Taxes
VAT
The State Fiscal Service of Ukraine in the individual tax consultation “On the performance of transportation and forwarding services” of 13.06.17 No. 604/ІПК/10/26-15-12-01-18 reminded how to fill in tax invoice for transportation and forwarding services.
The tax liability arises at the forwarding agent when receipt of funds from the customer or by the date of execution of documents confirming the fact of the carriage for the customer, depending on which of these events occurred earlier. The forwarding agent should calculate the value added tax (hereinafter − VAT) on this date for the amount of transportation and the amount of transportation and forwarding services provided to such a customer (this rule applies also in the case when the forwarder provides transportation services and when he/she engages the carrier − VAT payer). So, the forwarder should reflect the value of his/her services and the cost of transportation services in the tax invoice in separate lines.
At the same time, in the column “Nomenclature of goods/services of the seller” of the tax invoice, the name of the service is recorded, which corresponds to the wording in the primary documents. And in column 3.3 − the code of the service according to the State Classification of Products and Services for forwarding services and transportation services, respectively.
PIT and War Tax
The State Fiscal Service of Ukraine in its letter “On taxation of income received by individuals working outside Ukraine” of 24.05.17 No. 325/6/99-99-13-02-03-15/ІПК reminded that residents of Ukraine working abroad must declare foreign income (including salary). Because responsibility for the payment of the income tax and the war tax from foreign income is assigned to the individual (sub-para. “б” of para.171.2 of TCU). The amounts of foreign income are imposed by 18% of the income tax and 1.5% of the war tax (para. 167.1, sub-paras. 1.2, 1.3 of para. 161 of sub-sec. 10 of sec. XX, para. 170.11 of TCU).
Also the individuals can reduce the tax liability from the income tax by submitting a legalized certificate of the amount of tax paid, as well as base and/or the object of taxation, received from government agencies of the country, where he/she received the income. Of course, under the condition that such right is stipulated by international treaties, recognized as mandatory by the Verkhovna Rada of Ukraine.
The State Fiscal Service of Ukraine in its letter “On the payment (transfer) of the tax on personal income” of 22.05.17 No. 12807/7/99-99-13-01-01-17 reported that due to the reduction of rates of taxation of dividends (from 18 to 9%), the tax agents could recalculate the tax and return (enrol) the overpaid income tax. Representatives of the fiscal agencies recommend the use of “recalculating” way of reflection of excess tax withheld. Thus, if the tax agent corrects the situation in the second quarter of 2017 and in this period he/she did not charge and not pay any incomes to relevant persons, the results of recalculation in f. No. 1 DF for II quarter 2017 should be reflected in the following way:
- “0” should be put down in line 3 “The amount of accrued income” and 3a “The amount of paid income”;
- the amount of excessively withheld tax should be fixed with the sign “minus” in line 4 “The amount of accrued tax” and 4a “The amount of transferred tax” ;
- “109” should be noted in line 5 “The income sign”.
The State Fiscal Service of Ukraine in the individual tax consultation “On taxation of income obtained by a court judgment in 2017 in the form of pension, underpaid by the Pension Fund of Ukraine for the period until 01.01.2017” of 12.06.17 No. 573/Д/99-99-13-02-03-14/ІПК reported that amount of the pension accrued to a person by the court decision after 01.01.17, for the period before 01.01.17, should be taxed by the personal income tax and the war tax on general grounds.
The amount of the pension received from the Pension Fund of Ukraine (hereinafter − PFU) is not included in the income of the taxpayer in accordance with sub-para. “e” of para. 165.1 of the Tax Code of Ukraine (hereinafter − TCU), except in case it exceeds ten subsistence minimum sizes for persons who have lost their working capacity (para. 164.2.19 of TCU). It is UAH 12 470 in 2017.
Article 85 of the Law of Ukraine “On Pension Provision” of November 5, 1991 No. 1788-XII temporarily limits the maximum amount of pension − in 2017 it can not exceed UAH 10 740. Therefore, there is no question of taxation of pensions, but if the pension is paid in previous periods and its amount exceeds the established limit, the PFU as a tax agent will have to accrue and withhold the income tax and the war tax from the amount exceeding UAH 10 740.
Simplified Tax System
The State Fiscal Service of Ukraine in the individual tax consultation “On the Unified Tax of the Fourth Group” of 15.06.17, No. 669/6/99-99-12-02-03-15/ІПК clarifies under what conditions could be the transfer of land plot to the farm enterprise (hereinafter – Farm) from the individual who rents a specified area him/herself and is the founder of the Farm.
Consequently, the inclusion of such land plots in the capital of the Farm and the tax return of the unified tax payer of group 4 is possible without the conclusion of an additional sublease agreement with the individual. In this case, such a transfer must be confirmed either by the act of acceptance-transfer of the right of lease of a land plot, or by the charter of the Farm.
At the same time, the right to lease on such a plot of land is made for an individual. Therefore, the obligation to pay the land tax also remains for him/her.
Other Taxes and Fees
The State Fiscal Service of Ukraine in its letter “On taxation of income received by an individual as a value in use of housing (apartment), owned by the legal entity (employer)” of 24.05.17 No. 324/6/99-99-13-02-03-15/ІПК expressed a loyal position on taxation of income received by an individual as a value in use of housing (apartment), owned by the legal entity (employer): if under the loan agreement, legal entity transfers to individuals (employee) to use the accommodation without determining the monetary value of that use, so in the sense of the TCU, there is no the income mark, the concept of which is explained in the paragraphs 14.1.54. That is, according to representatives of fiscal agency, it is not about the income arising in this case.
