laws of Ukraine “On electronic documents and electronic document management” no. 851-IV of May 22, 2003 and “On electronic trust services” No. 2155- VIII of October 5, 2017 to the controlling bodies by the payers of the corporate income tax and non-profit enterprises, institutions, organizations that file tax returns in electronic form.
The State Tax Service of Ukraine through the Office of Large Taxpayers has announced that in order to form a uniform practice of application of Law of Ukraine “On State Registration of Legal Entities, Individuals - Entrepreneurs and Public Organizations” (hereinafter – the Law) the Ministry of Justice of Ukraine by letter No. 245/8.4.4/32-21dated 13.01.2021 has clarified the issue of annual confirmation of information on the ultimate beneficial owner of a legal entity.
The letter states that since in 2020 the legal act, which was to approve the form and content of the ownership structure, was not adopted, the submission of information about the ultimate beneficial owner of the legal entity for the first time under the Law will be expected in 2021 after such legal act is approved. As this is an annual confirmation, taking into account this principle, the next confirmation is planned in 2022.
Thus, the Law established, within what term there should be a confirmation, - 14 calendar days from the date of the state registration. Therefore, each legal entity in 2022 within 14 calendar days from the date of state registration of such a legal entity must confirm the information about the ultimate beneficial owner.
For example, if a legal entity is registered on February 10, the obligation to submit documents in accordance with Art. 171 of the Law arises from February 10, 2022.
Submission of documents in accordance with this article is carried out regardless of whether during the year there were any changes in the ultimate beneficial owner, said in the letter.
The State Tax Service of Ukraine in individual tax consultation “On the application of penalties for late submission of reports on controlled transactions” No. 216/ІПК/99-00-21-02-02-06 of January 18, 2021 raised the issue of exemption from liability for late submission of a report on controlled transactions for 2019.
Many companies experienced quarantine restrictions, in particular, they were not able to obtain the necessary information from the counterparty in time, which is necessary for the preparation of a report on controlled transactions.
Specialists of the tax authority has noted that for violations of tax legislation committed during the period from March 1, 2020 to the last calendar day of the month (inclusive), which ends the quarantine, penalties are provided only in part of the limited list of violations set out in item 521 section 10, Chapter XX “Transitional Provisions” of the Tax Code. This list does not refer to controlled transactions.
And although the obligation to submit a report on controlled transactions is not cancelled, and the postponement is not provided, the penalties established by item 120.3 of the Tax Code for violation of the submission deadlines do not apply if the deadline falls during the quarantine.
The State Statistics Service of Ukraine has introduced a new form of reporting “Report on wage arrears” (No. 3-debt (monthly).
Legal entities must submit this report to the territorial body of the State Statistics Service no later than the seventh day of the month following the reporting month. This report is submitted for the first time in January 2021. As February 7 is a day off, the report for January 2021 can be submitted on February 8.
You can submit a report in form No. 3-debt in both paper and electronic form.
Indicators of No. 3-debt form include data on the amounts of unpaid accruals for wages, the number of employees to whom these payments are owed, the amount of unpaid temporary disability benefits.
Wages unpaid by the end of the month for payments for wages and the amount of unpaid temporary disability benefits are not arrears of wages, if the deadline for such payments at the company is set in the same month for which the accrual is made.
The unpaid amount of accrued wages to employees within the next month after the date of its payment set at the enterprise is wage arrears, information on which is reflected in the relevant lines of the report.
For example, if the report in form No. 3-debt is made on May 1, the indicators of the form contain information on the amount of fully or partially unpaid wages for January - March of the reporting year and previous periods (reporting and previous years).
If there are no arrears of wages and benefits due to temporary incapacity for work in the enterprise, line 2000 contains the mark “V”, and all other lines of the form do not contain data.
The National Bank of Ukraine amended the Regulations on Determining the Amount of Credit Risk on Active Bank Transactions by Banks of Ukraine, approved by Resolution of the Board of the National Bank No. 8 of January 26, 2021.
With these changes, the National Bank has expanded the range of borrowers whose credit risk can be assessed under a simplified procedure, i.e. based on the state of debt service. The simplified procedure will be used to evaluate loans, including mortgages, which do not exceed 0.1% of the bank's fixed capital.
For mortgage loans, the National Bank of Ukraine allowed to take into account the income of family members of the debtor – an individual when assessing his financial condition. Banks are also given the right not to inspect the condition of a residential mortgage of an individual in the presence of a contract of compulsory insurance of such a mortgage.
Banks have the right to determine the class of the debtor, which belongs to the group of legal entities under joint control, taking into account the class of the group determined on the basis of the credit rating of its parent company/controller on an international scale.
The National Bank of Ukraine reduced the value of the lower limit of the PD range (probability of default) when calculating the amount of credit risk on loans of debtors - legal entities on a group basis – to 0.005, which is similar to the lower limit of the range set for individual assessment.
“We allow to evaluate small loans that do not create significant risks, under a simplified procedure, even if the bank is just starting to lend to a certain segment and has not accumulated a large portfolio. In particular, this will include loans to small and medium enterprises and mortgages. The approved changes will promote the development of these priority areas of lending in 2021,” Yurii Heletii, Deputy Governor of the National Bank, said.
The new requirements for simplified asset valuation and improved group valuation requirements will take effect on March 1, 2021.
