Legislation Overview (November 2017)

Taxes

VAT

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the Formation of a Tax Credit” of 30.10.17, No. 2442/6/99-99-15-03-02-15/ІПК responded to the request of the VAT payer regarding the possibility of including in the tax credit of a tax invoice, in which the figure of line 7 “Delivery price of the unit of goods/services excluding value added tax” is reflected with more than two decimal places.

Representatives of the fiscal department recalled the basic requirements for the confirmation of a tax credit from para. 198.6 of TCU and para. 201.10 of TCU. In addition, they traditionally emphasized that the details of “Delivery price without tax” is one of the mandatory requisites of the tax invoice specified in para. 201.1 of TCU, and all the columns of the tax invoice, which have cost figures, should be filled in hryvnias with kopecks (except for the figure in line 7, if otherwise provided for by applicable law).

Thus, a tax invoice registered in the URTI, which specifies the price of supplying a unit of product /service, which contains more than two decimal places, is the basis for the formation of a tax credit, provided that it conforms to other requirements specified in the TCU.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On Registration of Permanent Representative of a Non-Resident by the VAT Payer” of 20.10.17, No. 2323/6/99-99-15-03-02-15/ІПК informed that the received funds from the parent company to the coverage of any expenses of the non-resident’s representation (including wages) should be regarded as a fee for the services provided to such a parent company. In other words, in the opinion of the representatives of the fiscal department, such a transaction is the subject of VAT, and therefore, it will be included in the calculation of the registration limit of UAH 1 million.

Controllers also noted that permanent representative offices of a non-resident are registered by VAT payers in the general order (Art. 181−182 of TCU). That is, there are no exceptions and/or peculiarities regarding registration of representation as a VAT payer under current legislation.

Consequently, a post representation may voluntarily become a VAT payer, or it will be compulsory to register if the total amount of deliveries aggregate exceeds UAH 1 million (excluding VAT) during the last 12 calendar months.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On taxation of VAT transactions of housing” of 03.11.17, No. 2501/6/99-99-15-03-02-15/ІПК reports that the transaction for the supply of construction services housing (housing facilities) for a construction organization (contractor) is the first supply of housing in accordance with para. 197.1.14 of TCU. Such transactions are considered to be subject to VAT and tax at a rate of 20%, regardless of whether the materials of the customer or the contractor are used for the construction of such housing.

Transactions for the further transfer of finished newly built housing to buyers − individuals are exempted from VAT in accordance with para.  197.1.14 of TCU.

In this case, when the customer in the process of construction before the registration of ownership of newly built housing, in accordance with the previous contracts with buyers − individuals, receives security payments, transactions for the transfer of such payments by buyers − individuals to the customer’s account do not change the tax base in the customer.

But tax authorities also emphasize: in accordance with para.198.5 of TCU, if the purchased goods/services, non-current assets are intended for their use in transactions exempted from taxation in accordance with Art. 197 of TCU, the taxpayer is required to calculate compensatory tax liabilities.

The State Fiscal Service of Ukraine by its letter “On the reflection in accounting of an unauthorized (not signed by the lessee) the act of acceptance-transfer of services for lease of property and the decision of the court on the collection of rent from the tenant” of 30.12.16, No. 28694/5/99-99-15-03-02-14 reminded landlords that tax deductions from value added tax (hereinafter − VAT) should be charged irrespective of the fact that the tenant signs an act of rendered services. Representatives of the fiscal department explained how to do it.

In the case of the supply of services for the lease of property, the supplier must make an act of acceptance and transfer of services and send it to the signature of the recipient. If the tenant has refused to sign the act, the supplier must draw up an act about the refusal of the signature and reflect the tax lease obligations in the VAT return for the reporting period, which actually provided such services.

The landlord who has not reflected the tax obligations must correct his/her mistake by means of a clearing calculation.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Procedure for Compiling the Calculation of Adjustment” of 16.11.17, No. 2639/6/99-99-15-03-02-15/ІПК clarifies the circumstances in which the payer of value added tax (hereinafter − VAT) has the right to adjust tax liabilities, if his/her buyer is not registered as the VAT payer.

Representatives of the fiscal department support the possibility of adjusting tax liabilities in a situation where the buyer was not a VAT payer at the date of the tax invoice and at the time of making the calculation of the adjustment was already in the ranks of VAT payers. Controllers believe that in this case it should be indicated “Non-payer” in column “Recipient (buyer)” of the calculation of the adjustment, and in the line “Individual tax number of the recipient (buyer)” put “100000000000”. Such adjustment calculation is subject to registration by the supplier.

Representatives of the fiscal department also called for the reduction of tax liabilities after the registration of the adjustment calculation  in the Unified Register of Tax Invoices by the supplier, in the situation when the tax invoice was drawn up for a non-payment of VAT, and in the future, such a buyer returned the unpaid goods. However, the controllers denied the possibility of drawn up of an adjustment calculation for the reduction of tax liabilities in the event of a return to the non-payer of the VAT of the balance of the amount of funds, that is, an advance not backed by goods. At the same time, the fiscals refer to paragraph 192.2 of the Tax Code of Ukraine (hereinafter − TCU), which makes a request for adjustment in transactions with non-payers of VAT − a full calculation, which involves both the return of goods and the return of payment.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the procedure for VAT taxation of transactions for the compensation of the value of communal services and electricity to the lessee by the lessor in the event that such a tenant is an embassy of foreign states” of 16.11.17, No. 2650/6/99-99-15-03-02-15/ІПК explained how the landlord can charge the VAT on transactions with the tenant for the reimbursement of the value of communal services and electricity in the event that such a tenant is an embassy of a foreign state. In addition, fiscal authorities paid attention in their explanation to the order of filling in tax invoices for such transactions.

