Legislation Overview (July 2017)

Taxes

VAT

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for the Electronic Administration of Value Added Tax and the Loss of Validity, the Resolution of the Cabinet of Ministers of Ukraine dated January 25, 2012, No. 73” of 19.07.17, No. 536 amended the Procedure of the Electronic Administration of VAT. Innovations are aimed at bringing this procedure in line with the requirements of the Tax Code of Ukraine and other laws.

Consequently, it will be excluded from the procedure of electronic administration of VAT the mention of the special regime of taxation of activities in the field of agriculture and forestry, as well as fishing, which has ceased to exist more than half a year ago, along with additional accounts in the system of electronic administration of VAT.

Introduced amendments:

• take into account the possibility of transferring the value of the registration amount (ΣНакл) in the case of reorganization of the VAT payer (para. 2001.3 of TCU);
• secure the right to register tax invoices/adjustments calculations for the amount of the index ∑Перевищ, reduced by the amount of tax liabilities and increased by the index ∑ПопРах (para. 2001.9 of TCU);
• regulate the issue of returning excessively charged funds to the electronic account from the budget;
• give the opportunity to pay tax debts to the budget through clearing calculations via electronic invoices.

Government Resolution enters into force after its official publication.

The State Fiscal Service of Ukraine in its letter “On Force Majeure” of 20.07.17, No. 19075/7/99-99-12-02-01-17 clarified how a tax payer of the value added tax (hereinafter − VAT) should report for June if he/she got into the cyber attack trap.

• In June the VAT return was submitted but it was not included the unregistered TIs. In this case, TI issued in June should be registered until 31.07.17 (inclusively) and included in the clarifying calculation for June 2017. The same applies to the June TI registered in the URTI during the period from 20.07.17 to 31.07.17, and, accordingly, was not reflected in the declaration.
• The VAT return was submitted for June. Thus, in the presence of a certificate of Ukrainian Chamber of Commerce and Industry (UCCI) (obligatory), the payer may be extended the deadline for submission of the declaration. Thus, the tax obligations, issued by TI of June, which were registered in URTI by 31.07.17 (inclusively), should be included in the VAT declaration for June 2017, regardless of the date of its submission to the controlling authority.
• VAT for May was paid late. If before the effective date of the Law of Ukraine “On Amendments to Su-section 10 of Section XX “Transitional Provisions” of the Tax Code of Ukraine regarding non-application of penalties for late registration of tax and excise invoices as a result of unauthorized interference with the work of computer networks of taxpayers” of 13.07.17, No. 2143-VIII, the payers were fined for such non-payment, the representatives of the fiscal department should cancel their notification-decision on the calculation of fines.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On Reflection of expenses, related to economic activity, in the Book of Income and Expenses of Taxpayers of the Unified Tax of the Third Group, which are VAT payers” of 27.06.17, No. 845/Ж/99-99-13-01-02-14/ІПК allowed the entrepreneur-unified tax payer, who carried out passenger transportation, to include incoming VAT on purchased spare parts, accumulators, tires and bus glass in the tax credit. Interestingly, the representatives of the fiscal department did not mention their traditional requirement − keeping records of expenses by the entrepreneur. They finally admitted that entrepreneur needs only registered tax invoice to reflect a tax credit.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the possibility of removing a false tax invoice from the Unified Register of Tax Invoices” of 11.07.17 No. 1117/6/99-99-15-03-02-15/ІПК provided clarification if it was possible to remove a false tax invoice from the Unified Register of Tax Invoices. Controllers deny this opportunity. At the same time, they believe that the volumes of supply reflected in such a tax invoice can be deducted by the adjustment calculation.  Such adjustment calculation should be registered by the person − the VAT payer, on whom the tax invoice was falsely drawn up.

The Cabinet of Ministers of Ukraine adopted the Resolution “On Approval of the Procedure for Reviewing Complaints on the Decision of the Commission of the State Fiscal Service on the Refusal to Register a Tax Invoice/Adjustments Calculation in the Unified Register of Tax Invoices” of 04.07.17, No. 485, and issued the Procedure for Review of Complaints against the Decision of the State Fiscal Service Commission on refusal to register a tax invoice/adjustment calculation in the Unified Register of Tax Invoices.

The VAT payer, whose tax invoice fell under the blocking procedure and the SFS commission refused to register it, can appeal such a decision within 10 calendar days after it was received.

The complaint should be made exclusively in writing and submitted personally or through an authorized representative directly to the SFS. Such a complaint can be sent by post.

The complaint must contain:

• title or surname, name, and patronymic of the taxpayer submitting the complaint, his/her tax address;
• tax number or series (if available) and passport number (for individuals − entrepreneurs who have a mark in the passport about the right to make any payments in a series (if any) and passport number);
• details of the appealed decision of the SFS Commission;
• information on the reasons for the disagreement between the taxpayer and the decision of the SFS Commission;
• information about appealing the decision of the SFS Commission to the court;
• requirements of the taxpayer submitting the complaint;
• address to which the decision is to be sent taken as a result of the consideration of the complaint.

The complaint can be accompanied by explanations and copies of documents, certified in accordance with the established procedure, confirming the information indicated in the tax invoice/adjustment calculation to which the procedure of suspension of registration has been applied.

