Legislation Overview (March 2017)

Taxes

VAT

The State Fiscal Service of Ukraine in its letter “On the Procedure for calculating of tax liabilities for VAT in the implementation of transactions to write off losses that occurred during the storage and transportation of agricultural products” of 06.02.17, № 2103/6/99-99-15-03-02-15 informed about the procedure for the imposition of value added tax (hereinafter − VAT) on the write-off of own-produced products.

Overtime cancellation of products is traditionally considered as its use outside of economic activities. Thus, according to paragraph 198.5 of the Tax Code of Ukraine (hereinafter − TCU), it is necessary to calculate the compensating VAT. However, in para.189.1 of the TCU, the tax base for transactions with any goods is defined as the cost of their acquisition.

The letter notes that the VAT should be calculated from the cost of production costs, the input tax for which was included in the tax credit.

The State Fiscal Service of Ukraine by its letter “On the Value Added Tax” of 10.03.17, № 5953/7/99-99-15-03-02-17 reports that tax invoices in the old form, registered in the Unified Register before 15.03.17 inclusively, certify the tax credit, however, subject to compliance with all other requirements for its formation.

The State Fiscal Service of Ukraine in its letter “On VAT taxation of transactions for decommissioning of fixed assets in connection with their stealing” of 10.02.17, № 2713/6/99-99-15-03-02-15 continued to maintain its position on the calculation of tax liabilities during liquidation of fixed assets (hereinafter – FA).

Public Council under the SFSU applied to the controllers with the remark to review position concerning VAT taxation of the transactions for the liquidation of FA. It should be recalled that tax authorities insist on accrual of tax liabilities:

• considering the tax base under para. 189.9 of the Tax Code of Ukraine (hereinafter − TCU), if liquidation of FA is at own will of the payer;
• under the rules of para. 198.5 of TCU, if FA are liquidated due to their destruction or ruination of as a result of force majeure, including in case of theft.

In the latter case, the fiscal agency representatives equate stolen FA to the non-business activities although there is no use of stolen FA (it was noticed by Public Council).

Controllers refused to change their position, stating: “The conclusions that the personal tax advice contradicts the norms of the TCU can be made exclusively by judicial authorities on the

results of the appeal of such personal tax advice directly by the payer, who was provided by such advice”.

The State Fiscal Service of Ukraine by its letter “On the right to form a tax credit on a tax invoice containing errors in the code according to the UCC FEA” of 22.02.17, № 3653/6/99-99-15-03-02-15 reminds that the tax invoice with an error in the UCC FEA code does not allow the buyer to reflect a tax credit. Such a document does not provide an opportunity to identify the transaction performed. Even the provision of an application with a complaint against the seller under the rules of para.201.10 of TCU will not save the buyer’s tax credit. Only the preparation of the adjustment calculation to the tax invoice with an error can help.

During 2017, the suppliers are not subject to the penalties provided for by para. 120¹.3 of TCU for errors committed in the tax invoice when specifying the code of the commodities in accordance with the UCC FEA and/or the service code according to the State Classifier of Goods and Services (para.35¹ of sub-sec. 2 of sec. XX of TCU).

The Cabinet of Ministers of Ukraine by its Resolution “On approval of Procedure for use of funds provided by the state budget for partial compensation of the value of agricultural machinery and equipment of domestic production” of 01.03.17, № 130 updated the procedure for using funds provided by the state budget for partial compensation of the value of agricultural machinery and domestic equipment. Now, in order to get compensation, agrarians (legal entities and entrepreneurs) do not need to take part in the competition, but they should only apply to the State Bank: application, a copy of the payment order, the act of acceptance and transfer of technology and equipment, certificate of state registration of appliances (if equipment is subject to the mandatory state registration). The application form must be approved by the Agriculture Ministry.

Only 20% of the cost (excluding VAT) of domestic agricultural machinery and equipment (previously − 30%) could be received as compensation.

The list of manufacturers, types and brands of machinery and equipment, and their reference value will be published on the official website of the Ministry of Economic Development in early May 2017.

Machinery and equipment purchased by agricultural producers with partial compensation of cost can not be alienated within three years and it should be used as intended.

Corporate Income Tax

The State Fiscal Service of Ukraine in its letters “On the withholding of the income tax of a non-resident obtained by such a non-resident in Ukraine from the sale of corporate rights to a resident-individual” of 22.02.17, № 3721/6/99-99-15-02-02-15 and “On the Withholding of Tax on non-resident’s incomes received by such a non-resident in Ukraine from the sale of immovable property to a resident – individual” of 24.02.17, № 2707/Г/99-99-15-02-02-14  state that an individual who pays income in favour of a non-resident − legal entity with a source of their origin from Ukraine is required to withhold from such income and at their expense a tax in the amount of 15%.  Of course, unless otherwise provided by the provisions of the international treaty.

In the opinion of the tax authorities, according to the results of the tax (accounting) year in which the income was paid to a non-resident legal entity, such an individual should submit a declaration on the income tax and the annex of TI to it to the controlling agency at his/her location.

According to the representatives of the fiscal department, in this case the individual is not required to get registered as an independent payer of the income tax.