According to the representatives of the fiscal department, in the general case, this transaction requires the VAT imposing (para. 185.1 of TCU). At the same time, para. 197.2 of TCU exempts from taxation the supply and import into Ukraine of the goods/services provided for the own needs of diplomatic missions, consular offices of foreign states and representations of international organizations in Ukraine, as well as for use by persons from among diplomatic staff of these diplomatic missions and members of their families living with such persons.

The procedure for exemption from VAT on these transactions was approved by the Resolution of the Cabinet of Ministers of Ukraine dated 27.12.10, No. 1240 (hereinafter − Procedure No. 1240).

Referring to paras. 6, 9 of Procedure No. 1240, controllers assert: transactions related to the lease of office, residential and non-residential premises for the needs of the embassy of a foreign state, are exempted from VAT duties without observance of the principle of reciprocity, provided that the contracts (agreements) are concluded on behalf of the diplomatic mission or the state that sent it.

In case of non-compliance with this condition, the provider of services related to the lease of premises for the needs of the embassy of a foreign state is required to impose the VAT. At the same time, the amount of tax paid in the cost of such services may be reimbursed to the embassy in accordance with Procedure No. 1240.

Regarding the filling of tax invoices for transactions related to the supply of such services to the embassy of a foreign state, fiscal noted: an appropriate mark “X” should be made in the upper left part of such a tax invoice and the type of reason “12” should be indicated. At the same time, the name of the legal entity (diplomatic mission) or the last name, first name, patronymic of the physical person (persons from the diplomatic staff and their family members) should be fixed in the column “Recipient (buyer)”, ITN “200000000000” should be put in the line “Individual tax number of the recipient (the buyer)”.

If the tax invoice is made up of a tax-exempt supply of goods/services, “Without VAT” should be marked in the column “Composed for transactions exempted from taxation” of the upper left part of such tax invoice.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Tax Consequences of Operations for the Supply of Goods/Services Financed by International Technical Assistance” of 21.11.17, No. 2679/6/99-99-15-03-02-15/ІПК reported: the value added tax payer (hereinafter − VAT) has the right to include in the tax credit the amount of VAT paid during the import of goods into the customs territory of Ukraine (of course, on the basis of a duly executed customs declaration). In addition, such a right arises regardless of whether these goods are purchased (imported) for the implementation of the project of international technical assistance or for other purposes.

At the same time, the VAT payer does not count “compensating” VAT liabilities on the basis of para. 198.5 of the Tax Code of Ukraine (hereinafter − TCU) for transactions related to the supply of such goods within the framework of the implementation of the project of international technical assistance (which exemption from VAT to be provided for by para. 197.11 of TCU).

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the part of the transactions related to the supply of agricultural products, the transactions for the sale of sugar, made from own raw materials on their own or on tolling terms, and the right to receive a budget subsidy for this kind of activity” of 27.11.17, No. 2723/6/99-99-15-03-02-15/ІПК explained to farmers that sugar production did not belong to activities for which a budget subsidy to be foreseen. Therefore, regardless of whether the company produces sugar independently or under tolling conditions, during the delivery of such products, they make a regular tax invoice. That is, they do not indicate the code “2” in the second part of its serial number. Such a code is written only in tax invoices for subsidized products. The list of types of products for which a budget subsidy is stipulated is given in para. 161.3 of the Law of Ukraine “On State Support to Agriculture of Ukraine” of 24.06.04, No. 1877-IV.

Accordingly, data on sugar supplies do not fall into the annex of ДС9 of VAT declaration.

At the same time, sugar produced by a farmer alone or under tolling conditions is considered an agricultural product. That is, the volume of its supply is taken into account when calculating the share of agricultural commodity value. Namely − they are included in Table 3 of Table 2 of the annex to ДС9 and to graph 4 of Section 6 of the Statement on the introduction of the agricultural producer in the Register of recipients of the budget subsidy. It should be reminded that farmers who have a share of agricultural products of not less than 75% of all deliveries during the previous 12 reporting periods can fall into this register.

The Ministry of Finance of Ukraine by its Order “On Approval of Amendments to the Criteria for Assessing the Risk Level Sufficient to Stop the Registration of a Tax Invoice/Calculation of Adjustments in the Unified Register of Tax Invoices” of 09.11.17, No. 926, which once again amended the Criteria for blocking tax invoices, increasing the number of grounds for blocking. The order envisages, in particular, to stop the registration of adjustments of calculations to tax invoices, if there is a change in the value of goods/services more than twice and/or change in the nomenclature of goods/services (for commodity codes according to UKT ZED (Ukrainian Commodity Classification for Foreign Economic Activity) −  the change of the first four digits of the code, and for service codes for DKPP (state classification of commodities  and services) - the first two digits of the codes).

Also, the Ministry of Finance detailed and extended the conditions under which the payer’s data table in the monitoring system will be automatically taken into account.