The tax authorities have 10 calendar days for consideration of the complaint.

Corporate Income Tax

The Cabinet of Ministers of Ukraine by its Resolution “On approval of the list of organizational and legal forms of non-residents who do not pay the income tax (corporate tax), including tax from incomes received outside the state of registration of such non-residents, and/or are not tax residents of the state, where they are registered as legal entities” of 04.07.17, No. 480 approved the list of organizational and legal forms of non-residents, transactions with which can be considered as controlled.

Consequently, from now companies need to pay special attention not only to the territory in which the non-resident counterparty is registered, but also to its organizational form.

It should be recalled that if a non-resident, whose organizational and legal form is included in List No. 480, paid the income tax (corporate tax) in the reported year, transactions with him/her should not be controlled. Of course, if you do not meet the other criteria from the paragraph “а”—“в” of para. 39.2.1.1 of TCU.

The State Fiscal Service of Ukraine in the individual tax consultation “On the adjustment of the financial results before taxation for 2016-2017 on the difference arising as expenses for the payment of vacations” of 23.06.17, No.809/6/99-99-15-02-02-15/ІПК clarified that payers of the income tax had the right to take into account in the object of taxation of the expenses for payment of vacations to employees and other payments related to wages, which were repaid after 01.01.15 at the expense of reserves and provisions formed before 01.01.15. Of course, if these costs were not taken into account when determining the object of taxation to 01.01.15. Such a right to take into account the “old” vacation is given by para.24 of sub-sec.4 of sec. XX of TCU.

According to tax officials, those taxpayers who report in non-adjusting regime have the right to take these costs into account.

The corresponding expenses should be reflected in line 4.2.11 of Annex PI to line 03 PI of The corporate income tax return, approved by the Order of the Ministry of Finance of Ukraine of 20.10.15, No. 897 (as amended by the Order of the Ministry of Finance of Ukraine dated April 28, 17, No. 467).

The State Fiscal Service of Ukraine in its letter “On filling in the new form of the declaration on corporate income tax” of 30.06.17 No. 16989/7/99-99-15-02-01-17 explained the main changes in the form of the corporate income tax return approved by the order of the Ministry of Finance of Ukraine dated 20.10.15, No. 897. It should be reminded: such changes were made by the order of the Ministry of Finance of Ukraine dated April 28, 177, No. 467.

Representatives of the fiscal department noted that the Annex PI from 01.01.17 was supplemented with new differences, in connection with which the editorial board changed the names of individual differences and the numbering of line codes. Major amendments to the Annex are the following:

• Differences, which arise when the calculation of depreciation, were supplemented with new differences: which increase the financial result (para. 1.1.3, para. 1.1.4) and reduce the financial result (para. 1.2.3).
• Differences, which arise when the formation of provisions (reserves), were subject to editorial changes and were supplemented with a new difference, which reduces the financial result (para. 2.2.3).
• Differences, which arise when the financial transactions, were subject to significant editorial changes and are supplemented with new differences that increase the financial result (para. 3.1.10, para. 3.1.11 and para. 3.1.12).

The tax authorities also recommend to the income tax payers, who report quarterly for the reporting (tax) period - half of this year, to file a tax declaration for an updated form.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On Adjusting of the Financial Results before Taxation on the Amount of the Executive Fee and Enforcement Expenditures” of 30.06.17, No. 929/6/99-99-15-02-02-15/ІПК clarified that the payment of the executive fee and the costs of enforcement proceedings paid to the executive authorities during the formation of the financial result should be reflected according the rules of accounting. That is, the differences of such collection are not provided for by the Tax Code of Ukraine (hereinafter − TCU).

It should be recalled that since 01.01.17, a new “penalty” difference appeared in TCU, which was fixed in para.140.5.11 of TCU. It provides for that the financial result should be increased by the amount of recognized penal sanctions, penalties, fines accrued in accordance with civil law and civil contracts in favour of non-payers of income tax (except for individuals) and the so-called “zeroes”.

PIT and War Tax

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the Recalculation of Personal Income Tax” of 21.06.17, No. 752/6/99-99-13-01-01-15/ІПК reported that when individual sells housing for the first time in a year, and such an object was owned by him/her for more than three years, then the income received should not be taxed. Thus, the legal entity - buyer should not withhold the income tax and the war tax from such payment. If the tax was wrongly withheld, then the error can be corrected by calculation according to the procedure of sub-para. 169.4.3 of the Tax Code of Ukraine. And in order to correct the error it is enough to indicate withheld excess tax in columns 4 and 4awith the sign “minus”, and it is required to submit the clarifying calculation.

The tax agent has the right to return or calculate in or towards payment of subsequent payments only the amount of excess tax paid, which was transferred to the budget over accrued amounts of monetary obligations, the deadline of payment of which occurred on such a date.

Excise Tax

The State Fiscal Service of Ukraine in the Individual Tax Advice “On Taxation of the Excise Tax” of 23.06.17, No. 813/6/99-99-15-03-03-15/ІПК informed about the excise consequences of the use of self-identified fuel surplus. Representatives of the fiscal department stressed that when shipping such fuel (including for the purpose of own consumption), if its receipt was not confirmed by the registered excise tax invoice, the company must pay the excise tax. The amount of tax should be calculated for the corresponding amount (surplus) of fuel at the rates provided for in paragraphs. 215.3.4 of TCU.

