Legislation overview (February 2016)

Legislation overview (February 2016)

Taxes

VAT

The Ministry of Finance of Ukraine by its order “On Approval of the forms and Procedure of filling and submission of tax returns of value-added tax” of 28.01.2016 № 21 (hereinafter - Order №21) established a new form of VAT returns. It entered into force on 01.02.2016. Except the tax return, the Procedure of filling and submission of tax returns of value-added tax was also updated.

 In particular, the order № 21 approved:

• form of tax return of value added tax;
• form of refined calculation of tax liabilities for value added tax due to correction of independently identified errors;
• form of calculating of tax liabilities accrued by service recipients not registered as a payers of value added tax, supplied by non-residents, including their permanent representations that are not registered by taxpayers in the customs territory of Ukraine;
• the Procedure of filling and submission of tax returns of value-added tax.

It should be noted that the SFS informed on its web-portal: considering the fact that recent changes in taxation, which were implemented on 1 January 2016, could be reflected in full only in the tax return of the value added tax approved by the Ministry of Finance dated 28.01.2016 № 21, a new form of VAT return should be submitted in a new form electronically by all taxpayers starting from the reporting period for January 2016.

The State Fiscal Service of Ukraine by its official letter “On subject to VAT taxation of services provided to non-resident” of 08.02.2016 № 23220/10/26-15-11-01-18 explained: when a payer of value added tax (hereinafter - VAT) provided services on provision of personnel to non-resident, even if the staff worked at the place of economic activity of the buyer the specified transaction to be not subject to VAT. This is because, under such circumstances the place of services on provision of personnel would be outside Ukraine.

Providing services on provision of personnel to the resident, even if the staff works at the place of buyer activity, the transaction is the subject to VAT at 20% rate.  In this case, the place of services provision is considered to be the territory of Ukraine. It doesn’t matter who exactly provided the services - resident or non-resident.

It should be reminded that according to sub-para. “г” of para. 186.3 of the Tax Code of Ukraine the place of services on provision of personnel (including when staff works at the place of buyer activity) is the place, where the services recipient is registered as business entity. In the absence of such a place - a place of his/her permanent residence or primary residence.

The State Fiscal Service of Ukraine in its letter “On adjustment of tax invoice” of 08.02.2016 № 2324/10/26-15-11-01-18 provided information on the correction of wrong Tax Identification Number (hereinafter - TIN) in a tax invoice.

Error correction in the TIN of a tax invoice (hereinafter – TI) registered in the Unified Register of tax invoices (hereinafter - URTI) should be conducted in the following way:

1. The seller is obliged to make an adjustment calculation (hereinafter - AC) to this taking into account the following:

• information with mistake from chapeau of TI (wrong TIN) should be indicated in the chapeau, and volume of supply and other indicators should be indicated in tabular part with the sign “-“;
• the date, on which a mistake in the buyer’s TIN was discovered, should be indicated in the “Date of preparation” box;
• the cause of adjustments “Correcting mistakes in tax identification number of the buyer” should be recorded in AC.

It should be emphasize that AC is to be registered in URTI by the taxpayer whose wrong TIN indicated in “buyer’s TIN” column of TI to which it is prepared.

2. The seller is obliged to prepare another TI and register it in URTI taking into account the following:

• details of the title part should be indicated without mistakes, it means that the correct buyer’s TIN is to be indicated in “buyer’s TIN” column;
• in the “Date of preparation” box should be recorded the date of the tax liability of the seller, i.e. the date of TI preparation with the wrong TIN;
• a new serial number that is different from serial number of TI with wrong buyer’s TIN should be assigned.
• in tabular part of a new TI should be indicated volume of transactions with the supply of goods or services and other indicators that were reflected in TI with wrong TIN.

The correction of buyer’s TIN is possible if less than 180 calendar days passed from the date of TI preparation with wrong buyer’s TIN. The TI with correct TIN could be registered not later than 180 calendar days after its preparation, which is indicated in this TI. The URTI does not register another TI in the event of delay beyond a time limit.