Corporate Income Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On submission of statements by a non-profit organization that has not been re-registered before July 1, 2017” of 17.11.17, No. 2662/6/99-99-15-02-02-15/ІПК again reminded: non-profits, which before July 1, 177 did not bring their constituent documents in accordance with the requirements of para. 133.4 of the Tax Code, became taxpayers of the income tax. Consequently, such organizations will have two statuses in 2017, appropriate reporting should be submitted under each of them. That is:

• for the period from 01.01.17 to 30.06.17, it is necessary to submit a Report on the use of the income (profits) of a non-profit organization and relevant financial statements to the controlling body within 60 calendar days following the last calendar day of the reporting (tax) year, that is, by March 1, 2018;
• for the period from 01.07.17 to 31.12.17 − a declaration on the corporate profit tax and financial reporting to the controlling body within 60 calendar days following the last calendar day of the reporting (tax) year, that is, by March 1, 2018.

Starting from 01.01.18, an organization that has lost its non-profit status is taxed on a general basis as the income tax payer.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Eligibility of Receiving Funds from the Students as Part-Payment of Education” of 28.11.17, No. 2746/6/99-99-15-02-02-15/ІПК informed the charity fund, which plans to receive money for students’ education: the fund, included in the Register of non-profit institutions and organizations, may provide educational services only on a non-profit basis for the achievement of statutory goals. That is, the purpose of the activity of such an organization should not be profit making. If such a fund violates the requirements specified in para.133.4 of TCU, it will lose its non-profits status. This means that the charity will become a taxpayer on a general basis.

PIT and War Tax

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Taxation of Personal Income from the Sale of Agricultural Products” of 08.11.17, No. 2555/6/99-99-13-02-03-15/ІПК reported that the taxpayer of the personal income tax (hereinafter − PIT) should not include income from their sale of own agricultural products to his/her taxable income. However, such products must be made on a land plot given to an individual under the conditions specified in para. 165.1.24 of the Tax Code of Ukraine (hereinafter − TCU).

When selling agricultural products, a natural person is required to provide a tax agent with a copy of the certificate indicating that he/she has a designated land plot. At the same time, the payer of PIT can independently choose a method of submitting a copy: either on his/her own or through an official representative. Such a choice will not affect the procedure for determining the income of individuals.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Taxation of the Personal Income Tax and the War Tax of Income Paid by Court Order” of 10.11.17, No. 2595/6/99-99-13-02-03-15/ІПК provided clarification on the income tax and the war tax of moral damage paid by court decision.

Representatives of the fiscal department noted that the taxable income of the taxpayer includes income in the form of non-pecuniary (moral) damages in accordance with para. 164.2.14 of TCU, except for cases specified by the mentioned para. In this case, the tax agent who accrues (pays, provides) taxable income in favour of the taxpayer, is obliged to withhold the tax and the war tax from the amount of such income at his/her expense (paragraph 168.1.1 of TCU).

Consequently, if you compensate moral damages to an individual by court order, do not forget to withhold the income tax and the war tax from the amount of reimbursement.

Unified Social Contribution

The State Fiscal Service of Ukraine in its letter “On certain issues of filling in the report on the amounts of the accrued unified contribution to the compulsory state social insurance” of 03.10.17, No. 16871/5/99-99-13-02-01-16 reported: if the index for the previous periods was calculated for the employee in the current month, the unified contribution under these amounts should be reflected in the month of the actual accrual (current), without reference to the corresponding months for which such an accrual was made.

Representatives of the fiscal department refer to Part 2 of Art. 9 of the Law of Ukraine “On the Collection and Accounting of the Unified Contribution to the Mandatory State Social Insurance” of 08.07.10, No. 2464-VI and sub-para.1 of para.3 of sec. IV of Guidelines on the procedure for accrual and payment of the unified contribution to the compulsory state social insurance, approved by the order of the Ministry of Finance of Ukraine of 20.04.15, No. 449. In accordance with these regulations, the unified contribution is calculated on the basis of accounting and other documents on the accrual (calculation) of payments (income).

Consequently, the indexation amounts, calculated for previous periods in connection with the detection of errors in the calculations, are reflected in Table 6 of the report on the unified social contribution (hereinafter – USC) as a part of the total salary for the current period.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Application of Penalties for Untimely Payment of the Unified Contribution to the Mandatory State Social Insurance” of 24.11.17, No. 2702/5/99-99-13-02-01-15/ІПК noted that payers who were registered with the revenue and expenditure authorities located in the occupied territories and who paid the unified social contribution in a timely manner to be liable for such non-payment on a general basis.

The reason for this decision of the representatives of the fiscal department is that the norms that previously exempted such payers from the payment of the USC were cancelled from 01.01.16. It is also worth noting that in the 2014-2015 biennium, a list of settlements in the territory of which the antiterrorist operations were conducted, was reviewed three times. It also affects the decision to impose fines for non-payment of the USC.

Accounting and Reporting

The President of Ukraine signed the Law of Ukraine “On Amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” (regarding the improvement of certain provisions) 05.10.2017, No. 2164-VIII.

It should be recalled that this Law, approved by the Verkhovna Rada of Ukraine on 05.10.17, is one of the draft laws in the sphere of European integration of Ukraine. It, in particular, clarifies the requirements for reporting under IFRS, for accounting purposes, the requirements for the size of enterprises are established, as well as the requirements for the registration of the primary supporting documents is weakened.

The Ministry of Finance of Ukraine in its letter “On Preparing the Financial Reporting by Small Business Entities” of 12.06.17, No. 35210-07-10/15486 clarified what forms of reporting should be used by the business entities, which lost the signs of a small enterprise in the middle of the year and began to meet the signs of a microenterprise. 