The State Fiscal Service of Ukraine in its letter “On the paying of advance payment of the income tax when the payment of dividends to the parent company” of 13.02.17, № 2753/6/99-99-15-02-02-15 reminded that advance payment should be calculated from the difference between the amount of dividends to be paid and the value of the subject to taxation for the relevant tax (reporting) year, based on which the dividends to be paid, monetary obligation for which was repaid.

Thus, if the amount of the dividend is less than the subject of taxation of the company for the relevant tax (reporting) year, based on which dividends to be paid and monetary obligation of for which to be repaid, the advance payment should not be accrued and paid.

The State Fiscal Service of Ukraine in its letter “On the activity of the tax agent” of 13.03.17, № 5002/6/99-99-13-02-03-15 recalls that the tax agent accruing taxable income in favour of the taxpayer, is obliged to withhold tax from the amount of such income at his/her expense (sub-para. 168.1.1 of TCU). If the employer decides to accrue and pay the income tax at his/her own expense, the amount of tax withheld to be income of the taxpayer as an additional benefit. Accordingly, it is necessary to withhold the income tax and the war tax from this amount.

he State Fiscal Service of Ukraine by its letter “On the documents confirming the beneficial owner” of 13.03.17, № 5060/6/99-99-15-02-02-18 recalled that the document for the recognition of the person as the actual owner of the income could be a document confirming the right of a person to such an income. In particular, but not exclusively, it can be a document issued by the competent authority of the country with which an international treaty of Ukraine is concluded, a license, a patent, an officially issued trademark, etc.

As it is known, the person (tax agent) has the right to independently apply exemption from taxation or a reduced tax rate provided for by the relevant international treaty of Ukraine for the period of payment of income to a non-resident, if such non-resident is the beneficiary (actual) recipient (owner) of income and resident of the country with which International treaty of Ukraine was concluded (para.103.2 of TCU).

PIT and War Tax

The State Fiscal Service of Ukraine by its letter “On the taxation of incomes of individuals” of 09.03.17, № 3747/5/99-99-13-02-03-16 recalled that an employer withheld and paid the tax in the form of a salary, and from others incomes received in Ukraine − a tax agent (Art.171 of TCU).

Answering the question about the payment of average earnings to the employee in the event of his/her recovery or the delay in the calculation when the dismissal, the representatives of the fiscal department stated that the tax agent should withhold the tax from the amount of income at the expense of the taxpayer.

Violation of the order of withholding and payment of income tax entails financial and administrative responsibility under Art.127 of TCU and Art.1634 of the Code of Ukraine on Administrative Offenses.

he State Fiscal Service of Ukraine in its letter “On taxation of dividends accrued by an agricultural enterprise in favour of individuals” of 28.02.17, № 2847/З/99-99-13-02-03-14 explained under which rate the agricultural companies should impose the income tax of individuals on accrued dividends.

Thus, the tax rate depends on whether the tax agent is the income tax payer. In the case when agricultural enterprise is the payer of income tax and includes dividends under shares and corporate rights, they are to be accounted at the rate of 5%. In all other cases, it should be used the rate of 18%.

However, in some cases accrued dividends in favour of individuals are equated to wages. For example, if the payment of dividends on preferred shares or corporate rights. Then the tax rate is 18%. All other cases provided in para. 170.5.3 of TCU.

The State Fiscal Service of Ukraine in its letter “On the Taxation of the Share of Inheritance in the Authorized Capital of a Limited Liability Company” of 07.03.17, № 4671/6/99-99-13-02-03-15 drew attention to the situation when an individual inherited a share in the authorized capital of

LLCs, but the participants did not accept it, and instead they paid the cost of a part of the property proportional to its share in the authorized capital of the company (that is, the heir actually sells its share).

Employees of the fiscal department note that in this case it is necessary to be guided by special norms established for taxation of income received from the transaction with investment assets. In particular, the investment profit is calculated as a positive difference between the income received from the sale of the investment asset and its value determined from the amount of documented expenses for its acquisition. The inherited investment is considered to be acquired at a cost equal to the amount of state duty and income tax paid in connection with such inheritance.

The State Fiscal Service of Ukraine in its letter “On the taxation of personal income tax on income received from the sale of immovable property” of 07.03.17, № 3165/К/99-99-13-02-03-14 emphasizes that the income of an individual from the sale of an apartment, the ownership of which was acquired on the basis of a certificate of ownership of a share in the common property of the spouses in the event of the death of one of them, is not the subject to the income tax and the war tax, under the condition that the person selling the real estate for the first time during the year.

It is not necessary to pay the taxes and fees if the following conditions of para.172.1 of TCU are met at the same time:

• individuals sold a dwelling house, an apartment or a part of them, a room, a garden (cottage) house (including the land plot on which such objects are located, utility buildings and structures) or plots, the size of which does not exceed the norms for free transfer of land, determined by Art.121 of the Land Code of Ukraine, depending on its purpose;
• individual sold the first sale of one of these objects during the reporting calendar year;
• property which is the subject of the sales contract, was owned by individual-seller for more than three years (except for inherited property).