Also, if based on the results of the documentary unscheduled on-site tax audit conducted at the request of the buyer, the mistakes made by the supplier in the required details of TI to be discovered, such a violation results in penalty imposing on the seller (UAH 170) and the obligations to correct mistakes.

The State Fiscal Service of Ukraine by its letter “On reassessment of the share of non-current assets acquired and commissioned in 2012-2014, in taxable transactions” of 10.02.2016 № 2756/6/99-95-42-01-15 reminded how to conduct annual reassessment of VAT under non-current assets.

Therefore, annual reassessment of the share of non-current assets using in taxable and exempt from VAT transactions should be carried out as follows:

• under non-current assets acquired prior to 01.07.2015, the reassessment is carried out on results the first, second, third years following the year of their commissioning. The reassessment is carried out on a cumulative total basis regardless of availability or absence of taxable or non-taxable transactions;
• under non-current assets acquired after 01.07.2015, the reassessment is carried out only on the basis of one year.

PIT

The State Fiscal Service of Ukraine in its letter “The place of payment (transfer) by an individual – entrepreneur the individual income tax and the war tax from income paid to individuals in the form of rental payment for use of land plots” of 26.01.2016 № 347/Н/26-15-12-02-14 informs: an individual – entrepreneur pays (transfers) the individual income tax and the war tax at the place of his/her registration in controlling bodies when the payment of rental payment for use of land plots to individuals. This is due to the fact that the individual – entrepreneur, according to the paragraphs 14.1.180 of TCU, acts as a tax agent for the individual, which receives rent payment. And according to Art.64 of Budget Code of Ukraine, the PIT, paid by the tax agent – individual, should be paid to the appropriate budgets at the place of registration of such an individual in revenues and duties agencies. This also applies to the war tax, because the order of its payment (transfer) as well as the personal income tax is determined by Art.168 of TCU.

The State Fiscal Service of Ukraine in its letter “On taxation of dividend income accrued (paid) by company - resident of the Russian Federation in December 2015 and January 2016 to a citizen of Ukraine, who owns a share in the authorized capital of the Company” of 21.01.2016 № 645/П/99-99-17-03-03-14 reported that foreign income (including dividends), received in December 2015 by individual – resident, should be included in the total annual taxable income of such person for 2015. In this case the individual is obliged to file an annual tax return and pay the tax at a rate of 15 (20) % before May 1, 2016.

At the same time, the amount of indicated income, to be received by individuals - residents in January 2016, should be included to the total annual taxable income on the results of 2016 with reflection in the tax returns submitted before 1 May 2017 and taxed at 18% rate.

Simplified tax system

The State Fiscal Service of Ukraine in its letter “On the possibility of providing of reimbursable financial assistance to another legal entity (individual - entrepreneur) by a legal entity- unified tax payer of the third group” of 05.02.2016, № 2503/6/99-95-42-03-15confirmed the right of legal entities - unified tax payers of the third group to provide reimbursable financial assistance to another legal entity (individual - entrepreneur). The amount of financial assistance provided by the legal entity - unified tax payers of the third group on a repayable basis in case of its return should not be included in the income of such payer.

In addition the state fiscal control cautions that the activities of a legal entity - unified tax payers of the third group with provision of reimbursable financial assistance to other legal entities (individuals - entrepreneurs) on a regular basis could be considered as a financial intermediation.

The State Fiscal Service in Kyiv city in its letter “On the provision of the services to self-employed individuals by the unified tax payers of group 2” of 04.02.2016, № 71/В/26-15-12-02-14 explained that if an individual-entrepreneur – the second group unified tax payer provides services to self-employed person, who conducts independent professional activity (unified tax defaulter), such an entrepreneur violates the conditions established by TCU for unified tax payers of group 2.

Individuals, who carry out independent professional activities in accordance with the requirements of TCU, could not be classified as business entities that have the right to apply the simplified taxation system.