The State Fiscal Service of Ukraine in the letter “On the entry into force of the order of the Ministry of Finance of Ukraine dated April 24, 2017 No. 451” of 19.06.17 No. 15789/7/99-99-15-03-03-17 clarified that persons determined by the payers of the excise tax for the first time submit an excise tax declaration taking into account the changes made by the order of April 24, 17, No. 451, not later than August 20, 2017 for July 2017.
In connection with the abolition of the excise tax on retail sales of fuel from 01.01.17, business entities that carry out the sale of fuel do not fill in sec. II of Annex 6 to the Declaration “Calculation of the amount of excise tax on sales by retail entities of excisable goods”.
This section II of Annex 6 to the Declaration is filled in only in the case of submission a refinement declaration for relevant transactions, executed before 01.01.17 and declared in the reporting submitted for December 2016 (that is, until 21.01.17) by business entities engaged in retail sales of fuel.
The State Fiscal Service of Ukraine in its letter “On correction coefficients” of 29.05.17 No. 13556/7/99-99-12-03-04-17 explained that payers of rent for the use of radio frequency resource were eligible to apply Note 1 (step-down coefficient of 0.75 according to para. 254.4 of the Tax Code of Ukraine (hereinafter − TCU) to the rates of rent for calculating of their tax liabilities. Such a right, according to representatives of fiscal agency guaranteed by the principle of legality of decisions in favour of the taxpayer in case of ambiguous interpretation of the rules (sub-para. 4.1.4 of TCU).
It is important that for the calculation of tax liabilities of radio communication in the system of data transfer using noise signals (e.g., for bandwidth of radio frequency of 60 MHz) lowering coefficient of 0.75 to be applied to 30 MHz, rest of 30 MHz to be taxed at the full rate.
Accounting and Reporting
The Ministry of Finance of Ukraine by its Order “On Amendments to Some guidelines on accounting for public sector entities” of 03.05.17 No. 481 amended the guidelines of accounting for public institutions.
Adjustments relate to the formation of inventory (nomenclature) number of fixed assets in public sector. Now the first four (formerly three) signs of inventory numbers mean number of sub-account, the fifth – subgroup, the remaining signs − the serial number of the subject in the subgroup. The fifth sign may be marked by zero for groups of fixed assets for which the subgroups to be not allocated.
In addition, there were removed the rules which had to form funds in capital construction in progress due to capital investments in fixed and intangible assets. Increase of contributed capital investments will occur as well as reduction of targeted funding during the transfer of capital investments into the fixed or intangible assets simultaneously with a decrease in capital investment.
The Ministry of Finance of Ukraine by its Order “On approval of amendments to the form of Reports on the use of income (profits) of non-profit organization” of 28.04.17 No. 469 set out in the new edition the Report on use of income (profits) of non-profit organization approved by the Ministry of Finance dated 17.06.16 No. 553 (hereinafter − Non-profit report).
There were no radical changes in the form of Non-profit report: adjustments aimed at bringing it in line with the innovations introduced in tax legislation. So, among other things, from 01.01.17, non-profit organizations except non-profit report are obliged to apply to the tax authorities the financial reporting, which is its integral part and application. Thus, financial statement is clearly appears as a supplement to updated form of Non-profit report.
Also, there were of made a series of local adjustments to the Non-profit report. In particular, quarterly reporting period was removed from to the requisites of the Non-profit report. And there were left only annual and monthly periods (last used in connection with violation of the terms of non-profit).
The State Fiscal Service of Ukraine by its Order “On approval of the State register of cash registers” of 07.06.17 No. 406 updated the State Register of cash registers (hereinafter − the Register).
Now, there are 82 models of cash registers permitted to primary registration to choose for companies. And 70 devices, registration of which is prohibited (but can be used in the future).
In addition, three new models for the fuel sales were added to the Register.
Five cash registers models, which are removed from the Register in 2016−2017 and prohibited for use, are submitted in a separate table.
The State Fiscal Service of Ukraine in the individual tax consultation “On correction of the financial results before taxation on the amount of bad debt consolidation” of 15.06.17, No. 673/6/99-99-15-02-02-15/ІПК explained under which conditions receivables can be recognized as bad if the counterparty was declared bankrupt.
Thus, the fiscal authorities indicate that a sufficient condition for recognizing the debt as bad in accordance with sub-para. “з” of para. 14.1.11 of the Tax Code of Ukraine (hereinafter − TCU) is the existence of resolution of an economic court on the recognition of a debtor by a bankrupt, approved at a court session with the participation of the parties, or termination of a legal person, which is confirmed by the entry in the Unified State Register.
If a company applies differences from sec.3 of TCU, then in this case, the result of the tax can be reduced by the amount of the debited receivable (including by creating a reserve of doubtful debts) after receiving the documents confirming the compliance of receivables with the attributes specified by sub-para. “з” of para.14.1.11 of TCU.
Control and Responsibility
The President of Ukraine signed the Law of Ukraine “On amendments to some legislative acts of Ukraine on increase of level of corporate governance in joint stock companies” of 23.03.17, No. 1983-VІІІ, which established the mechanism of compulsory sale of shares by the shareholders at the request of a shareholder − owner of 95% shares.
However, a minority shareholder − owner of 5% of the shares is entitled to put forward the request to the owner of the packet of 95% of ordinary shares of the company on purchase of 5% of his/her 5% shares of the company at a fair price.
The main argument for introduction of such a mechanism in Ukraine: the owners of 5% of shares, in fact, have no influence on decision-making in joint stock companies (i.e., suspended from their control).