The object of taxation of the excise tax, in particular, arises in the company if the volumes of sold (spent) fuel exceed the volumes of received fuel from other tax payers of the excise tax, which is confirmed by registered excise invoices in UREI.

In case if the volumes of the sold (spent) fuel by the company do not exceed the amount of the received fuel from other payers of the excise tax, which is confirmed by registered excise invoices in UREI, then the subject to taxation will not arise when such an operation.

Other Taxes and Fees

The Cabinet of Ministers of Ukraine by its Resolution “On approval of forms of typical decisions concerning the setting of rates and benefits for the payment of land taxes and real estate property tax other than land” of 24.05.17, No.483 unified the forms of decisions by which the local authorities would set rates and benefits for the payment of land tax and real property tax other than land.

The resolution, which approved the standard forms of such decisions, comes into force on July 25, 2017. Thus, from that date, local authorities should approve their decisions on rates and benefits from these two local taxes purely on typical forms, in order not to put their voters and fillers of local budget.

The Ministry of Finance of Ukraine by its Order “On Approval of Amendments to the form of the Tax Return Declaration” of 31.05.17, No. 545 introduced changes to the form of the Tax Return on rent, approved by the Order of the Ministry of Finance of Ukraine dated August 17, 2005, No. 719. Specifically, Annex 1 “Calculation of rent for the use of mineral resources for the extraction of minerals” is contained in the new wording.

Other changes to the declaration are of a cosmetic nature and are intended to bring the form of the rent declaration into compliance with the norms of the Tax Code of Ukraine.

A document that provides for changes is not published. However, when this happens, guided by para. 46.6 of TCU, the updated form of the declaration should be submitted from the period that comes after the period of entry into force.

Control and Responsibility

Accounting and Reporting

The Ministry of Finance of Ukraine by its Order “On Approval of the Amendments to Certain Regulatory Acts on Accounting in the Public Sector” of 13.06.17, No. 571 amended certain accounting standards and the Chart of Accounts of accounting in the public sector. The changes made relate, in particular, to the accounting of fixed assets, inventories, income and expenses. The chart of accounts is supplemented with new sub-accounts 7112 and 7122, which will record the income from the placement of assets previously not included in the balance sheet (i.e. found as a result of inventory received as a result of dismantling, write-off of property, etc.), as well as a sub-account 7512 “Transfers”, intended for accounting of receipts related to the transfer of amounts of transfers and the funds received for the implementation of targeted measures.

In addition, the new wording sets out the first three sections (accounting for fixed assets, accounting for intangible assets and inventory accounting), the typical correspondence of sub-accounts to reflect transactions with assets, capital and liabilities of budget funds managers and state-owned trust funds.

The Ministry of Finance of Ukraine by its Order “On approval of the certificate form on the submitted declaration of property status and income (on payment or absence of tax liabilities) and the Procedure for its registration and issuance” of 13.06.17, No. 568 approved the procedure for registration and issuing the certificate on the submitted declaration of property status and income (on payment or absence of tax liabilities).

Such a certificate will be issued free of charge on the basis of:

• statements by the taxpayer about the issuance of the certificate;
• tax declarations on property and income.

The application, as well as the tax declaration on the property status and income, the taxpayer (his/her authorized representative) will have to submit to the controlling authority at the place of tax accounting.

As before, the State Fiscal Service issues a certificate at the place of tax accounting:

• to taxpayers who applied in accordance with para. 179.12 of the Tax Code - within 10 calendar days from the date of receipt of the application;
• for taxpayers − residents who travel abroad for a permanent place of residence and applied in accordance with para. 179.3 of the Tax Code − within 30 calendar days after receipt of the tax declaration and payment of the due amount of tax.

The certificate can be issued in hard and/or soft copy.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the Formation of Costs by the Individual-Entrepreneur in the General System of Taxation” of 29.06.17 No. 894/О/99-99-13-01-02-14/ІПК noted: Individual-Entrepreneurs, which are in the general system of taxation, may include depreciation of FA purchased or manufactured after 01.01.17 in their expenses.

In this case, the expenses of acquiring or manufacturing such FAs must be supported by relevant documents.

Thus, there is no need to calculate tax amortization for FA, received by entrepreneurs to 2017.

The cost of self-employed individual does not include the cost of purchasing or self-producing of such FA.

The State Fiscal Service of Ukraine in its letter “On Approval of Amendments to the Form of the Report on the Use of Income (Profit) of a Non-Profit Organization” of 19.07.17 No. 19001/7/99-99-15-02-01-17 recalled the updating of the Non-Profit Report Form (hereinafter − Report).

In particular, the tax authorities emphasize these changes.

1. Information on the date and number of the decision to include a non-profit organization in the Register of non-profit institutions and organizations (line 7) as well as a sign of non-profitability (line 8) are obligatory details of the report form. Therefore, these lines should indicate the date and number of the last decision of the tax authorities on inclusion, reintroduction of non-profit organization into the Register and assign or change the non-profit characteristic.

2. Compared to the previous form of the report, line 2 “Reporting (tax) period of 20__” and line 3 “Reporting (tax) period, which is specified in 20_” of  the introductory part of the new report form provide for only two reporting (tax) periods: a year and a month.

