Taxes
VAT
The Cabinet of Ministers of Ukraine by its Resolution “On approval of the procedure for maintaining the Register of applications for return of amount of budgetary value added tax refund” of 25.01.17, № 26 approved a new procedure for maintaining the Register of applications for return of amount of budgetary value added tax (hereinafter − VAT) refund under the implementation of updated sub-para. 200.7.1 of the Tax Code of Ukraine (hereinafter − TCU).
The mentioned above procedure comes into force on April 1, 2017. By this time the budgetary compensation is to be carried out under the old rules in force before January 1, 2017. This applies to all submitted applications that are included in the Unified Register under para.52 of sub-sec.2 of sec. XX of TCU.
The new procedure for maintaining the Register of applications for the return of budgetary compensation provides that data entry in the Register of VAT refund should be carried out by officials of the SFSU and Treasury in the automatic mode in compliance with the laws on electronic signatures and electronic documents.
Data from the Register will be published on the official website of the Ministry of Finance of Ukraine except for details of the current account of the VAT payer for the transfer of budgetary refund.
The State Fiscal Service of Ukraine in its letter “On the procedure of preparation and registration in URTI of the adjustment calculation to the tax invoice, which was drafted for the final consumer (VAT defaulter) by mistake” of 23.12.16, № 27795/6/99-99-15-03-02-15 explained that tax invoice (hereinafter – TI) wrongly prepared and registered in URTI under the transaction of the supply of goods/services to the final consumer (VAT defaulter), which did not actually take place, could be annulled.
For this purpose, at the date of the error detection the supplier executes adjustment calculation. Since the TI, issued for the final consumer, is not provided to the recipient, the adjustment calculation to it should be registered in URTI by the supplier.
Representatives of SFSU also reminded that VAT payers can use adjustment calculation to correct errors when the preparation of TI, including those that are not connected with compensation of cost of goods/services.
The State Fiscal Service of Ukraine by its letter “On VAT taxation of compensation for damaged property” of 30.12.16, № 28710/6/99-99-15-03-02-15 reported that VAT payers, who receive money as compensation for damaged or destroyed property, should accrue tax liabilities. Controllers consider that the amount of such revenues (excluding penal sanctions and penalties) is the compensation of the property value and require including it in the tax base. However, the tax authorities do not allow accruing the compensating tax liabilities on the value of property destroyed during its cancellation.
Therefore, representatives of fiscal authorities equate compensation for damages to the supply transaction, and the destroyed property, for which it was received the compensation, is considered to be used in business activity.
The State Fiscal Service of Ukraine in its letter “On the procedure of VAT taxation of advertising services” of 23.12.16, № 27744/6/99-99-15-03-02-15 reported that the supply of advertising services for non-resident customer should not be taxed with VAT. The substantiation is simple: the place of supply of such services is situated outside Ukraine (sub-para. “б” of para. 186.3 of TCU).
In addition, the tax officers do not require accruing VAT due to the distribution of goods of premium fund and promotional and informational materials. At least they do not talk about such subject to taxation as the supply of goods (sub-para. “a” of para. 185.1 of TCU), but only perceive them in the acquisition and subsequent use of part of cost price of services. Consequently, service providers have the right to form a tax credit under acquired inventory. However, due to their use for the implementation of tax-free supplies of advertising services – it should be accrued compensatory VAT under sub-para. “a” of para. 198.5 of TCU.
The State Fiscal Service of Ukraine in its letter “On the Procedure for the application of paragraph 198.5 of TCU” of 23.05.16, № 11168/6/99-99-15-03-02-15 explained when the payer of value added tax (hereinafter − VAT) should accrue compensating tax under the rules of para. 198.5 of TCU concerning the goods/services purchased after 01.07.15. Therefore, if such purchases are intended for discharged or non-target transactions, so it is necessary to level the tax credit on such transactions in the reporting (tax) period, when the supplier prepared and registered corresponding tax invoice in URTI. That is, conditional VAT is accrued not earlier than the payer obtained the right to a tax credit.
If the VAT payer decides to postpone the tax credit (within 365-day period), he/she is still obliged to accrue VAT on purchases based on para. 198.5 of TCU during the period of preparation and registration of tax invoice by the supplier.
The State Fiscal Service of Ukraine in its letter “On updating of the State Classifier of Goods and Services” of 26.01.17, № 229/4/99-99-15-03-01-13 presented the draft of a new form of the tax invoice, which provided for a special column to indicate code of the services according to the State Classifier of Goods and Services (hereinafter − SCGS).