If at least one of the listed conditions of para.172.1 of TCU was not met, then the income of individuals from the sale of real estate should be taxed by the income tax and the war tax.

Unified Social Contribution

The State Fiscal Service of Ukraine in its letter “On the payment of the unified contribution to the compulsory state social insurance from income in the form of remuneration under a civil law contract that does not exceed the minimum wage” of 03.03.17, № 4496/6/99-95-42-02-15 reports: if the person performs work (provides services) to his/her own employer, who also works under an employment contract, then the minimum payment rule for calculating the unified contribution is applied considering the total amount of accrued income, assessed by the contribution, including remuneration under a civil law contract (hereinafter − CLC-remuneration). That is, it is added the contribution for the amount of the difference between the minimum wage and such total income of an individual per month.

If it is about the CLC-payment from an outside company (which is not an employer at the same time), then the minimum wage rule is not applied: the contribution is to be charged only on the actual amount of remuneration.

Other Taxes and Fees

The Cabinet of Ministers of Ukraine by its Resolution “Some issues of charging of the excise tax from fuel produced in Ukraine and imported into customs territory of Ukraine to local budgets” of 08.02.17, № 96 defined the shares size, under which a part of the excise tax (13.44%) would be divided between local budgets from fuel produced in Ukraine and imported into customs territory of Ukraine in the first half of 2017. The Treasury Department will distribute the funds each next working (banking) day following the receipt of the excise tax.

It is expected also that in the second half of 2017 the share of distribution will be calculated under another formula.

Accounting and Reporting

The Ministry of Finance of Ukraine in its letter “On accounting of expenses on participation in tender” of 27.12.16, № 31-11420-07-16/37214 explained where should be included the expenses incurred by the company during participation in tenders, in particular, for payment of the services of an electronic platform, preparation of tender documents.

According to the representatives of agency, such expenses can be included in the cost structure of sales (if participant became the winner of the tender) or in other expenses of operating activities (if the participant did not win in the bidding).

The Ministry of Finance of Ukraine by its letter “On certain issues related to the application of the Accounting (Standard) Regulation 22 “The impact of inflation” of 10.02.17,  № 31-11410-01-2/3710 reported that it would be made amendments to the Accounting Regulation 22 “The impact of inflation” on increasing the value of the cumulative rate of inflation. The relevant draft has been already prepared. This will allow to the business entity not to adjust the figures of annual financial statements for 2016.

It should be recalled that the Accounting Regulation 22 provides for adjustment of the annual financial statements, in particular upon condition of achievement of the value of the cumulative inflation rate of 90% or more. Adjustments should be conducted only by those companies that make public their financial statements.

In 2016 for the first time in the history of national accounting cumulative increase in inflation crossed the appropriate boundary, after which the financial statements data should be adjusted on the inflation component. Therefore, tax officers insisted on adjustment in their explanations.

The Ministry of Finance plans to increase the threshold of adjustment to 100%.

The State Fiscal Service of Ukraine in its letter “On the depreciation of low-value non-current tangible assets” of 02.03.17, № 4349/6/99-99-15-02-02-15 once again reminds that the differences in low-value non-current tangible assets do not arise. After all, these non-current tangible assets are not considered as fixed assets for the purposes of the TCU.

Also, the representatives of the fiscal department noted: in lines 1.1.1 and 1.2.1 NA, it is noted the differences arising when depreciation of non-current assets without taking into account the depreciation of low-value non-current tangible assets.

The State Statistics Service of Ukraine by its order “On Amendments to the Form of State Statistical Observation № 1-ПВ (quarterly) “Report on Labor” approved by the Order of the State Statistics Committee of June 10, 2016, № 90” of 15.02.17, № 39 changed the form № 1-ПВ (quarterly) “Report on Labor”. The changes are related to the increase in the size of the minimum wage: in Section IV of Form № 1-ПВ “Distribution of full-time employees by wage size” the limits of distribution were increased. The report has not undergone any other changes.

It should be recalled that for the first quarter it should be reported under a new form. It can be downloaded on the website of the State Statistics in the section “Respondents/Album of Forms of State Statistical Observations for 2017/Employment and Unemployment”.

The State Fiscal Service of Ukraine in its letter “On filling and submission of tax calculation in the form № 1ДФ” of 16.02.17, № 3874/7/99-99-13-01-01-17 reminded that expenses for business trips that to be subject to the tax (i.e. funds excessively received and not returned in due time), the tax agent should fix in f. № 1ДФ under the sign of income “118”. Tax deductible amounts for business trips should not be reflected in № 1ДФ.

In addition, the tax authorities emphasize that in case of error or inaccurate information in the f. № 1ДФ did not lead to distortions of tax liabilities or changes of the taxpayer, the penalty should not be imposed on the tax agent (para. 119.2 of the Tax Code of Ukraine, hereinafter − TCU).

Financial Markets

The National Bank of Ukraine by its Resolution “On Amendments to the Regulations on the Transfer of Cash and Bank Metals across the Customs Border of Ukraine” of 22.03.17, № 24 simplified the procedure for transfer of foreign currency across the customs border of Ukraine.