3. The major part of the new form of the Report is presented in a new version and consists of two parts.

Part I of the Report should be filled in by all non-profit organizations, regardless of whether they have complied with the requirements specified in para. 133.4 of TCU or not. At the same time, the formation of incomes and expenditures, which are reflected in the Report, should be carried out according to the accounting rules, that is, at the moment of their occurrence, regardless of the date of receipt or payment of funds.

Part II of the Report is intended to calculate the tax liability for corporate income tax and is filled in only by non-profit organizations that have failed to comply with the requirements specified in para. 133.4 of the Tax Code.

4. The information on mandatory annexes in the form of financial statements is reflected in the “Availability of Applications” block and marked in the field “ФЗ6” in the new form of the Report.

The State Statistics Service of Ukraine by its Order “On approval of the form of state statistical observation № 2- Б (annual) “Report on the issue, placement and circulation of securities” of 17.07.17 No. 171 approved a new form of reporting for joint stock companies − securities issuers.

Form No. 2- Б “Report on the issue, placement and circulation of securities” will be put into effect from January 1, 2018. Issuers of securities will submit a report to the State Statistics Committee once a year.

The State Statistics Service of Ukraine by its Order “On Approval of Forms of State Statistical Observations Regarding the State of Business Activity of Companies” of 17.07.17, No. 172 changed the forms of reporting that were developed to monitor the state of business activity of companies.

In particular, the forms of statistical reporting were changed:

• “Questionnaire for industrial company” (2К-П);
• “Questionnaire for an agricultural company” (2К-С);
• “Questionnaire for a construction company” (2К-Б);
• “Questionnaire for the service industry” (2К-СП) and others.

New forms will be put into effect on January 1, 2018.

The State Statistics Service of Ukraine by its order “On Approval of Forms of State Statistical Observations No. 5- ЗЕЗ (monthly) “Report on Export (Import) of Non-Customs Goods” and No.14-ЗЕЗ (quarterly) “Report on the Acquisition (Sale) of Goods to ensure the life of vehicles, the needs of passengers and crew members” of 21.07.17, No. 190 approved new forms of statistical reporting for enterprises conducting foreign trade activities in the field of trade and transportation.

Thus, from January 1, 2018, the following will begin to operate:

• f. No. 5-ЗЕЗ (monthly) “Report on export (import) of goods not undergoing customs declaration” − applies to all legal entities that carry out export-import transactions with goods not undergoing customs declaration;
• f. No. 14-ЗЕЗ “Report on purchase (sale) of goods for insurance of the life support of vehicles, the needs of passengers and crew members” − applies to all legal entities that conduct foreign economic activity and have a license for the right to transport passengers and goods by transport vehicles.

Control and Responsibility

The President of Ukraine signed the Law of Ukraine “On State Control over Compliance with the Legislation on Food Products, Forages, Animal Origin by-products, Health and Welfare of Animals” of 18.05.17, No. 2042-VIII, which entered into force on July 04, 2017. Insufficient control over the production process and the quality of food products (especially of animal origin) created obstacles for Ukrainian producers to enter the markets of solvent states for a long time. A similar problem was related to the import of food products into Ukraine, which threatened the health of Ukrainian citizens.

In order to eliminate these barriers and avoid mass food poisoning, this regulatory act introduced an effective system of state control to verify compliance by market operators with the Legislation on Food Products, Forages, Health and Welfare of Animals, as well as Animal Origin Products during importation (forwarding) of such by-products into the customs territory of Ukraine.

The President of Ukraine signed the Law of Ukraine “On the Energy Efficiency Fund” of 08.06.17, No. 2095-VIII, therefore soon it would work. This legal act provides for the creation of an Energy Efficiency Fund, which will include the Supervisory Board, independent members of the Supervisory Board and the Directorate. The Cabinet of Ministers of Ukraine will regulate the actions of the new Fund.

The objective of the Fund is to maintain ideas for improving energy efficiency, stimulate and support measures that will promote the increase of energy efficiency of buildings and energy saving in the residential sector.

The Energy Efficiency Fund will carry out the following functions:

• providing loans, grants, warrants and guarantees to businesses and individuals as well as to partner banks and other intermediaries for the purpose of implementing energy efficiency projects;
• financial and technical evaluation of energy efficiency projects;
• risk assessment for projects and beneficiaries;
• regulation of cooperation with international financial organizations and donors.

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for the Return of Illegal State Aid Unacceptable for Competition” of 04.07.17, No. 468, determined the procedure for the execution of decisions of the Antimonopoly Committee on the return of illegal state aid.

The term for transferring and/or committing other actions, which ensure the return of illegal state aid to its recipients, can not exceed six months from the date of the official promulgation of the AMCU decision.

Illegally obtained state aid will have to be returned, even if it results in insolvency and/or bankruptcy of the recipients.

It should be recalled that illegal state aid is being returned in order to eliminate the distortion of competition caused by the competitive advantage obtained as a result of illegally provided state aid and to restore the state of such enterprises in the market in which they were before obtaining illegally state aid.