Representatives of fiscal agency paid attention to the absence in the SCGS of codes for certain services, which to be supplied by the VAT-payers when the economic activities. As a result, the tax authorities initiate SCGS updates − they sent an appropriate appeal to the Ministry of Finance.
It should be recalled that the VAT payers temporarily should not indicate the codes of service according to SCGS in the tax invoice until its update.
Corporate Income Tax
The State Fiscal Service of Ukraine in its letter “On the adjusting of the financial result before tax when determining of the subject to the company income tax on differences under construction contracts” of 18.01.17, № 969/6/99-99-15-02-02-15 informed that a taxpayer, who performs construction under the contract concluded before 01.01.15, could reduce the financial result when determining the subject to taxation in the amount of incomes counted twice. This refers to the amount of income taken into account in tax accounting when determining the subject to the income tax under such a contract before 01.01.15 and as a part of income in accounting after 01.01.15. This right appeared due to para.42 of sub-sec.4 of sec. XX of TCU introduced from 01.01.17.
However, annex PI to the Tax invoice on the company income tax approved by the Ministry of Finance of Ukraine of 20.10.15, № 897 does not provide lines to reflect such differences. Therefore, according to para.46.4 of TCU the payer could submit amendments in any forms together with that tax declaration (by notifying about such amendments in the relevant box of declaration).
The State Fiscal Service of Ukraine in its letter “On amendments in the taxation of income tax in 2017” of 08.02.17, № 2991/7/99-99-15-02-01-17 reported that non-profit companies, institutions and organizations should submit annual financial statements together with a report on the use of incomes (profit) of non-profit organization for 2016.
This is due to the fact that in para. 46.2 of TCU updated from 01.01.17, the requirement to submit to the tax authorities of the financial statements was also extended to cases of reporting, which reflects the volume of transactions, income (profit) on which tax and customs legislation provides for exemption of the taxpayer from the obligation of accrual and payment of taxes and duties.
Previously, the submission of the financial statements to the tax authorities was only the right but not the obligation.
The State Fiscal Service of Ukraine in its letter “On the payment of advance payment on the company income tax in the amount of 2/9 of the tax” of 08.02.17, № 2438/6/99-99-15-02-02-15 informed: if the income tax payers, which had to pay an advance payment one-time, independently discovered the fact of understatement of the amount of advance payment accrued in the tax declaration of the income tax for the first three quarters of 2016 and submit adjusted declaration, they should pay the penal sanction provided for by sec. “a” of para. 50.1 of TCU, − 3% of the understatement. Because, the one-time advance payment is an agreed amount of money liabilities.
It should be recalled that payers of the company income tax, which quarterly reported on the company income tax in 2016, before 31.12.16 had to pay the advance payment of this tax in the amount of 2/9 of income tax accrued in the tax statements for the three quarters of 2016.
PIT and War Tax
The State Fiscal Service of Ukraine in its letter “On the sale of item of immovable property, which is in the temporarily occupied territory” of 17.01.17, № 740/Р/99-99-13-02-03-14 noted that the income of an individual-resident from the sale of item of immovable property − apartment, located in the temporarily occupied territory – should be imposed by 5% of the income tax and 1.5% of the war tax (Art.172 of the Tax code of Ukraine, hereinafter − TCU). Tax officers argued in favour of the fact that temporarily occupied territory of Ukraine is an integral part of the territory of Ukraine covered by the Constitution and laws of Ukraine (Art. 1 of the Law of Ukraine “On the rights and freedoms of citizens and legal regime in the temporarily occupied territory of Ukraine” of 15.04.14, № 1207-VII).
It is not required to pay the tax and fee if the following conditions of Art. 172.1 of TCU are met simultaneously:
- an individual sold the residential building, apartment or their part, room, garden (suburban) house (including the land plot where situated such items, utility buildings and structures) or land plot, which size does not exceed the norms of free transfer of land established by Art.121 of the Land Code of Ukraine, depending on its purpose;
- an individual made the first sale of one of the mentioned above items during the reporting calendar year;
- immovable property, which is the subject of the contract of sale, was owned by individual-seller more than three years (except inherited property).
When even one of the mentioned above conditions of para. 172.1 of TCU was not met, the income of the individual from the sale of property should be taxed by the income tax and the war tax.