When the payment of incomes, directly related to the activities, to the business entities - tax agents individuals that conduct independent professional activity, the income tax at source of payment should not be withheld in case of providing by the individual of copy of certificate of his/her registration in tax registration as an individual conducting an independent professional activities. This rule should not be applicable in the case of accrual (payment) of income for the performance of certain work and/or the provision of services in accordance with civil law contract, the relationship under which to be established by labor relations, and the parties to the contract could be classified as employee or employer in accordance with the sub-paras.14.1.195 and 14.1.222 of TCU (para.178.5 of TCU).

Other taxes and fees

The State Fiscal Service in Kyiv city by its letter “On reducing of income tax for the amount of accrued and paid tax on real property” of 03.02.2016, № 1897/10/26-15-11-02-11 reported that real property tax of 2015 would reduce the income tax of the same period.

The legislation provides that the amount of real property tax for the last base tax (reporting) quarter of the year should be defined as the difference between the annual amount of real property tax and the amount of tax on real property for base tax (reporting) quarters of the year, except the last one.

Thus, the advance payment of real property tax for IV quarter of 2015 (paid to 30 January 2016) should be declared in the tax return of the real property tax, other than land, for 2015.

The State Fiscal Service of Ukraine in its letter “On registration of business entities, which implement fuel, as the excise tax payers” of 10.02.2016 № 2781/6/99-99-19-03-03-15 reminded that all entities that realize fuel are obliged to be registered as the excise tax payers. The application in the form approved by the Ministry of Finance of Ukraine should be submitted not later than three working days before the start of the fuel implement. It should be recalled that on 1 March the electronic implementation of fuel and excise invoices would be introduced.

The state financial control emphasizes that the order of the Ministry of Finance “On approval of the registration application form of excise tax payer on fuel implementation” is still a project. Thus, since the application form also has the status of the project, the payers of excise tax that are seller of fuel will not be able to be registered without the form. All one can do is wait for the entry into force of the regulatory legal acts.

The State Fiscal Service of Ukraine in its letter “On the procedure for declaration of excise tax manufacturers of tobacco products” of 10.02.2016 № 4506/7/99-99-19-03-03-17 reminded about changes in the administration of excise tax regarding taxpayers of excise tax - manufacturers and importers of tobacco products in connection with the adoption of the Law of Ukraine “On Amendments to the Tax Code of Ukraine and some other legislative acts of Ukraine on providing the balance of budget revenue in 2016” of 24.12.2015 № 909-VIII (hereinafter - Law № 909).

According to the amendments made by the Law № 909 to Art.214 of the Tax Code of Ukraine (hereinafter - TCU) in case of tax assessment using ad valorem rates, the tax base is the value of goods (products) produced in the customs territory of Ukraine and/or imported into the customs territory of Ukraine, under established maximum retail prices by the manufacturer and/or importer taking into account the value added tax and excise tax (sub-paras. 214.1.1, 214.1.2 of para. 214.1 of Art. 214 of TCU).

In addition, the amendments made to Art. 213 of TCU, in particular, para.213.3 “Transactions with excise goods that are exempt from taxation” are supplemented with new paragraphs 213.3.12 in implementation of the transactions of waste of raw tobacco on conditions of documentary confirmation of their formation and subsequent destruction or disposal.

These regulations of TCU are effective as of 1 January 2016 and should be taken into account during the declaration of excise tax for January 2016.

Appropriate amendments to the Declaration of excise tax, approved by the Ministry of Finance of Ukraine “On Approval of the Declaration form of excise tax, filling in and submission of the declaration of excise tax” of 23.01.2015 № 14 (hereinafter - Order №14), are in the process approval.

Prior to the introduction of new reporting forms, the manufacturers and importers of tobacco products that implement excise goods and under sub-paras.212.1.1, 212.1.2 of para.212.1 of Art.212 of TCU to be the payers of excise tax, should submit a declaration in the form approved by Order № 14. However, the Maximum retail price taking into account the value added tax and excise tax should be indicated when calculating the amount of excise tax in Appendix 2 to the Declaration of excise tax in column 5 “Maximum retail price(hereinafter - MRP) excluding VAT and including excise tax”.