The Government’s decision will come into force on August 08, 2017.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the General Provisions on the Centre for Social Services for Family, Children and Youth” of 19.07.17, No. 528 made amendments to the General Provisions on the Centre for Social Services for Family, Children and Youth. The innovations, in particular, include the instruction to the local centres of social services to monitor the targeted use of state aid at the birth of the child.

The main tasks of the local centres of social services included the organization of mentoring for children living in institutions for orphans and children deprived of parental care, other institutions for children.

The Ministry of Finance of Ukraine by its Order “On approval of certain forms of documents necessary for the implementation of the Decree of the Cabinet of Ministers of Ukraine dated December 29, 2010, No. 1244” of 22.05.17, No. 517 approved the forms required for the sale of property, which is in a tax lien (Article 95 of the Tax Code of Ukraine), in particular:

• Act of revaluation of property of taxpayer, which is in a tax lien, when selling through retail organizations;
• Act of acceptance of delivery of property of the taxpayer, which is in the tax lien, when selling through retail organizations;
• Act of revaluation of property of the taxpayer, which is in the tax lien, for sale on the stock exchange;
• Notice on the sale of property of the taxpayer, which is in the tax lien.

The Ministry of Finance of Ukraine by its Order “On approval of the Procedure for conducting and forms of the Register of applications for payment by instalments, deferral of monetary obligations or tax debt” of 30.05.17, No. 540 determined the procedure for entering information to the Register of applications on payment by instalments, deferral of monetary obligations or tax debt, a system for recording information about applications and other documents related to the allocation of instalments, deferrals of monetary obligations or tax debt.

Information about applications received during the operational day, which is confirmed by the mark of the controlling body, should be entered into the register during the operational day of receipt in the chronological order of their receipt.

If the application has been received by the controlling authority after the end of the operational day, the information about such an application should be entered into the register during the next business day.

The register will be placed on the official web-portal of the State fiscal service of Ukraine. It will be open. Information in it will be daily updated.

It should be recalled that the Register will specify, in particular, the number and date of the decision of the controlling authority on the results of the consideration of the application, the date and number of the agreement on payment by instalments, deferral of the monetary obligation or tax debt, the value of the property transferred to the tax pledge.

The Ministry of Finance of Ukraine by its order “On approval of the Procedure for the appointment and dismissal of the tax administrator with determination of his/her functions and powers” of 25.05.17, No. 529 approved the procedure for the appointment and dismissal of the tax administrator with the determination of his/her functions and powers.

Thus, the tax administrator has a number of functions related to tax pledges, administrative seizure of property, sale of property, which is in a tax pledge, and collection of funds. In particular:

• making a description of the property in the cases provided by the TCU and drawing up an act describing such property;
• inspection of the state of conservation of property held in a tax pledge;
• consideration of the taxpayer’s application and the preparation of documents for assignment (postponement) of payment of monetary obligations (tax debt);
• organization of the description of the taxpayer’s property during the administrative arrest procedure and drafting of the relevant protocol;
• preparation and communication to the court of a notice regarding the release of the taxpayer’s property from administrative arrest;
• collection of funds from bank accounts of taxpayers with a tax debt and from accounts in the system of electronic administration of VAT opened in Treasury bodies in accordance with a court decision;
• organization of sale of the taxpayer’s property, which is in a tax pledge, etc.

The tax administrator is designated to a taxpayer who has a tax debt, by order of the head (his/her deputy or authorized person) of the controlling body at the place of registration of the taxpayer. In the same way, they are discharged from authority.

The Ministry of Finance of Ukraine by its Order “On Approval of the Regulation of the SFS Commission, which makes a decision to register a tax invoice/adjustment calculation in the Unified Register of Tax Invoices or refusal in such registration” of 26.06.17, No. 450 approved the procedure for the operation of the SFS Commission, which makes a decision regarding

the Registration of tax invoices in the URTI or refuses in it (hereinafter − Commission).

This procedure regulates the organizational nuances of the SFS Commission, defines the rights and obligations of its members, as well as the procedure for cooperation of the Commission with the territorial bodies of the SFS.

Thus, written explanations and copies of documents from payers are accepted for consideration by the Commission, which will facilitate the further registration of suspended TIs. The Commission within 5 working days from the day of receipt of the explanations or documents takes the final decision on registration of TI or refusal in such registration and sends it to the payer in electronic form (in the electronic cabinet).

The commission is a collegial body under the SFS, which includes officials of the fiscal department.

The Ministry of Finance of Ukraine by its Order “On Approval of the Procedure for conducting targeted auctions for the sale of property of a taxpayer in tax pledge” of 22.05.17, No. 518 approved a new Procedure for conducting targeted auctions for the sale of property of a taxpayer, which is in a tax pledge. According to its rules, the property that is in the tax pledge and the decision of the controlling authorities on the repayment of the entire amount of the tax debt has to be sold. An exception is a property that can be grouped and standardized, or that is perishable or which volume is not sufficient for the organization of public tenders, securities, as well as property for which the restriction is established by the law, and integral property complexes of companies whose property is in state or communal ownership.

Measures related to the sale of property at the target auction will be carried out at the place of registration of the payer after the decision making of the supervisor (his/her deputy or authorized person) of the controlling authority to repay the entire amount of the tax debt.

The authorized commodity exchanges will be organizers of target auctions. They must conduct an auction on the terms of the best price offer.