So, if an individual transfers a currency in excess of the equivalent of 10 000 euros, in order to determine its source of origin it will be possible to provide not only documents confirming the withdrawal of cash from accounts in banks (financial institutions), but also receipts for the implementation of a currency exchange transaction with this cash, if there was such a transaction.

Also, the regulator tripled the validity period of these supporting documents required for customs declaration of foreign currency − from 30 to 90 calendar days.

Appropriate changes were made to the Regulations on the movement of cash and precious metals across the customs border of Ukraine, approved by the NBU Board Resolution of 27.05.08, № 148.

The National Bank of Ukraine by its resolution “On amendments to certain legislative acts of the National Bank of Ukraine” of 23.02.17, № 14, which came into force on February 25, 2017, simplified the conduction of foreign transactions for individuals. Now on the foreign accounts they will be able to place foreign currency sourced outside Ukraine without individual licenses of the NBU. For example, foreign salary, scholarship, pension, alimony, dividends etc. can be placed without a license.

Furthermore, without individual licenses of the NBU, individuals are allowed to invest abroad at the expense of funds outside Ukraine. For instance, to conduct investment from foreign accounts, reinvest funds outside Ukraine, to conduct trade with financial instruments in foreign exchanges etc.

However, the ability to conduct these transactions without license from the NBU does not exempt an individual from the need to declare incomes and pay taxes.

The National Bank of Ukraine in its letter “On removal of export transactions from currency control” of 21.11.16, № 40-0004/95287 reported that export transaction of a resident could be removed from control by the bank only after enrolment of foreign currency and hryvnia equivalent received as a result of compulsory sale of foreign currency, on the current accounts of the resident.

The NBU argues this position by the fact that clearing account has a technical nature and deprived of the status of the current account of the company. Consequently, enrolment of the foreign exchange revenues in favour of residents under foreign trade agreements on such a clearing account can not be considered as enrolment of proceeds for purposes of currency controls.

The National Bank of Ukraine by its Resolution “On Amending Certain Normative Legal Acts of the National Bank of Ukraine” of 23.03.17, № 26 simplified the procedure for registration of agreements on the attraction by residents of credits/loans in foreign currency from non-residents.

Thus, the regulator of the banking services market simplified registration procedures in case of a change in the creditor from a resident to a non-resident under a credit contract/loan agreement. Namely – it has been expanded the list of participants in such a treaty, which have the right to apply to banks to initiate appropriate registration procedures. From now on, registration or modification of contracts in such cases can occur at the request of both the borrower resident and the non-resident creditor and the authorized bank - the original creditor.

In addition, it is provided to introduce a new automated system for registering contracts on residents receiving credits/loans in foreign currency from non-residents.

The National Bank abolished the requirement of mandatory provision by residents-borrowers of the NBU certificates on the amount of actually received credit and repayment of debts on it. The resident borrowers should submit such a certificate to the authorized bank when they place the attracted funds in foreign currency to accounts outside Ukraine.

The amendments take effect on April 10, 2017.

Control and Responsibility

The State Fiscal Service of Ukraine in its letter “On the adjustment of the financial result before taxation on the amount of penalties and fines that are transferred in favor of the individual entrepreneur and the SFS bodies” of 03.03.17, № 4468/6/99-99-15-02-02-15 reported that the financial result before taxation should not be increased by the amount of penalty (financial) sanctions and penalties accrued in favor of individuals (including individuals - entrepreneurs) in accordance with civil law and civil-law contracts.

Sub-para.140.5.11 of TCU was introduced in the tax legislation since 01.01.17. According to it the profit-making companies that carry out tax adjustments under sec.III of TCU, the financial result before taxation is increased by the amount of expenses from recognized fines, penalties, penalties accrued in accordance with civil law and civil-law contracts in favor of persons who are not payers of the income tax (other than individuals) and taxpayers applying 0% rate, according to para.44 of sub-para.4 of sec. XX of TCU.

In the opinion of the representatives of the fiscal department, such a magnifying adjustment does not apply to penalties accrued in favor of entrepreneurs.

The State Fiscal Service of Ukraine in its letter “On the issue of the application of penalties on the basis of paragraph 120 of remarks 1.2 of TCU” of 03.03.17, № 709/4/99-99-15-03-02-15 suggested to the Ministry of Finance to support their interpretation of para.1201.1 of TCU.  It involves the fines charging for all cases of untimely registration of tax invoices for deliveries taxed at rates of 20 and 7%. In particular, for all tax invoices which are not provided to buyers.

It should be noted that in unfavourable circumstances, the penalty for late registration of the tax invoice will be transformed from a tool to protect the interests of the buyer - the payer of the value-added tax (hereinafter − VAT) (which tax credit depends on the timely actions of the supplier) to the budget replenishment tool due to fines.

The State Fiscal Service of Ukraine by its order “On Amendments to the Order of the SFS dated 24.10.2014, № 213” of 28.02.17, № 150 decided that the acceptance of documents and licensing of retail trade in alcoholic beverages and tobacco products could be implemented in service centres of taxpayers operating at district level.