Under such conditions, representatives of the financial department give the right to choose to the enterprise. That is, to submit financial statements for the reporting period in which such a transition took place is possible in both forms No. 1-м and No. 2-м, and in forms No. 1-мс and No. 2-мс.  But from the next year, such a microenterprise should submit only a Simplified financial report of a small business entity (f. No. 1-мс and f. No. 2-мс).

The Ministry of Finance of Ukraine by its Order “On Approval of the Procedure for the Application of the Standards of Paras. 102.6-102.7 of Article 102 of Chapter 9 of Section II of the Tax Code of Ukraine” of 20.10.17, No. 861 established a mechanism for the extension of deadlines for submission of a tax return, applications for review of decisions of controlling bodies, about the return of overpaid money obligations.

An application for the extension of the deadline should be submitted in an arbitrary form. However, it must contain a clear and concise justification of the grounds for extending the deadlines, with reference to the documentary evidence of the facts, the type of tax (duty), tax period and the amount of the monetary obligation, etc.

Such an application should be submitted within 30 calendar days following the expiration of the circumstances giving the right to change the deadlines or the commencement of their action.

Of course, these circumstances need to be documented. Thus, the Ministry of Finance has identified a list of such evidence for each case.

It should be recalled that the right to extend the deadline arises if an official of a legal entity (individual-payer):

• was outside Ukraine;
• was sailing on ships abroad of Ukraine as part of the crew of such vessels;
• was in places of deprivation of liberty after a court sentence;
• had limited freedom of movement in connection with detention or captivity in the territory of other states or as a result of other circumstances of force majeure, documented;
• was recognized by a court decision as missing or was wanted in cases stipulated by law.

The Ministry of Infrastructure of Ukraine in its letter “On Certain Issues Regarding Fuel and Lubricant Costs” of 14.09.17, No. 9080/25/10-17 stressed that the Norms for fuel and lubricants consumption in road transport regulate the order of depreciation of fuel for rolling stock motor transport, for carrying out transport work, etc. However, they do not apply to fuel costs for industrial and technological equipment.

According to the explanations regarding the write-off of fuel for production equipment, the Ministry of Infrastructure directs all those interested in the State Enterprise “State Moto transport Research and Design Institute”.

The Ministry of Defense of Ukraine by its Order “On Approval of the Guidelines on the Registration of Military Property in the Armed Forces of Ukraine” of 17.08.17, No. 440 approved the Guidelines on the Registration of Military Property in the Armed Forces of Ukraine (hereinafter − Guidelines). It is intended to streamline the organization and keeping records of military assets secured by military units, educational institutions and their units, institutions and organizations of the Armed Forces of Ukraine.

In particular, the Guidelines provides for the division of military property into 5 categories with qualitative characteristics, such as: new; used; with expired use; needs repairs; unsuitable for intended use. According to these categories, they are registered in the warehouse (in the repository). The relevant category is also indicated in the primary documents, by which the property records are kept.

By the way, the primary documents, in accordance with the Guidelines, are the invoices, requirements, information, certificates, certificates and other documents that are intended for the registration and confirmation of the performed transactions that are related to the movement and change in the cost and quality (technical) state of military property, and is the basis for the registration of accounting data in the registries.

The National Commission, which carries out state regulation in the field of financial services markets (Natskomfinposluh) by its decision “On Approval of the Procedure for Reporting by Financial Companies, Financial Institutions − Legal Entities of Public Law, Trusts, as well as by Legal Entities, Business Entities, Which, by their Legal the status is not financial institutions, but have the opportunity to provide financial leasing services specified by laws and regulations of the Financial Services Commission or the Natskomfinposluh” of 26.09.17, No. 3840 approved a new procedure for filing financial documents to it by financial companies, financial institutions − legal entities of public law, trust companies, as well as enterprises (institutions) which are not financial institutions according to their legal status, but according to law, have the right to provide services of financial leasing.

Among the main changes are: the timing of submission of monthly financial statement is increased for financial companies - managers and financial companies – administrators. It will be required to submit in due time no later than the 25^th of the month that occurs for the reporting, and not until the 15^th. The composition of financial reporting was also corrected.

The changes also affected the order of submission of financial statements to the National Financial Services Commission. All of the abovementioned entities have to submit it with an exclusive electronic signature. It can be filed in paper form only on the basis of a decision of the Natskomfinposluh regarding a separate financial institution.

At the same time, the new procedure for submission of financial statements to the National Financial Services Commission takes effect on 01.01.18. At the same time, the indicated financial institutions submit the reports for December and the fourth quarter of 2017, annual reports for 2017, in accordance with the requirements of the order that was in force on the date of such reporting.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the adjustment of the financial result before taxation to the amount of the impairment of a financial investment in a subsidiary (holding of a block of shares), which was accounted for at cost in accordance with IFRS” of 02.11.17, No. 2486/6/99-99-15-02-02-15/ІПК clarified whether the financial result for impairment of a financial investment in a subsidiary (shareholding), which is accounted for at cost in accordance with the rules of IFRS should be adjusted.

According to the representatives of the fiscal department, sec. III of TCU does not provide for differences to to adjust the financial result before taxation to the amount of the impairment of the financial investment in the subsidiary, if such financial investment is accounted for not using the equity method or proportional consolidation method. Therefore, these transactions (including losses due to them) are reflected in the financial result before tax in accordance with the rules of accounting.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the reflection of business transactions based on the invoice” of 14.11.17, No. 2608/О/99-99-13-01-02-14/ІПК has emphasized that the invoice for its purpose does not correspond to the signs of the original document.