Financial Markets

The National Bank of Ukraine prepared a draft regulation of the Board of the National Bank of Ukraine “On Amendments to the Regulation on the Conduct of Cash Transactions in the National Currency in Ukraine”. This is stated on the official website of the National Bank.

The draft regulation provides for:

• to grant the right to economic entities to independently develop and approve the procedure of cash entering in accounting records by the inner order in their cash registers;
• to improve the procedure for calculating the cash register limit of the enterprise;
• to allow the issue of cash under the report for the purchase of scrap of ferrous and non-ferrous metal scrap for a period not exceeding 30 working days from the date of their issue.

The National Bank of Ukraine by its Resolution “On Amendments to the Resolution of the Board of the National Bank of Ukraine dated December 13, 2016, No. 410” of 10.07.17, No. 61 simplified the early repayment of loans from non-residents. The Resolution of the NBU Board No. 410 dated December 13, 2016 “On Regulation of the Situation in the Monetary and Monetary Markets of Ukraine” establishes prohibition on early repayment of foreign currency loans and loans received by residents from non-residents. The same document identified a number of exceptions to such a ban. The National Bank has expanded the existing exceptions to the early repayment of loans attracted from non-residents.

Thus, on July 11 (that day the Resolution came into force):

• banks have the right to repay such loans earlier;
• business can repay loans in the event that the shareholder of such a borrower or non-resident lender is an international financial institution;
• resident borrowers can make early repayments of loans provided that the non-resident lender is a bank.

The National Bank of Ukraine by its Resolution “On approval of Amendments to the guidelines for cash transactions by banks in Ukraine” of 11.07.17, No. 62 made amendments to the guidelines on cash transactions by banks in Ukraine, approved by the Resolution of the NBU Board dated June 1, 2011 No. 174 (hereinafter – Guideline No. 174).

The updated Guideline No. 174 stipulates that a cash document is a paper or electronic document that is issued for a cash transaction. At the same time, a cash document may be:

• in hard copy for the bank and client;
• in soft copy for the bank and in hard for the client;
• in soft copy for the bank and client.

At present, the bank (sub-office, branch) will be able to carry out cash servicing of clients using the electronic signature (hereinafter − ES), including electronic digital signature (hereinafter - EDS).

The client-individual has the right to use an EDS which, by its status, is equivalent to a personal signature, an EDS applied by the parties on a contractual basis, any other ES.

Other clients have the right to use EDS equivalent to their own signature, and EDS, which is used by the parties on a contractual basis.

Also, the banking services market regulator has clearly established that cash documents must contain the following requisites:

• name of the bank that carries out a cash transaction;
• date of transaction;
• indication of the payer and the payee;
• amount of the cash transaction;
• purpose of payment;
• personal signatures or ES of payer /payee and personal signature or EDS of bank employees (sub-office, branch) authorized to carry out a cash transaction.

The National Bank of Ukraine in its letter “On the procedure for banks calculations that discontinues banking activities with its depositors and other creditors” of 12.07.17, No.27-0006/48464 clarified how the bank, which decided to terminate its banking activities, should meet obligations to depositors and other creditors.

Consequently, the bank has the right to advance to meet its obligations related to the implementation of banking activities, including the right to termination of contracts unilaterally. By the way, this is stated in para.4 of Art.2 of the Law of Ukraine “On simplification of bank reorganization and capitalization procedures” of 23.03.17, No. 1985-VIII.

If the depositor or other creditor is absent, the bank must transfer the amount of the deposit and accrued interest on it, funds, securities, which belong to the depositor or another creditor, to the notary’s deposit, notary’s office in accordance with the legislation of Ukraine. The bank should transfer such funds or securities in a period of up to 30 calendar days from the day the depositor or another creditor notifies about early termination of the obligation.

The National Bank of Ukraine by its letter “On the peculiarities of transactions conducting on the basis of individual licenses in electronic form issued by the NBU to individuals” of 13.07.17,  No. 40-0005/48633 clarified that an electronic license could be the basis for the purchase of foreign currency. Since such a license has a limited period of validity, in the line “Basis for the purchase of foreign currency” of the relevant application is allowed to indicate the value:

• “individual license of the National Bank of Ukraine in electronic form”;
• “e-license of the National Bank of Ukraine”;
• or other similar meaning.

Consequently, it is allowed to file an application for the purchase of a foreign currency to an authorized bank without specifying in it the specific number of the e-license and the date of its issuance.

It should be reminded that an e-license is issued to a resident individual, which is not a business entity, for the purpose of carrying out a currency transaction for the transfer of funds from Ukraine in order to fulfil his/her obligations to a non-resident under an insurance contract of life, placement of funds on his/her own account outside Ukraine or making an investment abroad.

At the same time, an individual is allowed to conduct currency transactions for a total amount, which must not exceed in aggregate USD 50 000 inclusive (equivalent of this amount in another foreign currency at the official exchange rate of hryvnia to the foreign currency, established by the NBU at the date of publication, on the date of issuance of corresponding e-license) on the basis of e-licenses issued to him/her. The procedure for issuing e-licenses is regulated by the NBU Board resolution of 15.06.17, No. 54.