Regarding the transactions with excise goods that are exempt from tax under sub-para. 213.3.12 of para.213.3 of Art.213 of TCU (implementation of waste of raw tobacco on conditions of documentary confirmation of their formation and subsequent destruction or disposal), then such transactions be indicated in Annexes 1 (column 15) and 4 (column 9) to the declaration and transferred to the column B12 excise tax declaration.

Accounting and Reporting

The State Fiscal Service of Ukraine in its letter “On the value of noncurrent assets for the purposes of accrual of depreciation in accordance with paragraph 138.3 of Art.138 of the Tax Code of Ukraine” of 28.01.2016 № 2784/7/99-99-19-02-02-17 informed about the determination of the amounts of adjustments for differences arising in the accruing of depreciation of noncurrent assets.

According to para.134.1.1 of TCU as in force on 01.01.2015, the subject to the income tax is a profit with the source of origin from Ukraine and abroad, which is determined by adjusting of the financial result before tax, as defined under national Accounting Regulations (Standards) or IFRS, on the differences arising under the provisions of sec. III of TCU. In particular, differences arising when accruing of depreciation of noncurrent assets should be formed in accordance with the requirements of Art.138 of TCU.

It is stipulated in para. 138.1 of TCU that the financial result before tax should be increased:

• by the amount of markdowns and losses from utility decrease of fixed assets or intangible assets included in the expenses of reporting period in accordance with national Accounting Regulations (Standards) or IFRS.

According to the para.138.2 of TCU the financial result before tax should be decreased:

• by the amount of surplus and benefits from utility recovery of fixed assets or intangible assets within previously classified as losses of markdown and losses from utility decrease of fixed assets or intangible assets in accordance with national Accounting Regulations (Standards) or IFRS.

Therefore, to calculate the depreciation in accordance with para.138.3 of TCU, the value of fixed assets and intangible assets excluding their reassessment (markdown, surplus) conducted under the provisions of accounting should be recognized.

With due regard to the requirements of para.11 of sub-section 4 of sec. XX of TCU, when the calculation of depreciation of fixed assets and intangible assets in accordance with para.138.3 of TCU, book value of fixed assets and intangible assets as of 01.01.2015 should be equal to book value of such assets, determined as of 31.12.2014 in accordance with Articles 144 - 146 and 148 of sec. III of TCU, which was in force before 01.01.2015.

The SFS emphasizes that the tax advices in respect of value of fixed assets to determine differences in accordance with para. 138.3 of TCU should be used insofar as it does not conflict with this explanation.

The State Fiscal Service of Ukraine in its letter “On providing an explanation” of 28.01.2016 № 2844/7/99-99-17-03-01-17reported that before the approval of a new form, the Report of USC (Unified Social Contribution) should be submitted to revenues and duties agency both for reporting periods of 2016 and for previous periods before 2016 (untimely submitted) in the form according to Annex 4 to the Order № 435, effective as on 01.05.2015, with filling in all required details.

Despite the introduction of a single rate of the USC for all types of income, the lines in Table 1 of the Report of USC should be filled under types of income.

Starting from the reporting period of January 2016, the withholding of USC from accrued income of insured persons is cancelled, the figure should not be specified when filing the Report of USC (lines 5, 5.1 - 5.6 in Table 1 of the Report). Also, accrued income, from which the USC is withheld (lines 4, 4.1 - 4.4 Table 1 of the report), should not be reflected. Accordingly, the requisite 20 “The amount of unified social contribution withheld for the reporting month (from wage / income)” should not be filled in Table 6 of Report of USC.

Reports of USC for January 2016 should be submitted before February 22, 2016.

