The Ministry of Finance this summer issued an order “On approval of amendments to the tax return forms for company income tax” of 08.07.2016, № 585 (hereinafter − Order № 585). The appearance of such a document caused by necessity to eliminate some deficiencies of the current declaration form as well as ensure compliance with its contents with realities of the Tax Code of Ukraine (hereinafter − TCU).
The first change relates to line 2 of the introductory part of the tax return for the company income tax, which form is approved by the Order of the Ministry of Finance dated 20.10.2015, № 897 (hereinafter − the Tax Return). It is about the place of reflection of the basic reporting period − quarter or year.
Except for technical adjustments, the changes in the main part of the tax return related to the abolition of monthly advance payments and the introduction of another − single advance contribution in the amount of 2/9 of income tax, accrued in the first three quarters of 2016. Although such regulations appeared in TCU since 01.01.2016 with the entry into force of the Law of Ukraine “On Amendments to the Tax Code of Ukraine and some other legislative acts of Ukraine concerning the provision of the balance sheet identity of budget revenues in 2016” of 24.12.2015, № 909-VIII (hereinafter − the Law № 909).
It should be noted that not all the mentions of monthly advance contributions are removed, because they will be counted in the case of clarifying of indicators for the period 2013 or 2014.
Annex of wages is redrafted
Filling in of an “old” annex of wages to the tax return was accompanied by a large number of controversial moments. And all this is due to the presence of a number of disadvantages. In particular, it was not possible to indicate an overpayment “dividend” advance payments on income tax and the amount of tax paid abroad, which could be attributed to the reduction of “native” income tax.
Unless the annex of wages to the tax return has been changed, the tax authorities recommended removing reporting deficiencies, in particular, by the additions representation in any form (para. 46.4 TCU). However, there was a place for everything in an updated version of annex.
Thus, in line 16.1 of annex of wages to the tax return should be reflected the amount of tax paid by business entities abroad, which is set off when payment of the income tax in Ukraine. The impact of such a foreign tax is limited: it could not exceed the amount of tax payable in Ukraine during the reporting period (sub-para. 141.4.9 TCU).
The following lines 16.2-16.4.2 of annex of wages to the tax return are intended for expanded reflection of information about advance payments paid in the payment of dividends. For this purpose:
- such advance contributions paid during the period should be noted in line 16.2;
- “dividend” advance payments that are not recorded in prior periods – in line 16.3;
- amount that reduces the income tax in the current period – in line 16.4.1;
- index, which can be transferred to the following periods – in line 16.4.2.
Accrued tax on real estate other than land, which can reduce the income tax for the reporting period, should be reflected in line 16.5 of annex of wages to the tax return. In this case there is no direct prohibition to transfer unrecorded part of the tax on real estate in the following periods (para. 137.6 TCU).
The last line 16.6 of the annex is intended to reflect novelties 2016 – advance contribution in the amount of 2/9 of income tax, accrued in the tax statements for the first three quarters of 2016 (para.38 of sub-sec.4 of sec XX TCU). It should be reminded that only quarterly payers of income tax should pay such a single advance payment.
Also, updated version of annex of wages to the tax return does not include the formulas by which limit values for indicators of its lines were previously calculated. However, in any case, the income tax of the reporting period, which is reflected in line 17 of the main part of the tax return could not be less than zero. The result of annex of wages to the tax return affects the indicator of such a line.
Annex of AC is changed
Adjustment annex to AC to the tax return has not changed its purpose – to detail the calculation of advance contribution on income tax, which is paid in case of payment of dividends.
Except for the change of the position of lines, the ministry employees changed the formula for calculating the maximum base for the accruing of such an advance contribution. It should be calculated as the difference of paid dividends and the value of the subject to taxation for the same reporting period, by results of which such dividends are paid. However, as a result of the Order № 585, the indicator of line 23 of TI of the main part of the tax return is not taken into account for the calculation of such an object.
In line 23 of TI of the main part of the tax return should be reflected the amount of taxes that are kept when the payment of incomes (revenues) to non-residents in the reporting period.
The decision of the Ministry employees to remove the repatriation tax from the formula is justified. Because the “dividend” advance contribution is determined as an integral part of the income tax, and it cannot be regarded as a tax, which is withheld from income (revenues) of non-residents (sub-para. 57.11.5 TCU).
Adjusted annexes PI and TI
The right to reduce the financial result before tax was extended to accrued incomes by the law № 909:
· from participation in the capital of single tax payers of the fourth group;
· in the form of dividends to be paid in its favor from any taxpayers who pay “dividends” advance payments on income tax (sub-para. 140.4.1 TCU).
Finally lines with the relevant names are listed in the annex PI to the tax return.
Also annex PI to the tax return was completed by the lines for reflecting of differences associated in particular with the implementation of the Law of Ukraine “On the financial restructuring” of 14.06.2016, № 1414-VIII. However, they can be used only after the entry into force of this law – starting from 19.10.2016.
In addition, the annex TI to the Tax return was completed by the lines intended to declare three types of incomes of non-residents exempt from taxation. This is about incomes (discount) for government securities, local bonds and various transactions associated with government loans and derivatives (sub-para. 141.4.10 TCU).