It is necessary to additionally specify in the application for the issuance of licenses for the retail sale of alcoholic beverages and tobacco, the address of trade place, the list of cash registers (registration book of payment transactions, RBPT) that are in place trade as well as information about them: model, modification, serial number, manufacturer, date of manufacture, registration numbers of certificates of cash registers (RBPT) that are in trade place, and the date of their accounting in SFS agencies.

Before the deciding to issue the license, it will checked the conformity of the submitted application data on the cash registers with the data of the State register of registers of payment transactions, as well as it will be inspected the availability of trade place of the newly created entity or  a newly established trading place specified in the application. The final step will be taken if there are risks of absence of trading place.

The Cabinet of Ministers of Ukraine by its resolution “On approval of the Procedure for the promulgation of information on the activities of state unitary enterprises and economic companies, in the authorized capital of which more than 50% of shares belong to the state, as well as economic companies 50 and more percent shares of which belong to the economic companies, the state’s share of which amounts 100 percent” of 09.11.16, № 1067, which entered into force on March 23, 2017, determined the procedure, periodicity and timeframe for the disclosure of information on the activities of state unitary enterprises and economic companies, in the authorized capital of which more that 50% of shares belong to the state, as well as economic companies 50 and more percent shares of which belong to the economic companies, the state’s share of which amounts 100%.

Such enterprises are now obliged to post documents and materials containing information on their activities on their own web pages (web sites).

The absence of its own website does not exempt such a legal entity from the obligation to disclose the information. Then such information should be posted on the official site of the subject of the management entity of the governmental property, which exercises the functions of managing the enterprise or corporate rights of the state in the economic company. For this purpose, there will be created a special section on the activities of the enterprise, the economic company together with other information about the enterprise, the economic company, which is subject to publication in accordance with the law.

Access to web pages and websites will be round-the-clock and free of charge.

In addition, the Government determined the frequency and timing of the publication of this information. For example, information on contracts concluded for the reporting period, the total value of which exceeds UAH 1 million, should be made public within 10 calendar days from the date of signing the agreements. And a charter of the enterprise, the economic company in force previously – before 06.04.17 inclusive.

The Cabinet of Ministers of Ukraine by the Resolution “On Approval of the Rules for Issuing Visas for Entry into Ukraine and Transit through its Territory” of 01.03.17, № 118 approved the rules for issuing visas for entry into Ukraine and transit through its territory. The new procedure, in particular, provides for:

• the possibility of online submission of visa application forms through the web page of the Ministry of Foreign Affairs of Ukraine;
• reduction of visa issuing time: urgent - up to five working days, usually − up to 10;
• reduction in the tariff rate for the issuing of all types of visas to USD 65;
• establishment of the unified rate for issuing visas at checkpoints through the state border in the amount of 150 of  IITE (the individual income tax exemption);
• increasing the validity of the long-term visa D: under the new rules, it will be issued as a reusable visa for 90 days;
• invitation to enter Ukraine with a private or business purpose should no longer have to be registered in the State Migration Service of Ukraine. It will be sufficient to have a notarized invitation of an individual or a legal entity submission letter;
• a package of documents for issuing a visa can be submitted to a foreign diplomatic institution or an external service provider personally, through a legal representative or using postal means;
• it will be possible to conduct interviews with applicants using remote communication tools, allowing for the visual identification of the applicant.

Controlled Transactions and Transfer Pricing

The State Fiscal Service of Ukraine in its letter “On the recognition of the transactions for the registration, by the party of the company, in the statutory capital of the fixed assets (equipment) as controlled” of 09.03.17, № 5898/7/99-99-14-01-02-17 reported that transactions of the statutory capital increase with the registration of FA (equipment) by the party of the company from 01.01.15 to be within the definition of controlled according to Art. 39 of TCU (if all other criteria for the recognition of a controlled transaction).

Thus, such transactions should be reflected in the Report of controlled transactions in the period in which there was a business transaction for the registration of FA in statutory capital on the date of transfer of ownership and/or on the date of reflection in accounting of crediting of such assets on the balance.

The tax authorities made the conclusion that due to the fact that these transactions, although not shown in the income of the recipient, but still affect (can influence) the formation of the subject to the income tax. Because, the company takes into account as expenses accrued depreciation on such FA that affects the financial result before tax and therefore reduces the subject to the income tax.

It should be noted that fiscal authorities do not always follow this position. For example, in the letter of SFSU dated 30.08.16, № 18727/6/99-99-15-02-02-15 they gave the opposite answer.

Public Procurement

The Ministry of Economic Development and Trade of Ukraine by its order “On Amending the Order of the Ministry of Economic Development and Trade of Ukraine dated March 22, 2016, № 490” of 17.01.17, № 45 determined that during the loading of the procurement contract or the framework agreement into the electronic system, the line fields with the number, date of signing and the period of validity of the contract or framework agreement must be filled in.

In addition, the forms of documents in the field of public procurement were changed. For example, in the form of an announcement of open tenders, it will be additionally fixed the amount of budget assignment by estimate or the expected cost of parts of the subject of purchase (lots) (if any) and other criteria that will be used in evaluating bids, as well as their specific gravity (if available).