The President of Ukraine signed the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Concerning Elimination of Barriers to Attraction of Foreign Investments” of 23.05.17, No. 2058-VIII. This legal act simplifies the procedures for granting permits for the employment of foreigners and certificates for temporary residence.
In the case of attracting foreign highly paid professionals, their work can be applied without permission to positions of a part-time, if the period of validity of the employment contract in the position of a part-time does not exceed the validity period of the permit for the main place of work.
The law also grants the right to obtain a residence permit in Ukraine for foreign investors who have a significant share in Ukrainian enterprises (the size of the share is not less than 100 thousand euros), but not employed by them. This will allow them to spend enough time in Ukraine to control the activities of enterprises.
The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolutions of the Cabinet of Ministers of Ukraine from May 25, 2011 No. 559 and from October 21, 2015 No.835” of 24.05.17 No. 354 facilitated public access to urban planning documentation. Now, in real time it is possible to get access to the urban planning documentation in a network of geo-portals of all levels and on the official website of Ministry of Regional Development.
Specifically, it will be declared the information about the decision of the local executive authority or local government, which approved planning documentation (date and number of the decision, the name of the body that made the decision, the website on which it is released) and website address on which it is published.
In addition, structural subdivisions of regional, Kyiv City State Administration on Urban Development and Architecture will quarterly update information on the urban planning documentation.
The Cabinet of Ministers of Ukraine by its Resolution “On approval of the Procedure for submission of documents electronically to the licensing authority” of 24.05.17 No. 363 approved the procedure for the submission of documents electronically to the licensing authority.
The new procedure does not make radical changes. But it opens additional opportunities. Now electronic documents can be presented to the licensing authority through the Unified State Portal of administrative services. In this case, documents that exist only in paper form should be submitted in PDF format with the putting of electronic digital signature (hereinafter − EDS) on it. This will enable to obtain faster and easier any license online.
Its decision licensing authorities sent electronically to the licensee through a personal account on the state portal. And also they publish it on their official website.
Today eight licenses in the field of foreign trade, construction and tourism were implemented through electronic portal.
The Cabinet of Ministers of Ukraine by its Resolution “On amendments to annex to the Cabinet of Ministers of Ukraine of December 25, 1996 No. 1548 and ceasing to be invalid some Resolutions of the Cabinet of Ministers of Ukraine” of 07.06.17 No. 394 finally abolished state regulation of prices on a number of goods and services from 01.07.17. In particular it applies to:
- limit trade (supply and sales) allowances to the wholesale price of manufacturer (customs value) for flour, bread, macaroni products, cereals, sugar, beef, pork and poultry, boiled sausages, milk, cheese, sour cream, butter, sunflower oil, eggs not exceed 15% excluding the cost of their transportation in intercity traffic;
- limits of profitability and trade margins on baby food;
- limited sizes of payment for services provided in trade facilities, in the markets for the sale of food and non-food products;
- limited price levels, profitability norms (in an amount not exceeding 20%) for the lease of commercial premises (areas), trade, technological and/or refrigeration equipment in commercial facilities in the markets for the sale of food and non-food products;
- limits of profitability of packing of food products for which there were introduced the state regulation of prices, excluding the cost of raw materials not higher than 10%.
Thus, now business can easily and quickly change prices for listed goods and services according to market price fluctuations. Also abolition of state regulation of prices indirectly will increase competition, decreasing the administrative burden on business and eliminating the corruption risks.
The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for approval of construction projects and conduction of their examination” of 07.06.17 No. 403 detailed rules for the examination of project documentation for the construction of facilities and buildings, developed for new construction, renovation, restoration, major repairs to such stages of designing as technical and economic feasibility study, technical and economic calculation, preliminary design, project, working draft.
In order expert organization has the right to conduct an examination, it must not only meet the criteria defined by the Ministry of Regional Development, but also be included in the relevant list.
In addition, there were determined some requirements for expert organizations, which want to examine the design of documentation of construction of facilities with significant consequences (CC3) that are constructed at the expense of budget funds, funds of state and municipal enterprises, institutions and organizations, as well as loans granted under state guarantees.
The Ministry of Justice of Ukraine in its letter “On liability of the accountant for the damage caused to the enterprise” of 23.02.17 No. 6508/105-0-2-17/7 provided an explanation for what the accountant is responsible and whether he/she can be punished for damage caused to the company.
In particular, the specialists of the department stressed that the owner (s) or the authorized body (official) who manages the enterprise in accordance with the legislation and constituent documents is responsible for the organization of accounting and ensuring the recording of the facts of all business transactions in primary documents, the storage of processed documents, registers and reporting within the established deadline, but not less than three years.
At the same time, the responsibility for the untimely preparation of primary documents and registers of accounting and the unreliability of the data contained in them are entrusted to the persons who compiled and signed these documents.
Thus, the administrative fine in the amount of UAH 136 to 255 (Article 1642 of Administrative Offences Code) could be imposed for the preparation of the primary documents in violation of the established procedure.
However, only the bodies of the State Audit Office of Ukraine have the right to impose this administrative fine on officials of those enterprises that receive financing from the budget.
In addition, in cases provided for in Art. 130 of the Code of Labor Law, employees are liable for damage caused to an enterprise, institution or organization as a result of violation of their labor duties.
The State Fiscal Service of Ukraine in its letter “On imposition of sanctions for performance of transactions for the sale of fuel without registration by the payer of the excise tax and for violation of registration of the excise invoices” of 13.05.17 No. 11856/7/99-99-12-03-03-17 informed how the verification of payers of the excise tax to be conducted. One of the considered situations shows that the careless reading of the inspection report will be costly for the payer.