Thus, the use of invoices at the company is only informational. In fact, such a document certifies only the intention to pay for goods delivered or services rendered.

At the same time, the fact of receipt of goods or services must be confirmed either by an expenditure bill or an act of acceptance-transfer of the performed works (services).

Control and Responsibility

The President of Ukraine signed the Law of Ukraine “On the Basic Principles of Providing Cybersecurity of Ukraine” of 05.10.17, No. 2163-VIII. It is interesting for business that cyber security measures are also required by legal entities belonging to critical infrastructure objects, as well as business entities, citizens of Ukraine, other persons who carry out activities and/or provide services related to information resources, electronic information services, electronic transactions, electronic communications, information security and cybersecurity. 

Critical Infrastructure objects are required to conduct an independent audit of their information security. And objects of critical infrastructure may include legal entities regardless of ownership, which:

1) carry out activities and provide services in the fields of energy, chemical industry, transport, information and communication technologies, electronic communications, banking and financial sectors;

2) provide services in the areas of life support of the population. In particular, in the areas of centralized water supply, drainage, supply of electric energy and gas, food production, agriculture, health care;

3) are communal, emergency and rescue services, emergency services to the population;

4) are included in the list of enterprises of strategic importance to the economy and security of the state;

5) are objects of potentially dangerous technologies and industries.

The President of Ukraine by his decree “On additional measures for the development of forestry, rational use of nature and preservation of objects of the nature reserve fund” of 21.11.17, No. 381/2017 instructed the Government to develop laws and carry out appropriate measures that would promote the development of forestry and preservation objects of the reserve fund of Ukraine.

Government officials were asked to create a state fund for forestry development, to determine sources of its filling and directions of use, as well as to evaluate the possibility of crediting such a fund rent for special use of forest resources.

Besides, the Government has to approve the program “Forests of Ukraine – 2030”, which provides for intensive reproduction of forests, increase of their areas, planting of certain territories, and also active struggle against pests and diseases. All these measures should increase the efficiency of forestry activities in the country.

In addition, the State Agency for Forest Resources aims to implement a unified state system of electronic accounting of wood and a system that will help to confirm the origin of wood in accordance with European norms and standards.

The President of Ukraine signed the Law of Ukraine “On Electronic Trust Services” of 05.10.17, No. 2155-VIII.

The new law introduces the term “electronic trust services”. Their composition includes:

• creation, verification and confirmation of advanced electronic signature or stamp;
• formation, verification and confirmation of the validity of the certificate of electronic signature or stamp;
• formation, verification and validation of the certificate of website authentication;
• formation, verification and confirmation of the electronic timestamp;
• registered electronic delivery;
• keeping up-to-date electronic signatures, seals, timestamps and certificates associated with these services.

At the same time, each of these services can be provided separately or in aggregate.

The Cabinet of Ministers of Ukraine by its resolution “On Amendments to the Traffic Rules” of 10.11.17, No. 883 limited the speed of vehicles.

On 01.01.18 the traffic of vehicles will be allowed at a speed of no more than 50 km/h in the settlements.

To ensure the implementation of the new rules, government officials propose toughening responsibility for their violation (but without parliamentary assistance it is only an initiative). For example, it is planned to set a fine of UAH 3 400 for exceeding the maximum permitted speed of more than 50 km/h (now fine for this offense is UAH 510). Also, it is planed to set a fine of UAH 3 400 for leaving the place of an accident, and provide for deprivation of a driver’s license for up to six months.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedures, approved by the Resolutions of the Cabinet of Ministers of Ukraine dated July 8, 2009, No. 694 and dated November 11, 2009, No. 1200” of 15.11.17, No. 856, regulated the issue of the procedure for registration and introduction into operation of agricultural and forestry tractors, trailers, trailer machines and other agricultural machinery. In particular, the Cabinet of Ministers clarified the list of documents that should be submitted to owners of such cars to the State Inspection of Agriculture for departmental registration.

From now on, it is necessary to submit the following instead of the certificate of conformity or the certificate of recognition of conformity for cars registered for the first time:

• declaration of conformity, issued by the manufacturer or its authorized representative, − for machinery for which it is applied the Technical Rules of safety of cars, approved by the Resolution of the Cabinet of Ministers of Ukraine dated January 30, 2013, No. 62;
• type-approval certificate issued by the conformity assessment body − for machinery for which it is applied the Technical Regulation for the approval of type of agricultural and forestry tractors, their trailers and variable trailer machines, systems, components and separate technical units, approved by the Cabinet of Ministers of Ukraine dated December 28, 2011, No. 1367 (hereinafter − Technical Regulation No. 1367);
• certificate of conformity to an approved type, issued by the manufacturer or its authorized representative on the basis of a type-approval certificate, − for machinery for which it is applied the Technical Regulation No. 1367.

The discussed amendments were made in connection with the introduction of the mandatory application of the Technical Regulation No. 1367. This approach to certification corresponds to the European model, in particular the Directive of the European Parliament and the Council of the EU dated May 26, 2003 No. 2003/37/EU on approving the type of agricultural or forestry tractors, their trailers and variable trailer machines, together with their systems, component parts and separate technical units.

It should be recalled that owners of agricultural machinery have 10 days from the date of purchase for the departmental registration. A businessman, who carries out wholesale or retail trade in cars, does not register them, if the documents of acceptance-transfer of machines are issued in accordance with the established procedure.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for the Conduct of a Competition for the Right to Lease State Property” of 22.11.17, No. 886 amended the Procedure for conducting a tender for the right to lease state property. In particular, the payment of a guarantee fee (six start rentals) or the possibility of providing a bank guarantee for the corresponding amount for all participants in the competition for the right to lease state property. The fee will be refunded to all those who have been awarded the contest to the winners. The guarantee fee will be credited for the rent fee to the winning bidder.