Securities Markets

The National Commission on Securities and Stock Market (hereinafter − NCSSM) in its decision “On Amendments to the Decision of the National Commission on Securities and Stock Market dated November 11, 2014, No. 1511 “On prevention of violation of investors’ rights and avoidance of the risks of professional participants” of 08.06.17, No. 423 clarified how the issuers or holders of securities should terminate an agreement with depositary institutions located in the ATO zone.

Consequently, if the depository institution has not changed its place of residence, the issuer of the securities has the right to terminate the contract with the latter and conclude an agreement with the new depositary institution.

In particular, the issuer, upon conclusion of the agreement on opening (servicing) accounts in the securities with a new depositary institution, must inform the owners of the securities in writing thereof. And also inform them about the details of the new depositary institution (full name, code for EDRPOU, location, and contact person telephone).

Labor and Salaries

The Cabinet of Ministers of Ukraine by its resolution “On amendments to the lists of industries, works, professions, positions and indicators, employment in which gives the right to retirement on the basis of preferential terms, approved by the Resolution of the Cabinet of Ministers of Ukraine dated June 24, 2016, No. 461” of 04.07.17, No. 479 amended the list of jobs, professions and positions giving the right to retirement on the basis of preferential terms (List No. 1 and List No. 2). In particular, for certain industries in the Lists No. 1 and No. 2 there were added workers engaged in repair of equipment in the current production conditions (for mining, ferrous metallurgy, production of coke products, production of non-ferrous metals, chemical production, etc.). List No.2 included, in particular, workers of warehouses and bases of storage and supply of pesticides and chemical products directly employed in the field of communication, engaged in work on the connection of leaded cables and cables with polyethylene and polychlorinated jackets.

However, there were removed X-ray laboratory assistants engaged in the offices of interventional radiology from the list No. 1.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine dated July 1, 1996, No. 710” of 19.07.17, No. 542 reduced the maximum amount of compensation for lost earnings to persons who were summoned to the bodies of pre-trial investigation, prosecutor’s office, court, or to bodies in the process of handling cases of administrative offenses. Now the maximum compensation will not exceed three times subsistence minimum for able-bodied persons. And now it is a threefold size, but the average salary of the person who was summoned for questioning.

In addition, the Government abolished the distribution of the normative value of one expert hour in public specialized institutions of forensic examination, depending on its complexity. Now there will be the only size - UAH 143. That is, the cost of an expert hour is significantly increased.

The Resolution will come into force on January 1, 2018.

The Ministry of Social Policy of Ukraine in its letter “On the application of paragraph 10 of the Order No. 100” of 10.05.17, No. 1380/0/101-17/282 reported that in case of changing the tariff rate (salary) to individual employees in connection with assigning a higher grade or transferring to another job (position), which is paid higher, adjustments to the average wage should not be made.

It should be recalled adjustment is needed if the tariff rate has increased in the accounting period or in the period during which the average earnings are kept. The Ministry of Social Policy emphasizes that when it comes to calculating the compensation for unused vacation, then the adjustment is necessary in the case when the salary increase occurred in the calculation period (in this case there is no the period during which earnings are saved).

The Ministry of Social Policy of Ukraine by its Order “On bonuses and remuneration of heads of state enterprises belonging to the sphere of management of the State service of Ukraine on labor issues” of 06.06.17, No. 940, established the conditions and amounts of bonuses of state enterprise management heads belonging to the sphere of management of the State service of Ukraine on labor issues. Quarterly bonuses will be paid in case of implementation and over fulfilment of the planned indicators of net profit, net income (revenue) and capital investment. Size will be determined by a certain amount of salary (depending on the achieved indicators). The quarterly bonus can not exceed 3 salaries.

The amount of the annual bonus will be determined depending on the performance of the financial plan indicators for the relevant year and the rates of change in the enterprise performance. Limit amount of annual bonus is 2 salaries.

In addition, the conditions and amounts of remuneration for effective management of the state property are determined. If the activity of the manager is considered to be satisfactory, the annual remuneration will be 2 salaries, if the effective - 4 salaries.

The State Service of Ukraine on Labor issues by its letter “Methodical recommendations for local governments on the implementation of state supervision over the observance of labor legislation” of 22.06.17, No. 6827/1/4-ДП-17 developed guidelines for the local councils on control of compliance with the Labor legislation.

The letter states that in order to exercise control powers, city councils of cities of region significance or united territorial communities are recommended to ensure the creation of new or imposing control powers on the current executive body. The number of the executive body sufficient for effective control is recommended to be set at the expense of 1 Labor Inspectorate by 20 000 population living on the territory of the city council of the city of a regional significance or a united territorial community. In the united territorial communities, which number up to 20 000 inhabitants, according to the decision of the community, control powers can be imposed on an authorized official who must have higher legal or economic education at an educational qualification level not lower than a junior bachelor’s or a bachelor’s degree.

The letter also specifies which duties and powers should be included in the job descriptions of inspectors.