Labor and Salaries

The Ministry of Social Policy of Ukraine in its letter “On provision of accrual of the minimum wages from 01.01.2017” of 14.02.17, № 344/0/101-17/281 indicates that all payments, which are not mentioned in Art. 31 of the Law of Ukraine “On labour” of 24.03.95, № 108/95-ВР, should be accounted in earnings, which compared to the minimum wage. In particular, the following benefits should be accrued over minimum wage (UAH 3 200) for health workers:

• additional payments in the amount of 12% of the salary (wage rate) established for workers employed in jobs with hazardous and difficult working conditions, under the results of attestation of working places (sub-para. 3.4.5 of the Order of the Ministry of Social Policy of Ukraine, the Ministry of Health “On regulation of labour remuneration of employees of health care institutions and institutions of social protection” of 05.10.05, № 308/519);
• additional payment of 10% of the salary (wage rate) to the employees (including nursing assistants) who use disinfectants in their work, and to the employees who engaged in cleaning toilets (sub-para. 3.4.7 of the Order № 308/519).

The following payments should be accounted in the size of earnings in comparison with minimum wage:

• additional payment for combination of professions (positions);
• additional payment for performance of duties of temporarily absent employee;
• additional payment for service area expansion or increase in the executed works;
• additional payment for irregular working hours;
• extra payment for drivers for the special qualification;
• additional payments for academic rank, for academic degree;
• additional payments for length of service;
• production premiums;
• indexation.

The Ministry of Social Policy of Ukraine in its letter “On the calculation of average number of staff members” of 04.05.16, № 108/19/71-16 reminded that when the calculation of average number of staff members (line 01 of the Report on employment and employment of disabled people under f. № 10-ПІ) it should be taken into account all categories of workers of payroll Paragraphs 2.4, 2.5 Regulations on statistics of the number of employees, approved by the State Statistics Committee of Ukraine of 28.09.05,  № 286, hereinafter − Regulation № 286), except for employees who are on leave due to pregnancy and childbirth or care for children up to the age required by law or collective agreement by the company, including those who adopted newborn baby directly from the hospital (para. 3.2.2 Regulation № 286). Also, it should not be taken into account the external part-timer and people involved in the implementation of works under civil contracts (construction contract) – sub-paras. 2.6.1 and 2.6.2 of the Regulations № 286.

The Ministry of Social Policy of Ukraine in its letter “On indexation of aliments” of 31.01.17, № 13/0/66-17/163 reported that the amount of alimony, determined by the court as a fixed cash amount together with the amount of indexation should not exceed 50% of the money income of the alimony payer. When making this conclusion, the agency employees were guided by para.104 of the Procedure of indexation of money incomes, approved by the Cabinet of Ministers of 17.07.03, №1078.

It should be recalled that the amount of alimony, determined by the court as a fixed cash amount should be indexed below the subsistence minimum established for able-bodied people.

The Fund of Obligatory State Social Insurance of Ukraine in case of Unemployment by its Resolution “On the minimum unemployment benefit” of 19.01.17, № 132 confirmed that from April 1, 2017 it would be increased the minimum unemployment benefit for persons for which the amount of assistance to be calculated by the average salary depending on length of service. The minimum amount for these categories of unemployed will amount to UAH 1 280 (now – UAH 1 160).

The amount of assistance remains at the level of UAH 544 for people who are prescribed the unemployment benefits in the minimum amount (those with less than six months of service before registering as unemployed, who fired from the last work under Art. 37, paragraphs 3, 4, 7 and 8 of Art. 40, Articles 41 and 45 of the Labour Code of Ukraine, as well as displaced persons without proper documents).

The Ministry of Social Policy of Ukraine in its letter “On the Calculation of the Average Wage for the leave days” of 06.02.17, № 272/0/101-17/282 notes that in the case of calculating the average salary before the closing of the payrolls, it is necessary to recalculate certain amounts after accrual of all payments to the employee for the last month of the accounting period.

If there are no real-time data for the calculation of earnings per piece workers for last month of the accounting period, this month may be replaced by another month immediately preceding the accounting period (Art. 9 para. 2 of the Procedure for the calculation of the average wage, approved by the Cabinet of Ministers of Ukraine dated 08.02.95, № 100).

The Social Insurance Fund for Temporary Disability (hereinafter – the SIF for TD) by its letter “On the determination of the amount of the benefit in the event that the employee has provided a certificate in the form of OK-5 or OK-7 after the provision of a certificate of incapacity for work” of 04.01.17, № 5.2-28-4 explained what to do if the employee provided a certificate confirming a six-month insurance period in the form of OK-5 or OK-7 with a delay, when the temporary disability allowance had been already accrued. In this case, the amount of benefits should be listed, even if the certificate is provided after twelve months from the day of restoration of work capacity.

It should be recalled that if the employee worked at the company less than six months before the occurrence of the insured event, he/she must confirm his/her insurance experience by providing information from the State Register of Social Insurance in the form OK-5 or OK-7. Otherwise, the allowance for temporary incapacity for work should be determined per month not higher than the minimum wage (para.4 of Art.19 of the Law of Ukraine “On Compulsory State Social Insurance” of 23.09.99, № 1105-XIV).