The Ministry of Finance of Ukraine by its order “On Approval of the forms and Procedure of filling and submission of tax returns of value-added tax” of 28.01.2016 № 21 (hereinafter - Order №21) established a new form of VAT returns. It entered into force on 01.02.2016. Except the tax return, the Procedure of filling and submission of tax returns of value-added tax was also updated.

 In particular, the order № 21 approved:

• form of tax return of value added tax;
• form of refined calculation of tax liabilities for value added tax due to correction of independently identified errors;
• form of calculating of tax liabilities accrued by service recipients not registered as a payers of value added tax, supplied by non-residents, including their permanent representations that are not registered by taxpayers in the customs territory of Ukraine;
• the Procedure of filling and submission of tax returns of value-added tax.

It should be noted that the SFS informed on its web-portal: considering the fact that recent changes in taxation, which were implemented on 1 January 2016, could be reflected in full only in the tax return of the value added tax approved by the Ministry of Finance dated 28.01.2016 № 21, a new form of VAT return should be submitted in a new form electronically by all taxpayers starting from the reporting period for January 2016.

The State Fiscal Service in Kyiv city in its letter “On reflection in tax accounting of exchange rate differences arising from calculation of obligations of the founders in the formation of the authorized capital” of 03.02.2016, № 1896/10/26-15-11-02-11 considered the point in question.

The subject to income tax is the profit determined by adjusting the financial result before tax defined in accordance with the National Regulations (Standards) or IFRS, on differences provided by para.III of the Tax Code of Ukraine (hereinafter - TCU). However, currently para.III of TCU does not provide for the adjustments on exchange rate differences. So in this case it should be guided by National Regulations (Standards), particularly by para.4 sec.8 of Accounting Standards 21 “Effects of Changes in Foreign Exchange Rates”.

The tax authorities emphasize in the letter that the exchange differences arising from calculation of obligations of the founders during formation of the authorized capital should not be recognized as income and to be reflected in additional capital.

Control and Responsibility

The Ministry of Finance of Ukraine by its order “On Regulation Approval on Financial Monitoring by reporting entities, the Ministry of Finance of Ukraine performs the governmental regulation and supervision of which” of 22.12.15 № 1160 approved the relevant regulation and obliged the Auditors to report the State Financial Monitoring Service on suspicion concerning financial machinations. Now, auditors, audit firms, business entities (individuals-entrepreneurs), which provide accounting services, should provide disclosure detection of financial transactions between the customer of auditing or accounting services and their contractors and conduct their registration and inform the State Financial Monitoring Service if the entity has grounds to suspect, specified in Art. 16 of the Law of Ukraine “On prevention of legalization (laundering) of proceeds from crime, terrorist financing and the financing of spread of weapons of mass destruction of 14.10.2014 № 1702-VII.

 A financial transaction is subject to financial monitoring if the reporting entity has grounds to suspect, in particular based on:

• risk criteria defined independently by reporting entities inclusive of risk criteria established by the central executive authorities on the formation and implementation of state policy in the sphere of prevention and counteraction to legalization (laundering) of proceeds from crime or terrorist financing;
• established on the results of analysis of the facts (facts) of discrepancy of financial transaction (transactions) of the financial condition and/or content of the customer activity;
• typological studies in the field of counteraction to legalization (laundering) of proceeds from crime or terrorist financing or financing of weapons of mass destruction, prepared and published by specially authorized body.

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the State Audit Service of Ukraine” of 03.02.2016, № 43 approved the Regulations on the State Audit Service(hereinafter - Regulation).

The Regulation defined the powers of the State audit service, in particular, control of:

• specific, effective use and preservation of state financial resources, non-current assets and other;
• budgetary savings achieving and efficiency in the activity of managers of budget funds;
• compliance with the law at all stages of the budget process on state and local budgets;
• compliance with the legislation on public procurements;
• the state of internal control and internal audit;
• an evaluation of management of the budget funds by reaching their savings as well as their state of financial and economy activity, efficiency and performance of controlled organizations;
• adoption of measures for elimination of law violations discovered during the state financial control and bringing to responsibility of guilty people etc.