Temporarily Occupied Territory

The Cabinet of Ministers of Ukraine adopted the Resolution “On Amendments to the Procedure for the Provision of Monthly Targeted Assistance to Internally Displaced Persons for the Payment of Housing and Communal Services of 04.07.17, No. 453, which amended the mentioned above Procedure. As it is known, if one of the family members of the immigrants owns housing located in other regions than the temporarily occupied territory, ATO areas and settlements located on the collision line, then targeted assistance should not be provided to cover the cost of living. From now on, the Government has made an amendment to this rule: this limitation shall not apply to the family, composed of soldiers from among persons who defend the independence, sovereignty and territorial integrity of Ukraine and are directly involved in the ATO, ensuring its implementation, while directly in areas of antiterrorist operation.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On accrual of Depreciation on Mortgage immovable property, located in Donetsk, which is not used in the economic activity of the taxpayer” of 15.06.17, No. 675/6/99-99-15-02-02-15/ІПК clarified that immovable property in the ATO zone, which the taxpayer did not use in economic activities, to be not the subject to tax depreciation.  Similarly, this property should not be depreciated in the tax-profitable account and in the period of its conservation.

Consequently, fixed assets (hereinafter − FA) in the ATO zone were actually equated to non-productive FA by the representatives of the fiscal department.

Non-productive FA are fixed assets not intended for use in the economic activity of the taxpayer.

Controlled Transactions and Transfer Pricing

The State Fiscal Service of Ukraine by its letter “On Non-submission of Transfers Pricing Documents” of 20.07.17 No. 19084/7/99-99-14-01-02-17 clarified that fine under para. 120.3 of TCU for non- submission upon request of fiscal authorities of transfers pricing documents, if such documents were not submitted within 30 calendar days from the date indicated by the postal service in the notice of delivery indicating the reasons for non-placing of the relevant request (and not from the date of the request).

It should be recalled that, upon request from the State Fiscal Service, taxpayers submit documentation for controlled transactions specified in the request within 30 calendar days from the date of receipt of the request (para. 39.4.8 of TCU).

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 28, 2017 No. 468” of 10.07.17, No. 17973/7/99-99-15-02-01-17 stressed that the order of the Ministry of Finance dated 28.04.17, No. 468 (hereinafter − Order No. 468), which amended the form of the Report on Controlled Transactions, entered into force on June 16, 2017.

Therefore, representatives of the fiscal department noted that the report on controlled transactions carried out by taxpayers during the reporting year 2016 should be filled in and submitted already according to the updated form in accordance with the procedure approved by the order No. 468. In addition to the above, Reports for 2016 submitted before the entry into force of the order No. 468, will be considered valid by the tax authorities.

The Other Things

The President of Ukraine signed the Law of Ukraine “On Amendments to the Law of Ukraine “On Education” on the peculiarities of access of persons with special educational needs to educational services” of May 23, 2017, No. 2053-VIII, which amended the Law of Ukraine on Education. In particular, it is supplemented by Art.231, which ensures the realization of the right to education of persons with special educational needs. The term “person with special educational needs” also appeared in the Law for the first time. This is “a person who needs additional permanent or temporary support in the educational process in order to ensure the right to education, promotion of personality development, improvement of health and quality of life, raising the level of participation in community life”.

According to the new edition of Art. 7 of the Law on Education, persons with special educational needs are provided with the right to study using the language, methods and communication methods most widely available for such persons, in particular the teaching of sign language and Braille. An individual development program will be developed for children with special needs. Also, the normative-legal act extends the powers of local executive authorities and local self-government bodies in the field of education, in particular, to ensure access of children with special needs to educational institutions, to transport them to the place of study and home.

Professional training or retraining of people with special educational needs in vocational schools will be carried out at the expense of budget funds (Article 40 of the Law on Education).

Also, the Law establishes two new forms of education − distance and individual (Article 3 of the Law on Education).

The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding the Organization of Recuperation and Rest of Children, Preserving the Network of Children’s Health-Improving Institutions” of 06.06.17, No. 2081-VIII, which provided for the establishment of the State Register of Property Objects of Children’s Facilities Improvement of all forms of ownership. Property objects to be included in the register − complexes of buildings, structures, including engineering, other premises, land plots on which they are located, which collectively provide the activity of the institution. The purpose of conducting such an electronic database is to prevent the liquidation, pledge transfer, re-profiling, use not for the purpose of these objects, and also to ensure the availability and openness of information about children’s recreation facilities and the services they provide.

The Government was entrusted with the task of providing a technical opportunity to submit information to such a register in the period up to April 1, 2018. The procedure for submission of information by the heads of institutions for inclusion in the State Register should also be determined by the Cabinet.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine dated December 12, 2011 No. 1271” of 12.07.17, No. 493 approved a new edition of the list of paid services that can be provided by state and communal institutions of culture. The updated document allows providing services for placing promotional products and advertising constructions during performances, theatrical, musical, choreographic productions, circus performances, concerts, festivals, contests, benefits, pop shows, exhibitions, educational and other cultural and artistic events (projects), video and film demonstration, information, entertainment and other events, performances by professional performance ensembles, artistic groups and individual artists (performers).

Also, the new list provides for the following paid services:

• display of advertising materials of legal entities and individuals in the premises or on the sites of cultural institutions;
• printing of information from electronic media, laminating of documents;
• extension of the term of use of documents, reservation of documents, night subscription
• lease of vehicles, equipment, property, tools belonging to cultural institutions; services related to the creation of conditions for organized tourism, short-term rest (tenting and campfires in specially equipped and designated places for it, horse and pony rides, bicycles, electric cars, boats, etc.).