In particular, if the payer of the excise tax missed the time of registration of exercise invoice/adjustment calculation, but 120 days have not passed, the tax authorities should fix it in the act. But they will wait with the registration of the tax notice − decision on the amount of the fine, until 120 days expire.
It should be recalled that the amount of the fine for late registration of excise invoice/ adjustment calculation depends on the time expiration and amounts to:
- 50% of the excise tax, if the document was not registered during the time limit − 120 days;
- from 2 to 40% of the excise tax, if excise invoice/ adjustments calculation was registered late, but within the 120-day period.
Thus, those who do not want to sponsor the budget in full should register excise invoice immediately after detecting of corresponding violation by controllers, without waiting for tax notice - decision from the tax agency.
The State Fiscal Service of Ukraine in its letter “On imposition of sanctions for performance of transactions for the sale of fuel without registration by the payer of the excise tax and for violation of registration of the excise invoices” of 13.05.17 No. 11856/7/99-99-12-03-03-17 reported that tax authorities would impose the fine on the payers as for tax declaration for the failure or delay in reporting on amount of tax benefits.
Since January 1, 2017 tax reporting list was supplemented by reports including those which to be submitted by the taxpayers to the controlling authorities, with the reflection of volume of transaction (transactions) for which tax and customs legislation provides for exemption of the taxpayer from the obligation of accrual of tax payment and collection (including excise tax). Thus, now the failure or untimely submission of a report on benefits will cost UAH 170 for the payers, and a repeated violations during the year – UAH 1 020 (para. 120.1 of the Tax Code of Ukraine, hereinafter – TCU).
The State Fiscal Service of Ukraine in the individual tax consultation “On conducting of documentary on-site audit not at the place of location of the taxpayer, as well as on the validity of the results of such verification” of 08.06.17 No. 551/6/99-99-14-03-03-15/ІПК explained: tax legislation does not deprive supervisors of the right to take measures to organize and make a decision on conducting a documentary on-site audit of the payer, subject to the availability of circumstances for its conduct and the mandatory compliance with the requirements for its organization.
A similar situation may arise when the director of LLC turns to the fiscal authorities asking to inspect the premises of the State Tax Inspectorate in connection with the inability to provide premises for a documentary on-site audit.
It should be recalled that the documentary on-site audit should be carried out at the payer’s location or location of the object of ownership in respect of which such verification is carried out.
The State Fiscal Service of Ukraine in the individual consultation “On payment (transfer) of taxes and fees in connection with the application of sanctions to the enterprise” of 15.06.17 No. 670/6/99-99-15-01-01-15/ІПК notes that TCU does not provide for a mechanism for exemption from payment (transfer) of taxes and fees and reporting in connection with the application of any sanctions to the company.
It should be recalled that the Decree of the President of Ukraine dated May 15, 2017 No. 133/2017 introduced the decision of the National Security and Defense Council “On the Application of Personal Special Economic and Other Restrictive Measures (Sanctions)” of 28.04.17. This decision of the National Security and Defense Council approved for enterprises a clear list of restrictive measures (for a period of three years), in particular:
- asset blocking − temporary limitation of the right of a person to use and dispose of his/her own property;
- suspension of execution of economic and financial obligations.
The Kyiv City Council by its decision “On approval of the Procedure of placement of signboards in Kyiv” of 20.04.17 No. 224/2446 reported that business entities, which established an information signboard in Kyiv City, to be required to send a statement with a message on its installation to the Department of advertising within 10 calendar days of its placement. Therefore, you should report about the installation at the entrance to your own or rented buildings (structures) of signboard with information about yourself (name, trademark, occupation, work schedules, etc.) in the capital, no matter where your business is registered.
It should be noted that the owners of “old” signboards should bring them into line with the requirements of the procedure of placement of signboards in Kyiv during a year (but no later than 30 days from the date of expiry of the passport on the placement of signboards).
Financial Markets
The National Bank of Ukraine in its letter “On criteria to identify customers whose financial transactions have marks of fictitious” of 26.05.17 No. 25-0008/37888 made public a list of criteria to identify customers whose transactions have marks of fictitious. In particular, among them are the following:
- main activity - wholesale trade;
- founder/members of a company with offshore status;
- resources of the business entity do not meet the volume of business conduction;
- the head is registered on the uncontrollable territory of Ukraine (ATO zone, Crimea);
- costs, after transfer within one or more coming days, are transferred “in transit” to other business entities from different purposes of payment, which may indicate the fictitious sale transactions, etc.
It should be noted that the presence of one or more criteria does not mean that financial transactions are fictitious. But in such cases, banks can analyze such customer activity on subject of confirmation or refutation of the relevant suspicion. The customer can have one criterion or several interrelated.
Meanwhile, if the available information is insufficient for analysis, banks can request to another bank.
The National Bank of Ukraine by its Resolution “On amendments to some legislative acts of the National Bank of Ukraine” of 08.06.17 No. 51 made amendments to the procedure for issuing of individual licenses for investment abroad.
In order to obtain a license it is no longer need to notary certify copies of contracts (agreements) and / or other document (decision of the founder, protocol of general meetings of shareholders etc.), which is the basis for the implementation of investment abroad by the resident. It is enough to submit copies of these documents. In addition, the National Bank will no longer require registration documents of non-residents abroad (an extract from the trade, bank, court registries, etc.) to authorized capital of which the funds to be invested.