The Ministry of Social Policy of Ukraine in its letter “On the calculation of the average wage” of 27.10.16, № 1491/13/8416 informs that non-adjustment of the average wage is a violation of the labor legislation. At the same time, representatives of the department note that the labor legislation regulates labor relations of both employees of enterprises and individuals working under an employment contract with individuals.

It should be recalled that in the event of an increase in tariff rates and official salaries, the average salary should be adjusted to the increase ratio in accordance with the requirements of paragraph 10 of the Procedure for calculating the average wage approved by the Cabinet of Ministers of Ukraine of 08.02.95, № 100. Adjusting the average wage should be made if the last increase in the official salary of an employee occurred in the accounting period.

Mobilization and ATO

The Cabinet of Ministers of Ukraine by its order “On approval of the Procedure of the movement of goods to the area or from the area of the antiterrorist operation” of 01.03.17, № 99 determined the legal regime of movement of goods, including humanitarian assistance to the area or from the area of ATO conduction (via collision line and/or within its boundaries).

List of road corridors and checkpoints of entry/exit, checkpoints of entry/exit on the railway should be approved by the head of the ATO and published on the official websites of the State Fiscal Service of Ukraine (hereinafter – SFSU), the State Border Service and the Security Service of Ukraine. It is prohibited the movement of goods outside the checkpoints of entry/exit and checkpoints of entry/exit on the railway, and control posts.

Business entities in order to move the goods should be included in the lists of business entities engaged in the movement of goods. The business entity (owner or the authorized person), who intends to move the goods should apply in hard and soft copies to the SFSU.

Business entities are allowed to move the following into temporarily uncontrollable territory and from temporarily uncontrolled territory:

• food products that are moved as a part of humanitarian goods;
• medicines and medical supplies that move as a part of humanitarian goods;
• goods and products (including those that provide functioning and maintenance or necessary in the production process) of metallurgical industry, ore mining and processing, coal mining and power generation sectors, critical infrastructure and under the list and volumes (cost, weight, quantity) approved by the joint decision of the Ministry for temporarily occupied territories and internally displaced people of Ukraine (hereinafter – MTOT) and the Ministry of Economic Development.

Individuals carry out the movement of goods in hand luggage and/or accompanied baggage with automobile transport and under the list and volumes (cost, weight, quantity), approved by the MTOT.

Land Relations

The Ministry of Finance of Ukraine by its Order “On Amendments to the tax return forms of payment for the land (land tax and/or rent for land plots of state or municipal property)” of 23.01.17, № 9 approved a new form of tax return of payment for land. However, currently the order, which introduces a new form, is not in force yet − pending official publication.

It should be noted that changes are mostly cosmetic. Maybe it is more comfortable to specify the land plots: in hectares or in square meters.

For the first time the tax return in a new form should be submitted for the tax period following the publication period of a new form (para. 46.6 of TCU).

This rule also applies to those who plan to correct the mistakes of the payment for land: the adjustment calculation is to be submitted in the form valid at the time of its submission (para. 50.1 of TCU).

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Methodology of normative monetary valuation of agricultural lands” of 16.11.16, № 831 updated the Methodology of normative monetary valuation (hereinafter – NME) of agricultural lands. Amendments came into force 01.03.17.

The information base for the NME of agricultural lands, including lands under farm buildings and yards, is the information of the State land cadastre and land management documentation.

The NME is to be determined in accordance with the norm of capitalized rental income on agricultural lands of natural and agricultural areas of the Autonomous Republic of the Crimea, regions, Kyiv and Sevastopol cities according to the application and indicators of soil valuation by adding scales of normative monetary valuation of agro-industrial groups of soils of natural and agricultural areas (for agricultural grounds).

According to the results of the NME conduction of a particular land plot for agricultural purposes, the territorial authority of StateGeoCadastre (the State Service of Ukraine for Geodesy, Cartography and Cadastre) through the centre for providing administrative services at the land location should issue an extract from the technical documentation for normative monetary evaluation of lands within a period not exceeding three working days from the date of receipt of the relevant application.

Budgetary Relations

The Cabinet of Ministers of Ukraine by its Resolution “On the approval of the basic rate of deduction of a part of the profit allocated for the payment of dividends based on the results of financial and economic activities in 2016 of economic companies in authorized capital of which there are corporate rights of the state” of 01.03.17, № 120 approved the base rate of deductions of a part of the profit for the payment of dividends for business entities in authorized capital of which there are corporate rights of the state, according to the results of activity in 2016. This basic standard is established in the amount of 50%.

It should be recalled that according to the results of financial and economic activity in 2015, economic companies with a state share should send 75% of profits to the state budget.

In case of non-payment of dividends by such enterprises in 01.07.17, there will be taken measures to their managers for termination of the contract.

Summary of Court Rulings

The Supreme Administrative Court of Ukraine in its decision of 23.02.17 in case № К/800/25008/16 explained that taxpayers had the right not to respond to a request of the supervisory authority, if grounds of its referral are not stated. Moreover, there should be not any reasons, but only under paragraph 73.3 of TCU.