In addition, the tenant within 10 business days of the date of conclusion of the lease agreement will have to make an advance payment of not less than six months. According to officials, such additional conditions are a kind of fence against participation in the contest of unscrupulous participants.

The Ministry of Finance of Ukraine by its Order “On Approval of Changes to the Procedure for Accounting of Taxpayers and Fees” of 06.10.17, No. 839, which changed the rules for accounting for taxpayers.

This time the Ministry of Finance removed norms that are not directly related to accounting from the Taxpayers’ Accounting Standards. For example, regarding the rules of conducting tax audits in case of termination of a legal entity or termination of entrepreneurial activity of an individual -entrepreneur.

It is also expedited to remove the registration (at the main place of registration) by the previous location (place of residence). After all, this will be done automatically simultaneously with the registration (according to the main place of account) of the new location (place of residence). It should be reminded: earlier two business days were assigned for these actions.

In addition, it has been specified that registration with the main place of accounting of a separate subdivision of a foreign company, an organization which information is included or to be included in the Unified State Register (hereinafter − USR), is carried out on the basis of information from this register in the controlling bodies. If information about such a unit is not made and should not be entered into the USR, it will be registered with the controlling body after proper accreditation (registration, legalization) of such a unit in the territory of Ukraine.

The Ministry of Infrastructure of Ukraine by its Order “On Approval of the Amendment to Certain Regulatory Acts of the Ministry of Infrastructure of Ukraine” of 23.10.17, No. 358 set the rates of port dues for oil tankers in foreign navigation. Thus, for example, a lighthouse fee in the seaports of Chornomorsk, Mykolaiiv, Odesa, Yuzhnyi, will be paid at a rate of USD 0.0081 per 1 cubic m of vessel volume, and berth charge at the same ports will be USD 0.0061 per 1 cubic m of vessel volume by ship.

It should be recalled that there are no norms for imposing port duties on oil tankers in foreign navigation in the current version of the procedure for collecting rates sizes of port charges, approved by the Ministry of Infrastructure of Ukraine of 27.05.13, No. 316.

The Ministry of Justice of Ukraine in its letter “On the execution by a private executor of a court order to impose an arrest on money” of 01.11.17, No. 11265/20.5/46-17 clarified: a private executor could enforce a court order to impose an arrest on funds, made in civil or commercial matters.

It should be recalled that the private executor during the first year of conducting of such an activity can not make enforcement of decisions under which imposing a sum of 20 or more million hryvnias or an equivalent amount in foreign currency, as well as by January 1, 2018, he/she is prohibited from enforcing decisions, according to which the amount of the penalty is six and more million hryvnias or the equivalent amount in foreign currency.

However, these restrictions apply to court decisions, the operative part of which provides for the collection of such amounts of funds. And the imposition of arrest on funds is one of the types of claim protection. The amount of money seized is not subject to collection.

Consequently, the private executor may execute a court order to seize money, regardless of the amount of money to be seized.

The Ministry of Health of Ukraine by its Order “On Amendments to the State Sanitary Rules and Norms “Hygienic Requirements for the Establishment and Operation of X-ray rooms and X-ray Procedures” of 22.09.17, No. 1126 changed the state sanitary rules and norms “Hygienic Requirements for the Arrangement and the operation of X-ray rooms and X-ray procedures”.

In particular, they allowed the placement of dental facilities (rooms) equipped with dental X-ray machines, in residential buildings and public facilities.

Dental X-ray machine − an X-ray machine designed to produce an image of the teeth and jaws on a film or digital media (radio-visualograph).

The requirements for placing an X-ray dental apparatus indoors are also announced. For example, the direction of the primary beam should not be directed towards the entrance door, or the windows of the first floor, or other vulnerable areas. If it is directed to the window of the first floor, it is necessary to install protective devices (blinds).

The State Regulatory Service of Ukraine by its the Order “On Approval of the Plan for Complex Measures of State Supervision (Control) for 2018” of 15.11.17, No. 139, approved the Plan for the implementation of comprehensive state supervision (control) measures for 2018.

Entities included in the plan of complex inspections should expect one check at once by several different bodies of state supervision (control).

It should be recalled that comprehensive plan inspections are carried out once a year, and all controlling bodies that have planned to inspect a specific business entity, can check it exclusively within the timeframe specified in the Plan for implementation of comprehensive state supervision (control) measures for 2018.

The State Property Fund of Ukraine by its order “On Approval of Amendments to the List of Documents Submitted to the Landlord for Conclusion of a Lease Agreement for State-Owned Property” of 18.09.17, No. 1464 clarified the list of documents that a potential tenant should submit for the conclusion of a lease contract for state property.

From now on, non-residents will be able to lease state property. In order to do this, they must submit legalized and translated copies of their constituent documents (copies of passport pages for individual).

Now anyone, who wants to rent a state property, should not submit:

• copies of the respective decision of the Antimonopoly Committee of Ukraine (hereinafter − ACU) on the issue of the concentration permit or preliminary findings of the bodies of the Antimonopoly Committee regarding the absence of the need for obtaining a concentration permit;
• copy of the tenant’s license for conducting a certain type of economic activity subject to licensing (in case if the object of the lease provides for the activities subject to licensing).