In addition, the National Bank established different requirements for obtaining licenses depending on the amount of investment abroad. If the size of the investment is less than USD 50 thousand, the simplified requirements to the list of documents to obtain licenses will act. In addition to the application, it will be enough to provide some other documents depending on the type of investment and type of investor (agreement on the investment, documents of the registration of facility of investment, etc.).
Detailed list of documents is to be established for investments of over USD 50 thousand. The list “will help to the National Bank to prevent the use of foreign exchange licenses for schematic outflow of capital” (as NBU explained in its notice).
So, if during the calendar year the resident plans to make investment(s) amounting to over USD 50 thousand (equivalent at the NBU rate on the date of application for a license) in favour of a person, in order to obtain a license he/she additionally need to submit the following documents:
1) information/documents confirming the economic feasibility (sense) of transaction on the investment. The National Bank explained that such information may be in the form of a business plan or otherwise;
2) certificate of the applicant in any form on his/her open current accounts in authorized banks (for applicants − legal entities and FOP). This certificate should contain the following information:
- banks that have opened accounts;
- currency of accounts;
- date of account opening;
- balances in the accounts;
- total depositing and debiting of funds under the accounts at least the last 6 months;
3) information/data on the ultimate beneficial owners of the applicant-legal entities, non-residents − the seller of the investment object (if any) and non-resident, corporate rights/securities of which acquires the applicant (if available). In other words, the National Bank wants to see a schematic representation of the ownership structure of the resident/non-resident (indicating direct and indirect participation of individuals in percentage terms) and information about the final beneficial owners (controllers) of resident/non-resident;
4) original or a copy of the evaluation report (assessment act) of the market value of the investment, compiled by an authorized person (the subject of evaluation activity).
The applicants − legal entities and entrepreneurs will have to submit additional documents that disclose information about their financial position. Namely − the financial statements and tax returns.
The applicants individuals should submit documents (information), indicating the presence of the applicant’s income in an amount sufficient for the investment (declaration of property and income, information sheet (data) of SFSU on the amounts paid to individuals (the applicant) of incomes and paid taxes, information from the official website of the National agency for prevention of corruption from declarations of property and income, which to be submitted by the individual (the applicant) to meet the requirements of legislation on prevention of corruption).
The National Bank of Ukraine in its letter “On calculation of periods of time of payments of export, import transactions and informing the tax authorities on found violations of term calculations in the reporting month” of 08.06.17 No. 40-0005/40465 reported: if exporters and importers to 26.05.17 did not complete the calculations for export, imports and did not violate the 120-day period payments, they can complete these transactions within 180-day period of calculations.
Consequently, it is not considered the violation of exchange control.
The National Bank of Ukraine by its Resolution “On amendments to some legislative acts of the National Bank of Ukraine” of 30.05.17 No. 44 and “On introduction of mandatory sale of revenues in foreign currency and setting the amount of the mandatory sale of such revenues” of 30.05.17 No. 45 continued to weaken exchange restrictions for banks and their clients. In particular, the regulator removed restrictions for individuals to transfer money from Ukraine for non-trading transactions. Earlier it was possible to transfer abroad not more than UAH 150 thousand per month (except in some cases). This rule earned into force on June 12, 2017.
Also, it was abolished the ban on buying of foreign currency if the client’s own funds in accounts at an amount exceeding USD 100 thousand equivalent. Previously, if exceeding that amount, the client had to fulfil obligations by its own foreign currency.
However, the National Bank kept the requirement for mandatory sale of revenues in foreign currency from abroad in favour of legal entities at 50% level.
The National Bank of Ukraine by its Resolution “On regulation activities of credit intermediaries in consumer crediting at banking services market” of 08.06.17 No. 50 approved the Regulation on the establishment of requirements for credit intermediaries of banks and their activities in the field of consumer crediting. It provides for requirements for a bank that concludes a contract with a credit intermediary and requirements for the credit intermediary.
In particular, individual, individual-entrepreneur, manager (the person who performs his duties) of legal entity, which are credit intermediaries, and credit intermediaries workers who perform customer service, must meet the following requirements:
- be residents of Ukraine according to the Tax Code of Ukraine;
- have sufficient knowledge in the field of consumer crediting;
- have full civil capacity;
- have an impeccable reputation.
The National Bank of Ukraine by its Resolution “On Amending Certain Legislative Acts of the National Bank of Ukraine” of 15.06.17 No. 54, which takes effect on July 3, 2017, has introduced currency licenses in electronic form. Thus, individuals (except entrepreneurs) will be able to receive electronic individual licenses (e-licenses) for the transfer of foreign currency to carry out individual currency transactions through authorized banks.
The National Bank has set limits on the amount of such transfers − up to USD 50 000 (in equivalent) per year.
E-licenses use will be available for three types of currency transactions:
- for investment abroad;
- on the placement of funds on their own accounts outside Ukraine;
- in order to fulfil obligations to non-residents under life insurance contracts.
The NBU will launch an automated information system “Register of Individual Licenses for the Exercise of Currency Transactions be Individuals” in order to implement such a mechanism.
In order to obtain an e-license, it is enough for an individual to apply to any authorized bank in which he/she has its own account and submit the following documents (in paper or electronic form):
- statement to the NBU on the issuance of an e-license;
- documents proving the availability of revenues in an amount sufficient to carry out the transfer of funds on the basis of an e-license;
- originals or copies of documents confirming the purpose of the transfer from Ukraine (except for the transfer of funds to own account).
The bank should send to the National Bank an application for the issuance of e-license to this person. On the basis of such a request, the National Bank automatically issues an e-license to a private individual, about what the bank informs the client.
