Is it necessary to withhold the personal income tax (hereinafter − PIT), the war tax from the salary advance and to accrue the unified social contribution (hereinafter – USC), in fact the advance is not to be accrued but only to be paid?
The tax agent, who accrues (pays, provides) the taxable income in favour of the taxpayer, is required to withhold the tax from the amount of such income at his/her expense, using the tax rate specified in Art.167 of the Tax Code of Ukraine (hereinafter − TCU).
Consequently, the employer when paying the advance is obliged to withhold and transfer the PIT and the war tax to the budget for the first half of the month (letter of the SFSU of 28.09.2015, № 20527/6/99-99-17-02-01-15).
At the same time, when the salary is imposed by the PIT, the total monthly taxable income should be determined. The tax social benefit is to be applied to the very income (para.169.1 of TCU). Therefore, the tax social benefit should not be applied to the advance.
In accordance with sub-para.168.1.2 and para.1.4 of sub-para.161 of sub-sec.10 of sec. XX of TCU, the PIT and the war tax are to be paid (transferred) to the budget when the payment of taxable income with the single payment document. Banks accept payment documents on payment of income only on the condition of simultaneous representation of the settlement document for the transfer of this tax to the budget.
There is a similar norm for the USC: when each payment of wages, on the amount of which it is calculated the USC, simultaneously with the issuance of the mentioned amounts, the employers are required to pay USC accrued on these payments in the amount prescribed for such taxpayers (advance payments) (para.2 of sec. 8 of Art.9 of the Law of Ukraine “On the collection and accounting of the unified contribution for obligatory state social insurance” of 08.07.2010, № 2464-VI, hereinafter − the Law on USC).
In order to accrue the USC it is necessary to determine the salary for a month. If the monthly salary will be accrued in the amount less than the minimum, the USC accruals should be implemented on the basis of the calculation of the minimum wages (para.2 of sec.5 of Art.8 of the Law on USC). A minimum insurance contribution will be determined as the product of the minimum wage and the contribution rate of 22% established by law for a month, for which the accrued wages (income), and is payable on a monthly basis (para. 5 of sec.1 of Art.1 of the Law on USC).
Thus, as we can see, the advance payment as well as the payment of the PIT withheld (18%), the war tax (1.5%) and USC accrued (22%) should be based on calculations without their accrual at the time of the advance payment.
The accrual of the salary, the PIT, the war tax and the USC should be carried out only at the end of the month.
One more thing should be taken into account when advance payment: in Art.115 of the Labour Code it is about the paid amount, i.e. after conducted withholdings. Therefore it is necessary to calculate a conditional basis for withholding. For the purpose, the calculated amount of the advance payment should be increased by 19.5% (18% of the PIT and 1.5% of the war tax).
Since the accrual of the USC is carried out on the amount of the advance payment, it is not necessary to use the conditional base. But for simplification of further calculations for a month it is advisable to take the same basis for the withholding of the PIT, the war tax and the USC accrual.