The Ministry of Finance of Ukraine by its order “On Approval of Procedure of compliant investigation on payment request of arrears in the payment of unified contribution for obligatory state social insurance and the decision on charging penalties and imposing fines by the regulatory authorities” of 09.12.2015 № 1124 (hereinafter - the Order) updated the procedure for appealing against single contribution arrears, penalties and fines.

The new procedure brought in compliance with current changes in legislation. Thus, now the SFSU handles the complaint investigation instead of the Ministry of revenues, which does not currently exist. In fact, the procedure for complaints submission and their review, as well as the terms remained the same. The forms of documents are contained in the Procedure of a new version.

The new Procedure specifies that the requirements for payment of debt (arrears) of unified contribution and/or a decision on charging penalties and fines imposing, which were appealed in court, are not subject to administrative appeal.

The State Fiscal Service of Ukraine promises not to apply the administrative fines for late registration of the tax invoice (hereinafter - TI) in the Unified Register of tax invoices (hereinafter - URTI) (see category 101.31 ZIR).

Controllers note: if there is no registration of tax invoice in URTI on condition of reflection of the amounts of value added tax (hereinafter – VAT), under such TI condition in tax liabilities of reporting period does not provide for administrative liability (under Art. 163-1 of the Code of Ukraine on Administrative offenses) of the taxpayer - the seller of goods/services.

They explain the fact that the taxpayer, regardless of the fact of registration of VAT amount indicated in this TI, in the Unified Register, should reflect in the tax liabilities of the reporting period, and it does not lead to violation of the procedure of tax accounting.

Registration period generally established in TI in URTI and adjustment calculations to them is 15 days. In case of its violation to the taxpayer to be applied the penal sanctions under Art.120-1 of TCU in amounts that vary depending on the number of days of delay of such registration.

Labor and Salaries

The Ministry of Social Policy of Ukraine in its letter “On calculation of average wages for accrual of compensation for unused leave” of 25.12.2015 № 1675/13/84-15 provided clarification on mentioned issue. The letter reports that maternity benefits should be included in payments that are taken into account when calculating the average wage for accrual of compensation for unused vacation.

But according to Sec. 6 of para.2 of the Order of calculating the average wage, approved by the Cabinet of Ministers of Ukraine of 08.02.1995 № 100, the time during which workers under current law or other valid reasons did not work and his/her wage wasn’t reserved or reserved in part, should be excluded from the calculation period. This provision applies to cases when child care leave to be granted to employees until the child reach 3 years of age in accordance with Art.18 of the Law of Ukraine “On leave” of 15.11.1996 № 504/96-ВР.

Therefore, when calculating the average wage for accrual of compensation for unused leave, when child care leave falls into accounting period until the child reach 3 years of age, the average daily wage is calculated by dividing total income for the last 12 months before leave granting on appropriate amount of calendar days of the year, decreased by the number of public holidays and nonworking days established by the law (Art. 73 of the Labor Code of Ukraine), and by the number of calendar days of staying of employee on leave for child care until the child reach 3 years of age. The obtained result is multiplied by the number of vacation calendar days.

Public Procurement

The President of Ukraine signed the Law “On public procurements” (the bill № 3559), which was previously approved by the Verkhovna Rada of Ukraine.

The mentioned above Law provides that government procurements should be conducted using two competitive procedures – public tenders and competitive dialogue as well as negotiate procurement procedure, which is considered to be a non-competitive.

The law comes into effect 19.02.2016 and to be entered into force:

• 1 April 2016 - for the central executive authorities and customers that engaged in activities in certain sectors of economy management;
• 1 August 2016 - for all customers.