Instead of these papers, the package of documents should contain information on the absence of sanctions against the applicant in accordance with the law. It is submitted in an arbitrary form signed by the head.

Financial Markets

The National Bank of Ukraine by its Resolution “On Approval of Amendments to Certain Regulatory Acts of the National Bank of Ukraine” of 25.10.17, No. 106 simplified the procedure for the opening, use, attraction of funds to the accounts of clients of banks and the execution of cashless settlements. Today due to this resolution:

• it is abolished the obligation to use the seals on documents by official (including on settlement documents);
• it is allowed to conclude contracts on opening a bank account and a bank deposit in electronic form, in particular by joining a client to a public offer for the conclusion of a contract;
• it is given the right to clients who already have accounts with a bank to open the following accounts in this bank without personal presence by filing documents with the help of means of information, telecommunication, information and telecommunication systems;
• it is provided for the assignment of a claim right under a bank deposit agreement;
• it is introduced norms on the use of individual account samples of the signature of an individual or a person entrusted to him/her in the bank account/banking agreement/power of attorney contract or other document specified by the bank's internal regulations;
• it is defined the procedure for the opening and use of current accounts of individuals whose civil capacity is limited;
• it is determined the procedure for the opening by individuals − entrepreneurs of current accounts to individuals for the implementation of certain types of payment of wages and payments equal to it;
• it is improved the current customer accounts operating regime, in particular in terms of business trip expenses.

The National Bank of Ukraine in its letter “On recognition of the validity of foreign key certificates in Ukraine” of 16.06.17, No. 40-0005/42751 recalled the inviolability of the right of economic entities to use electronic invoice.

Today there is no procedure for recognizing the validity of foreign key certificates in Ukraine. However, this should not prevent businesses from using modern technological advances. That is, the contractors have the right to use the invoice in electronic form. After all, the legal validity of an electronic document can not be denied only because it has an electronic form.

It should be recalled that the original of an electronic document is an electronic copy of a document with mandatory requisites, including an electronic signature of the author or a signature equivalent to autographical.

Labor and Salaries

The Verkhovna Rada of Ukraine made amendments to the Labor Code of Ukraine, having added December 25 to the list of holidays. This day is known as the Catholic Christmas. The adoption of the relevant law is reported on the web portal of the Verkhovna Rada. We hope that the entry into force will not be delayed, and we will have time to enjoy an unexpected weekend this year.

But the list of holidays not only widened but also it is reduced. May 2 was removed from the list of holidays by legislators.

These innovations will necessarily have to be taken into account when calculating working time standards.

The Ministry of Health of Ukraine in its letter “On the procedure for issuing documents certifying temporary incapacity for citizens in medical institutions” of 12.06.17, No. 3.04.02-Н-7698/6898-зв reported that the employer had the right to verify the legality of issuance disability certificate. In order to do this, he/she needs to request a structural subdivision on health issues of the oblast, Kyiv city state administrations, under whose authority the health care institution issuing a disability certificate.

The agency is not the first to express the following opinion: in a letter of 03.08.06 р. 3.07-16/1004, it noted that the employer could verify the validity of issuing a disability certificate, but then specialists of the department offered it to apply directly to medical institutions.  At the same time, it should be noted that the normative documents do not provide for a deadline for consideration of such applications both by the departments of the state administration and medical institutions.

Paragraph 2.1 of the Regulations on the Commission (authorized) on social insurance of an enterprise, institution, and organization, approved by the decision of the Board of the Social Insurance Fund for temporary disability of 23.06.08, No. 25, established that the commission on social insurance of the enterprise has the right to apply, if necessary, to the branches of the Social Insurance Fund on issues of checking the correctness of issuance a disability certificate to insured persons of the enterprise.

However, the employer, of course, can apply to the state administration and hope for a quick response. However, such an application can not be the reason for the detention of payments under a disability certificate.

The Ministry of Social Policy of Ukraine in its letter “On Cash Assistance for “rehabilitation” for civil servants in the case of dividing the annual main holiday into parts” of 19.09.17, No. 2416/0/101-17 has clarified what to do with the payment of benefits to a civil servant if he/she does not take the entire annual leave immediately, but uses parts of it. In this case, it is impossible to divide the aid into parts. It is required to pay one amount when providing any of the parts of the annual main leave under the application of the employee.

The representatives of the department emphasize that during the formation of the wage fund for the corresponding budget year, one assistance is provided for the rehabilitation, which is a guaranteed payment once a year during the provision of annual leave for the relevant working year.

The Ministry of Social Policy of Ukraine in its letter “On observance of minimum guarantees for part-time pay” of 06.10.17, No. 19585/0/2-17/28 clarified: if the piece wage-rate is calculated taking into account the hourly rate of labor, then the guarantee is minimum wage at an hourly rate, if from daily - minimum monthly wage.

It should be added that if the piece wage-rates is determined from the tariff rate, which is not less than the minimum wage, then there will be no need for any additional payment to the minimum wage, regardless of the amount the contractor will execute. And if the price is determined at a rate lower than the minimum wage, then there may be situations where employees of the same qualification with the same rates will receive the same salary for a different work volume (at the expense of an additional payment).

The State Labor Service in its letter “On the timing of keeping the working time record sheets” of 08.09.17, No. 9150/4/4.1-ДП-17 informed that the Procedure for the implementation of state control over the observance of labor legislation approved by the CMU resolution of 26.04.17, No. 295, there is no time limit for which an inspection visit or non-visiting inspection is carried out.