The National Bank of Ukraine by its Resolution “On Amending Certain Legislative Acts of the National Bank of Ukraine” of 15.06.17 No. 55 lifted the restrictions for foreign economic activity entities (hereinafter − FEA) on the conduct of currency exchange transactions. Clients of banks that are subjects of foreign economic activity will be able to carry out transactions on exchange (conversion) of foreign currency on condition of “forward” without limitation under the classifier group, the term and type of the hedged transaction. In addition, residents – FEA entities will be able to conduct foreign exchange purchase transactions for hryvnias on condition of “forward” to hedge the risk of a change in the exchange rate of hryvnia against foreign trade transactions without limitation on the classifier group and without limitation of the term of this transaction.
In addition, the National Bank removed restrictions on the conduct of transactions for the exchange of non-cash foreign currency for individuals-non-entrepreneurs. Such persons may carry out exchange transactions with non-cash currency on their account, without limitation, under the Classifier group and the number of such transactions during the day. Until the present it was possible to carry out the specified transactions only once during the day and only with the foreign currency of the 1st group of the Classifier.
The National Securities and Stock Market Commission (hereinafter − NSSMC) by the decision “On Approval of the Amendment to the Regulation on the Depositary Activity” of 11.05.17 No. 286 amended the Regulations on the conduct of depository activities, approved by the decision of the NSSMC of April 23, 2013 No. 735.
Innovations, in particular, stipulate that resident legal entities whose constituent documents are published on the portal of electronic services (through which they access the information of the Unified State Register), instead of a copy of the constituent document, can provide the depositary institution with information about the access code for the results of the provision of administrative services, which provides access to copying the published constituent document.
In addition, a depository institution can create electronic copies of the filing documents, when opening a securities account. In this case, originals or notarized copies of the relevant documents must be presented for their creation. The authorized employee of the depositary institution, which accepts the documents and holds an enhanced public key certificate, imposes its electronic digital signature upon creation of the electronic document. The electronic copy of the document created in this way remains in the depositary institution, and the original of the document or its notarized copy should be returned to the applicant.
Labor and Salaries
The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine dated December 25, 2015 No. 1131” of 14.06.17 No. 424 regulated the procedure for payment of remuneration to employees of the departments of state registration of civil status acts. This resolution determines the source of the payment and the amount of remuneration.
In particular, it is provided that the payment of remuneration will be carried out within the limits and due to the corresponding revenues to the special fund of the state budget. The amount of monthly and one-time remuneration can not exceed 100% of the official salary of the employee.
The Cabinet of Ministers of Ukraine by its Resolution “On Certain Issues of Remuneration for Workers of the Centres of Social Services for Family, Children and Youth” of 21.06.17, No. 435, adopted allowances depending on the length of work to the heads of centres for social services for families, children and youth, their deputies, heads of structural units according to the main type of activity and specialists in social work in the following sizes:
- over 3 years − 10%;
- over 10 years − 20%;
- over 20 years − 30%.
These allowances are introduced in order to reduce staff turnover in this area. After all, with the transition to new conditions of remuneration, 2793 workers lost the opportunity to receive an allowance for retirement, of which 955 employees have an employment record of more than 10 years, 405 − more than 15 years, 162 − more than 20 years, 46 − more than 25 years.
The Ministry of Social Policy of Ukraine by its letter “On the hourly wage system in overtime” of 24.04.17 No. 1264/0/101-17/282 explained how to pay employees overtime work under the summarized account monthly tariff rates. It is stated in this regard: hourly rate for payment of overtime work in case of accounting period of a year should be calculated by dividing the salary (monthly wage rate) established for the employee at the time of accrual of mentioned payment (at the end of the year - when the accounting period in the year), on the average monthly number of hours for the accounting period (year), which should be calculated considering the normal working hours for a year, established with the compliance of requirements of Articles 50—53, 67 and 73 of the Labor Code of Ukraine (hereinafter − the Labor Code).
The Ministry of Social Policy of Ukraine in its letter “On determining of adjustment coefficient when the calculating of vacation payments” of 20.04.17 No. 1227/0/101-17/282 provided clarification on the calculation of vacation payments in the case of wage increases in the settlement period and during leave. Thus, if the wages increase took place in the settlement period, then when calculating vacation payments it is necessary to adjust the wage before the time of its increase on the coefficient of the increase of employee’s wage.
For example, if the settlement period is December 2015 − November 2016 and salaries increased from May 2016, the wage before May is to be adjusted, and from May to November − to take into account in the amount of actually accrued wages.
If the increase of tariff rates and salaries took place during the vacation, for this earning it should be accrued only in the part concerning the preservation of the average wage days from the date of increase of tariff rates (salaries). Therefore, if the employee was on vacation from December 26, 2016 to January 20, 2017, and from January 1, 2017 there was salaries increase, it is necessary to adjust the average salary, which was kept for an employee from 1 to 20 January 2017, and additionally accrue funds belonging to him/her.
It should be recalled that the adjustment of salaries, including premiums and other benefits, which are taken into account when the calculation of the average salary in the case of increase of tariff rates and salaries provided by para.10 of the Procedure of the calculation of the average wage approved by the CMU of 08.02.95 No. 100.
The Ministry of Social Policy of Ukraine by its letter “On providing financial aid to government officials” of 15.02.17 No. 355/0/101-17/281 reminded: government officials who were recruited for the transfer from another public authority, financial assistance should be provided if they did not get it at previous job in the year, which were transferred, (para.5 of the Procedure of providing financial aid to government officials to resolve welfare issues, approved by the Cabinet of Ministers of Ukraine of 08.08.16 No. 500). That is why government officials should be provided by a certificate of salary from previous employment.