 This law applies:

• to customers provided that the purchase price of procurement item (goods), service(s) equals or exceeds UAH 200 thousand, and works - UAH 1.5 million;
• to customers carrying activities in certain sectors of economy management, provided that the purchase price of procurement item (goods), service(s) equals or exceeds UAH 1 million, and works - UAH 5 million;

Tender procurement procedures should not be provided before/without promulgation of announcement of the procurement procedure conducting on the website of the Authorized Body. The announcement of procurement procedures conducting and within the established deadlines should be subject to mandatory promulgation on the web portal of the Authorized Body in English if the expected cost of procurement exceeds the amount of equivalent: for goods and services - 133 thousand euro; for works - 5150 thousand euro.

Land Relations

The Verkhovna Rada of Ukraine adopted the Law “On amendments to the Land Code on conducting of land tenders” (the bill № 2279). Law, in particular, establishes that the land tenders are to be conducted in accordance with the agreement between the organizer of land tenders and their performer. Their organization financing and conducting should be carried out by the organizer of land tenders or their performer under the contract concluded between them, including at the expense of registration payments of participants of land tenders. Expenses made by the organizer or performer of land tenders for their conducting should be reimbursed by the winner of the tender.

A number of provisions, which allowed transferring in use of land plot of state and communal property without land tenders (auctions) conducting was excluded from the Land Code of Ukraine. This law contains a provision under which individuals and legal entities, who before the effective date of this Law received in the prescribed manner permission to develop land management projects on allocation of land plots or technical documents on land management regarding the establishment (renewal) of boundaries of the land plot in kind (on location) to transfer ownership or use of land plots of state and communal property, have the right to receive such land plots without tendering in cases determined by the provisions of Sec. II of Art.134 of the Land Code of Ukraine.

Summary of Court Rulings

The Supreme Administrative Court of Ukraine in its Resolution of 11.11.2015 in case № 815/1224/15(К/800/26909/15) stated: to provide proper protection of the rights of taxpayers in case of appointment of documentary remote audit, the taxpayer is entitled to appeal against respective decisions (including the orders of audit appointment), actions or inaction of the supervisory authority, regardless of whether such an audit actually made, even after the registration of its results in the form of a corresponding act (certificate).

According to the results of consideration of relevant claims of taxpayers, courts should assess the legality of appointment and purpose of such inspections and make a decision on legality or illegality of the order of appointment of inspection or actions for its implementation. However legal consequence of adoption of the judgment on inspection illegality should be recognition of absence of tax audit as a legal fact. Accordingly, any tax notices-decisions, made based on results of relevant remote audit, should be automatically recognized as illegal.

The Supreme Court of Ukraine in its Resolution “On recognition of actions as illegal” of 06.10.2015 № 21-241ба15 emphasized that fiscal authorities had no right to refuse to accept declarations due to incorrect data in it.

Verification of data indicated in tax declarations (calculations) of the payer, as well as verification of timeliness, accuracy, completeness of accrual and payment of all taxes and duties provided by the Tax Code of Ukraine should not be conducted at the time of resolving the issue of acceptance or rejection of the tax return adjustment calculations to it.

These figures shall be verified when the cameral tax audit or documentary audit.

The Оther Things

The Cabinet of Ministers of Ukraine approved Regulations in execution of the Law of Ukraine “On Amendments to the Tax Code of Ukraine and some other legislative acts of Ukraine on providing the balance of budget revenues in 2016” of 24.12.2015 № 909-VIII, which defined:

• the registration procedure of payers of excise tax on fuel in the electronic register;
• opening and closing of electronic accounts by such taxpayers;
• the procedure of electronic administration system of fuel implementation.

During operation of all these transactions of fuel implementation in domestic market, excise invoices, which operate similarly with tax invoices on value added tax (hereinafter - VAT) should be prepared by the sellers in electronic form, and should be provided for buyers and registered in the Unified Register of excise invoices.

The electronic administration system of fuel implementation (hereinafter - EASFI) is introduced on March 1, 2016.

Legal entities and individuals-entrepreneurs, which should carry out the implementation of fuel are subject to mandatory registration as payers of excise tax on implementation of fuel (hereinafter - taxpayers) prior to start of such implementation.