Without compliance with rule mentioned above, the taxpayer is exempt from the obligation to provide a response to the request. In addition, the lack of response of the taxpayer on such a request is not a basis for further tax inspections of the taxpayers by the fiscal authority.

The Supreme Court of Ukraine in its decision of 01.03.17 in case № 6-284цс17 noted that the amount payable on obligations is determined in hryvnias at the official rate of the National Bank set for the relevant currency on the day of payment. Of course, if another procedure for its determining is not established by the law or a contract or another regulatory legal act.

The court also noted that in the event of a breach of the monetary obligation, the subject of which is funds denominated in hryvnias with the definition of the equivalent in foreign currency, provided for by sec.2 of Art.625 of the Civil Code of Ukraine, inflationary losses are not subject to recovery. Because, the losses from depreciation of hryvnia due to inflation are restored by the equivalent of foreign currency.

The Other Things

The President of Ukraine signed the Law of Ukraine “On Access to Construction facilities, Transportation, Electricity for the Development of Telecommunication Networks” of 07.02.17, № 1834-VIII. This normative act considerably simplifies the process of providing the Internet access by providers.

The law defines uniform rules for access to the infrastructure of construction facilities, transport, electric power, cable sewerage of telecommunications, house distribution network for the placement of technical means of telecommunications.

The Law of Ukraine “On Access to Construction facilities, Transportation, Electricity for the Development of Telecommunication Networks” establishes:

• powers of state authorities, including the development and approval of methods for determining access fees for the relevant infrastructure, rules/procedures for access to the relevant infrastructure, requirements for the location of telecommunications equipment on the elements of the relevant infrastructure;
• types of payment that can be applied when providing access to the infrastructure;
• rights and obligations of legal entities and individuals owned by the infrastructure, including to ensure non-discriminatory access of customers in order to create equal conditions for the use of infrastructure elements.

Thus, infrastructure owners will not be able to unreasonably interfere with providers in laying telecommunications channels, lay down unreasonable requirements (for example, repair the porch, the roof of the house) or sky-high prices for access to infrastructure.

The law comes into force three months after the date of its publication.

The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to Certain Laws of Ukraine Relating to the Provision of Assistance to the Children of the deceased breadwinner” of 07.02.17, № 1836-VIII. Due to this normative act, in the event of the death of the breadwinner, his/her children will be able to receive state aid regardless of the length of insurance experience acquired by the deceased on the date of death, and regardless of the size of the family’s income. This allowance is granted in the absence of the right to receive a pension.

In addition, it is possible to receive both a disability allowance and survivor’s assistance for a disabled child.

he Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure of certification, issuance and cancellation of certificates for seeds and/or planting material” of 21.02.17, № 97 approved, respectively, the certification procedure, the issuance and cancellation of certificates for seeds and planting material, and also the forms of certificates. The previously adopted temporary order became invalid.

The Government Resolution, in particular, determines the procedure for the bodies of the conformity assessment and the auditors of the certification (agronomists-inspectors) of the process of certification of seeds and planting material. In addition, the mechanism for the issuance and cancellation of certificates for seeds or planting stock is regulated.

The Verkhovna Rada of Ukraine adopted the Draft Law on Amendments to Certain Legislative Acts of Ukraine on the Use of Seals by Legal Entities and Individual Entrepreneurs − Draft Law № 4194.

The parliament by this document abolished the requirements on mandatory use of seals (regardless of their presence at the business entities) and the necessity of their use in relations with state bodies and local governments.

That is, the seal can not be an essential requisite of any document that is submitted by a business entity to a state authority or a local government body. A copy of the document submitted to the state authority or a local government body will be considered duly certified if only the signature of the authorized person of such a business entity or the personal signature of the individual entrepreneur is affixed to such a copy.

The state authority or the local government body does not have the right to demand the notarization of a copy of the document, unless such requirement is established by law.

The administrative responsibility is established for officials of the state authority or local government that require affixing a seal impression of the business entity on a copy of the document that is submitted to it.

The Cabinet of Ministers of Ukraine by its Resolution “On approval of the criteria for assessing the risk level from the implementation of tour operator activities subject to licensing and determining the frequency of the implementation of planned measures of state supervision (control) by the Ministry of Economic Development and Trade” of 16.03.17, № 153 approved new criteria, under which there should be assessed the level of risk from the implementation of tour operator activities, subject to licensing. In particular, this is:

• duration of implementation of tour operator activity;
• volume of tourist services provided (the number of tourists who used the services of tour operators);
• presence of violations of licensing conditions for the implementation of tour operator activities.

The list of risk assessment criteria is significantly narrowed compared to the current one. For example, the following criteria are excluded: the composition of the founders and the organizational and legal form of the business entity; the level of qualification of the personnel of business entity that has an appropriate license; making of compulsory payments to the budget and compliance with other financial obligations.

The degree of risk (high, medium, low) affects the frequency of scheduled inspections of licensed tour operators carried out by the Ministry of Economic Development.