Financial assistance to resolve social and domestic issues is not mandatory payment and can be made by the decision of the head of civil service within the estimated appointments for labor remuneration in the presence of financial resources after securing of government officials by the mandatory benefits: salary, bonuses for rank and for long service, financial support in the provision of basic annual leave.
The Ministry of Finance of Ukraine by its Order “On Approval of the Procedure for informing of employers of taxpayers on the existence of violations of the application of tax social benefits, deprivation of the taxpayer or regaining of its right to tax social benefit and forms of notification of violations” of 19.05.17 No. 514 approved a new Procedure for informing of taxpayer employers of the existence of violations of the tax social benefit, deprivation of the taxpayer or restoration of his/her right to a tax social benefit and forms of notification of the existence of violations. Its norms are compared with the text of the predecessor (the order of the Ministry of income and collections of Ukraine “On Approval of the Procedure for informing of employers of taxpayers on the existence of violations of the application of tax social benefits, deprivation of the taxpayer or regaining of its right to tax social benefit and forms of notification of violations” of 27.01.14, No. 86) have undergone only minor adjustments: “The Ministry of revenues” is replaced by “SFS” in the text. Thus, the mechanism of informing remained unchanged.
It should be recalled that if a payer submits an application for social insurance to more than one employer, he/she loses the right to a benefit at all places of income receipt. To restore the right to social benefits, he/she should file an application for waiver of social benefits for all places of application. On its basis employers should keep the amount of underpaid tax and 100% of the fine from the amount of underpayment (paras. 169.2.4 of TCU).
The Social Insurance Fund against accidents and occupational diseases of Ukraine (hereinafter − the Fund) in its letter “On participation in the investigation of accidents that have occurred in the territories temporarily uncontrolled by the Ukrainian authorities” of 22.05.17 No. 100-06-3 reported: if the accident occurred with the employee in the territory temporarily uncontrolled by the Ukrainian authorities, the relevant documents (urgent notification about the accident, reports of occupational disease in the form П-3, certificates of medical institutions, etc.) which issued, approved or signed after December 1, 2014 by institutions not subordinated to the Ukrainian authorities, can not be considered as such which are prepared in accordance with the requirements of Ukrainian legislation. Accordingly, it is excluded the possibility of their use for investigating accidents or causes of occupational diseases.
Appropriate conditions for the establishment of commissions, obtaining necessary materials, conduction of impartial investigation and comprehensive investigation of accidents with the requirements of the Procedure for investigation and record keeping of accidents, occupational diseases and accidents at work, approved by the Cabinet of Ministers of Ukraine from 30.11.11 No. 1232, are absent currently, the Fund mentioned.
Thus, the working bodies of the executive management of the Fund in the Donetsk and Luhansk regions provide accumulation of information that they receive about accidents and diseases that have occurred in the territory temporarily uncontrolled by Ukrainian authorities, with the purpose of possible return to the investigation of these cases after the release of temporarily occupied territories.
The State Service of Ukraine on Labor issues in its letter “On the registration of trainees − students of vocational schools at the place of practice” of 19.05.17 No. 5783/4.1/4.1-ДП-17 notes that it is not necessary to formalize labor relations with trainees − students of vocational schools during the production practice (training). Also, it is not necessary to inform the SFS of the employee’s acceptance when concluding an agreement on educational and production practice.
It should be recalled that the company, counting salary of trainees should withhold 18% of income tax and 1.5% of the war tax from this entire amount. In addition, 50% of the amounts of the salary after the taxation of the industrial practice of students, students of vocational schools are sent to the account of an educational institution (sec. 4 of Art. 53 of the Law of Ukraine “On Education” dated May 23, 1991 No. 1060-XII).
Temporarily Occupied Territory
The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Law of Ukraine “On Higher Education” on the right to the higher education of persons whose residence is temporarily occupied territory of Ukraine” of 16.05.17 No. 2026-VIII, which defined the conditions of admission to universities of persons whose residence was temporarily occupied territory of the Crimea. This normative legal act provides that Crimeans that have a document on general secondary education can enter the one of the universities in Zaporizhzhia, Mykolaiv, and Odesa, or Kherson regions on a competitive basis by the results of entrance examinations. At the same time it is established a quota for admission of such persons − one thousand places of public orders (it should be distributed among the universities in these regions in order determined by the Cabinet of Ministers of Ukraine).
Mobilization and ATO
The State Fiscal Service of Ukraine in the individual tax consultation “On conducting a documentary unscheduled inspection on the written application of the taxpayer” of 07.06.17, No. 537/6/99-99-12-03-02-15/ІПК emphasized that payers who filed a notice on the loss of primary documents in the ATO zone, can not be verified by the controlling authority in respect of the periods specified in the notification, including after completion of the ATO. In addition, this applies to documentary unscheduled inspections by the written application of the payer himself/herself.
This is substantiated by the fact that, temporarily, until the completion of the ATO, special rules for confirmation of the data specified in the tax reporting are applied to payers who were engaged in activities in the temporarily occupied territory and/or the territory of settlements situated on the collision line and can not present the primary documents on the basis of which the accounting of incomes, expenses and other indicators related to the definition of tax objects and/or tax liabilities.
The reasons for impossibility of presenting primary documents are that the primary documents:
- were lost (destroyed or damaged in connection with the ATO);
- are in the area of settlements in the temporarily occupied territory and/or the territory of settlements situated on the collision line that can not be removed or removed from that territory due to the risk to the payer's life and health or impossible in connection With other administrative obstacles established by the authorities.