The application should be sent to supervisory authority at their main place of registration exclusively in electronic form by electronic means in compliance with the conditions for registration in accordance with the procedure determined by the Law, with the electronic signature of responsible persons.

Forms of electronic application and other documents under EASFI are posted on the official web portal of the State Fiscal Service (hereinafter – SFS) in section “Electronic reporting”/for taxpayers about electronic reporting/information and analytical support/Registry of electronic forms of tax documents.

The application could be formed and sent via personal cabinet of electronic services “Payer electronic cabinet” (updated version).

To form the application electronically the taxpayer could choose at his/her sole discretion any software that forms the output file according to the approved sample (standard).

The first receipt (delivery receipt) is the confirmation of receipt of the application by the supervisory authority. The second receipt is to be sent to the payer after automatic processing of the application no later than the second working day.

Information about the results of consideration should be indicated in the second receipt, namely:

• notification of the person’s registration by the taxpayer through including him/her in the Register of excise duty payers on fuel implementation (hereinafter - Register of taxpayers);

or

• notification of the need to file a new application in case of revealing violations of requirements on digital signature, compliance of form, filling in and submitting the application.

In case of application submission to 01.03.2016 the date of registration of those people, who submitted such applications, by the taxpayer is the date which corresponds to the first day of the transition period - 01.03.2016.

A person who is registered by the taxpayer can direct a request in electronic form to the SFS by electronic means for getting extract from the register of taxpayers in the form J(F)1302501 (hereinafter - Request).

The SFS sends in electronic form an extract from the register of taxpayers to the person by electronic means not later than the next business day after the request. Extract is valid to appropriate amendments made in the register of taxpayers.

It is possible to view information from the Register of taxpayers in an updated “Payer electronic cabinet” (open and closed parts/ information from the Register of SFS/Register of taxpayers of excise tax).

Information on the details of the open electronic account of SFS should be sent to the taxpayer not later than the operational day following the day of its opening as a message.

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for determining the average market cost of passenger cars and amendments to Annexes 1 and 2 to the Procedure for determining the average market cost of passenger cars, motor bikes, mopeds” of 18.02.2016 № 66 approved the Procedure for determining the average market cost of passenger cars.

According to the procedure, the Ministry of Economic development should calculate the average market cost of passenger cars and annually to February 1 of the base tax (reporting) period should provide to the SFS the information on the vehicles, which year of manufacture passed less than 5 years (inclusive) and the average market price of which is more than 750 minimum wages, established by the law on 1 January of the tax (reporting) year.

In turn, the Ministry of Economic development on its official Web site to update the information on the average market cost of passenger cars considering mark, model, year of manufacture, engine type, engine cylinder volume, type of gear boxes and mileage.

The Ministry of Finance of Ukraine by its Order “On the form approval and preparation procedure of report on controlled transactions” of 18.01.16 №8 determined a new form of the Report on controlled transactions (hereinafter - Report) and its preparation procedure (hereinafter - Procedure). The report should be submitted electronically before 1 May by the taxpayers, the amount of controlled transactions which with counterparty for the year exceeds UAH 5 million excluding VAT provided that such business transactions meet the requirements defied by sub-para. 39.2.1. of TCU.

The report consists of the title and the main parts, application and information to the application. Applications are issued separately for each person. Application number corresponds to the number of contractors that are parties to the controlled transactions.

If the taxpayer used methods of compliance establishment of conditions of controlled transactions of principle of “arm’s length”, then filling in the section “Information on controlled transactions” annexes to the Report, it is allowed to give general information on the set of controlled transactions and not to describe each transaction separately.

The procedure describes filling in of all graphs of the Report and decryption of codification, which was given in the Report, in view of the specific controlled transactions.

If the taxpayer found errors in previously submitted report, before 1 May of the relevant year he/she should submit adjusted one with the note “New Report”. Having found an error later should be submitted “Clarifying report”.