At the same time, the State Labor Service recalled the terms of storage of primary documents. In particular, working time record sheets must be kept at the company for at least 1 year (this is established by the List of typical documents that are created during the activity of state and local governments, other institutions, enterprises and organizations, indicating the terms of storage of documents, approved by the order of the Ministry of Justice of Ukraine of 12.04.12, No. 578/5).

So, be prepared to allow inspectors, who come to inspect to be asked to provide 12-month working time accounting records − they will have the full right to do so.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Adjustment of the Financial Results before Taxation on the Amount of Expenses for the Formation of Provisions for the Compensation of Pension Benefits on Privileged Terms” of 17.11.17, No. 2663/6/99-99-15-02-02-15/ІПК reported that the costs of providing the facilities for reimbursement of pensions on preferential terms refer to the costs associated with remuneration of labor. In its turn, financial result before tax should be adjusted for differences on the formulation and use of provisions other than those related to pay, specified in paras.139.1.1 and 139.1.2 of TCU. Therefore, in the event of the creation of a provision for reimbursement by the Pension Fund of Ukraine of expenses for payment, delivery of preferential pensions and actual payment of pensions, as well as during its use, it is not necessary to adjust the financial result under paras. 139.1.1 and 139.1.2 of TCU.

The State Fiscal Service of Ukraine in its individual tax advice “On the taxation of amounts recovered by a legal entity (employer) of expenses incurred by an individual (employee) for travel during a business trip in Ukraine and abroad” of 27.10.17, No. 2407/6/99-99-13-02-03-15/ІПК noted: it is not included in the taxable income of the employee the amount of the employer's reimbursed expenses for the use of taxi services and travel on the leased transport incurred during a business trip abroad or within Ukraine, subject to compliance of the requirements set out in para.170.9 of the Tax Code.

According to para. 170.9.1 of TCU travel expenses are not subject to taxation only if there are confirmatory documents certifying the cost of these expenses, in particular, transport tickets or transport accounts (baggage receipts), etc.

In addition, any travel expenses are not included in the taxable income of an employee in the presence of documents confirming the connection of such a business trip with the economic activities of the employer / the sending party.

At the same time, it should be noted that the conclusion given in the individual tax advice of the State Fiscal Service of Ukraine (hereinafter − SFSU) applies only to enterprises that are not financed from the state budget. Budget institutions must comply with the requirements of the Guidelines on official business trips within Ukraine and abroad, approved by the order of the Ministry of Finance of Ukraine of 13.03.98, No. 59. Consequently, in the case of reimbursement of travel expenses by taxi on a business trip within Ukraine, they are obliged to declare this amount to the additional benefit of an employee with the appropriate taxation.

The Social Insurance Fund from Accidents at Work and Occupational Diseases of Ukraine in its letter “On Investigation and Accounts of Accidents that Occurred with Employees while performing the Labor Obligations” of 06.06.17, No. 99-05-13 reported: if the driver was injured in an accident, fulfilling the tasks of the employer, the latter should provide an investigation in accordance with the Procedure for conducting investigations and record keeping of accidents, occupational diseases and accidents at work, approved by the decision of the Cabinet of Ministers of Ukraine dated 30.11.11, No. 1232. According to this document, the accident investigation commission has been given the right to determine whether an accident is connected with the production, after the clarification of the circumstances and causes of an accident and the study of materials of the investigation.

Controlled Transactions and Transfer Pricing  

The State Fiscal Service of Ukraine in its individual tax advice “On the adjustment of the financial result for the difference provided for in para. 140.5.4 of the Tax Code of Ukraine” of 24.10.17, No. 2348/ІПК/28-10-01-03-11 clarified the procedure for applying of tax adjustments under 140.5.4 of TCU. In accordance with this norm, the financial result before taxation is increased by the amount of 30% of the value of goods purchased, in particular, from non-profits (except budget institutions), entered into the Register of non-profit institutions and organizations on the date of such acquisition.

This adjustment is not applied, if a company acquired goods from non-profits during the reporting year in the amount not exceeding 25 sixes of the minimum salary established by law as of January 1 of this year (in 2017 − UAH 80 thousand). Also, in order not to apply this adjustment, the taxpayer can demonstrate compliance of prices for these products with the “arm’s length” principle in accordance with the procedure provided for in Art. 39 of the Tax Code of Ukraine (hereinafter − TCU) for controlled transactions, but without submission of a report. Otherwise, adjustments should be made.

If the price of the purchase of goods (works, services) exceeds their price, determined by the “arm’s length” principle, then the result is increased by the size of the difference between these values.

Land Relations

The Cabinet of Ministers of Ukraine by its Resolution “On Amending Certain Regulations of the Cabinet of Ministers of Ukraine” of 22.11.17, No. 890 increased the tenants’ responsibility for the unfair use of land plots.

It was introduced for this purpose the compulsory reflecting in the lease contract of land indicators of qualitative characteristics of the soil cover of the land at the time of its transfer to the lease. This will enable to control efficient and rational use of land plots by tenants, in particular preventing the deterioration of soil quality.

Also, the resolution provides for compensation to the lessor − the owner of the land plot in case of deterioration of the quality of the soil cover of the leased land or to bring it to a state that is not suitable for use on the intended purpose. The government by its Resolution set specific terms for rent payment for the use of the land plot and liability in case of late payment.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On Land Fee” of 01.11.17, No. 2465/6/99-99-12-02-03-15/ІПК clarified: if the local government did not decide on the allocation of a land plot for the construction of