In case of loss and/or impossibility of removal of primary documents, the payer at the place of his/her registration should submit to the controlling authority a notice in an arbitrary form, signed by the head of the company and the head of the chief accountant. It indicates the circumstances that led to the loss and/or impossibility of exportation of the primary, calendar periods (day/month/year), as well as a general list of primary documents (if possible, with details of the requisites).
After submission to the supervisory authority a notice of inability to export primary documents before the completion of the ATO, it should be imposed a moratorium on any inspections regarding tax (reporting) periods fixed in the notification.
Land Relations
The Ministry of Agrarian Policy and Food of Ukraine by its Order “On Approval of the Procedure for Normative Monetary Valuation of Agricultural Land” of 23.05.17 No. 262 determined the procedure for conducting normative monetary valuation of agricultural land. Namely: agricultural land (arable land, perennial plantations, hayfields, pastures, alterations) and non-agricultural land on agricultural land.
In addition, the document clearly specifies the composition of the technical documentation on the normative monetary valuation of agricultural land in the district.
Information on the normative monetary valuation of a separate land plot is made on the request of the concerned person as an extract from the technical documentation on the normative monetary valuation of the land plot.
Controlled Transactions and Transfer Pricing
The Ministry of Finance of Ukraine by its Order “On Approval of Amendments to the Procedure for monitoring of controlled transactions and the Procedure of the survey of authorized, officials and/or employees of the taxpayer on the transfer pricing” of 28.04.17 No. 470 amended the procedure for monitoring of controlled transactions (hereinafter − Procedure for monitoring) and the Procedure of the survey of authorized, officials and/or employees of the taxpayer on the transfer pricing approved by its order dated 14.08.15 No. 706.
In particular, it is determined the period during which taxpayers are required to submit the information specified in the request of supervisory authority on the results of the primary analysis, and its documented evidence. This should be done within 15 working days from the day following the day of receipt of the request.
Also it is determined that the initial analysis should be carried out regardless of whether the taxpayer submitted report on controlled transactions for the corresponding period.
In addition, it is stipulated that monitoring of controlled transactions carried out during the reporting period 2013 and 2014, should be carried out according to the Procedure for monitoring considering the peculiarities of norms of Art. 39 of TCU in the version that was in force until 01.01.15.
The Ministry of Finance of Ukraine by its Order “On Approval of Amendments to the forms and the Procedure of reporting on controlled transactions” of 28.04.17 No. 468 changed the form and procedure for reporting on controlled transactions approved by its order of 18.01.16 No. 8. There are a lot of changes but almost all of them are point and their majority has technical nature and the specifying.
Thus, due to changes in deadline of this report (May 1 deadline postponed to October 1) and increasing of cost criteria for recognizing of transactions controlled there were adjusted appropriate items of the procedure of its compilation.
Information regarding codes of reasons of referring of business transactions to controlled have been also supplemented and updated (Annex 1 to the Procedure).
In addition, the procedure is supplemented with norms: if the rate of profitability is calculated for the totality of controlled transactions during the year, but the grouping rule does not allow to show information about a grouping with a single line, the appropriate rate of return (column 22 of Report) and its numeric value (column 23 of Report) should be fixed in each of the lines, which represent the totality of these transactions.
Summary of Court Rulings
The Supreme Court of Ukraine (hereinafter − SCU) by its resolution of 15.05.17 in case No. 6- 2790цс16 noted: solutions of the company manager about deprivation of employees of premiums or reducing their size, which to be adopted on the basis of provisions on bonus award and within the competence, can not be qualified as worsening terms of wages, about which the employee must be warned in advance.
It should be recalled: according to part four of Art. 97 of the Labor Code, the employer has no right on a unilateral basis to make decisions on wages worsening the conditions established by the law.
At the same time the Supreme Court reminded that the awarding of workers is a right but not an obligation of the employer and should be carried out in view of their work performance based on the relevant order of the head of the company.
The Superior Specialized Court of Ukraine by its decision of 17.06.15 in case No. 6- 12110св15 decided that an employee can be dismissed under para.5 of sec.1 of Art. of the Labor Code under the condition that he/she does not appear to work because of temporary incapacity for work which lasted at least four months in a row. So if a period of disability to be interrupted at least a day according to sick leaves, the calculation of four months period also to be interrupted. In addition, the calculation period ends regardless of whether a person appeared at work on the day of such a “break” or not.
The Supreme Administrative Court of Ukraine in its order from 16.05.17 in case No. К/800/53389/15 explains that that not filling in the column 3 “The amount of paid income (UAH, cop.)” in f. No. 1ДФ does not affect the tax liability and therefore there are no reasons to use a fine of UAH 510 (and in case of repeated violations during the year − UAH 1 020) under para. 119.2 of TCU.
Furthermore, in case of delayed payment of the income tax, it should be applied the sanctions to the company under Art.126 of TCU, but not Art.127 of TCU. Of course, this conclusion is good news. Since para.126.1 of TCU provides for a fine of 10% of the amount paid late if the delay is to 30 calendar days, and if a longer period − 20%. But, in para.127.1 of TCU, the larger fines are fixed, and grading of their size depends on the sequence of the violation within 1 095 days: -25% for the first violation; 50% for the second; -75% for the third.
The Other Things
The Ministry of Education and Science of Ukraine in its letter “On the license obtaining by entrepreneur for the provision of educational services in the case of group counseling, seminars” of 12.05.17