The State Fiscal Service of Ukraine in its letter “On taxation of income as the value of property received by the taxpayer-transferee under hereditary agreement” of 14.02.17, № 2214/Л/99-99-13-02-03-14 noted that individual-transferee after receiving of the income as the value of property under hereditary agreement should 18% of the income tax of such amount 1.5% of the war tax (sub-para.“e” of sub-para.14.1.54, para.164.3, sub-para.168.4.5 of the Tax Code of Ukraine, hereinafter − TCU ). The individual resident should pay the tax and fee according to the results of annual declaration before August 1 (para. 179.7 of TCU).
Other Taxes and Fees
The State Fiscal Service of Ukraine in its letter “On the rental payment for the special use of water” of 30.01.17, № 2069/7/99-99-12-03-04-17 reported that: the payer of rental payment for special use of water should submit the tax reporting on the location water objects or objects related to taxation or through which activities to be carried out using water volumes obtained by sampling of these water objects. That is, at non-main place of registration, if they are on other territories than the main company.
Thus, the water users, which include structural units located in other areas than the main company, should be taken on the tax account at the principal place of registration. That is, at the location of water objects from which the water withdrawal, or at the location of objects related to taxation or through which activities to be carried out using water volumes obtained by sampling of these water objects.
The deadline for submission of tax declarations and payment of tax liabilities under the tax are considered to be:
- for IV quarter 2016 − February 9, 2017, and the last day of the tax payment − February 17, 2017;
- for I quarter 2017 − May 10 and 19, 2017 respectively;
- for II quarter 2017 − August 9 and 18, 2017 respectively;
- for III quarter 2017 − November 9 and 17, 2017 respectively;
- for IV quarter 2017 − February 9 and 19, 2018 respectively.
If a business entity registered by the payer of a rental payment for special use of water plans in the reporting (tax) year to use water only for their own drinking water and sanitation needs, based on an application prepared in any form, should report not later than the deadline for submission of the tax reporting on rent for I quarter of the reporting (tax) year to the controlling authority on the absence of the subject to rent taxation in the reporting (tax) year. Accordingly, he/she does not submit the tax reporting at rental payment during the tax (reporting) year.
Accounting and Reporting
The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Regulation on customs declarations” of 11.01.17, № 27 determined that it to be required to submit additional customs declaration and pay the customs duties in the months of moving goods across the customs border of Ukraine under periodic customs declaration.
It also provides the requirement for completing the sheet of adjustment in the case of making changes in the customs declaration associated with additional payment or repayment of customs duties, including in connection with the cancellation the decision of the customs authority and related to the adjustment of cost of goods that exported outside the customs territory of Ukraine.
The State Fiscal Service of Ukraine in its letter “On issues of application of tax legislation in the write-off of fuel and lubricating materials” of 20.01.17, № 1186/6/99-99-15-02-02-15 reported that the cost of purchasing fuel and lubricants materials should be taken into account when determining the financial result before tax in accordance with the accounting rules in the event of confirmation duly completed by the primary.
However, TCU does not provide for adjustments to the financial result before tax on excess amount of fuel costs over linear norm established by the order of the Ministry of Transport of Ukraine of 10.02.98, № 43.
The State Fiscal Service of Ukraine by its letter “On filling the excise declaration” of 06.02.17, № 2158/6/99-99-15-03-03-15 reminded peculiarities of filling in the declaration of the excise tax for the fuel suppliers, namely the application 1¹ “Calculation of the amount of the excise tax of implementation of fuel in accordance with sub-paragraph 213.1.12 of paragraph 213.1 of Art.213 of the Code”. It necessarily should be filled in by all the payers (legal entities and individuals) of the fuel excise tax (including manufacturers) regardless of whether the subject to taxation was in the reporting period. That is the data of the movement of fuel should be noted in Appendix 1¹ even in the absence of the subject to taxation in the reporting period.
The letter also provides the explanations how the declaration of the excise tax should be filled in, in the case when the payer did not carry out the business activity in the reporting period. In order to avoid the mistakes, it should be filled indicators of the declaration “in digital format”, in other words to put zeros (category 116.07 ZIR).
The Ministry of Finance of Ukraine by its order “On approval of amendments to the form of Tax declaration of the environmental tax” of 28.12.16, № 1177 approved a new wording of Annex 4 “Payment for the generation of radioactive waste (including already accumulated)” to the declaration of the environmental tax. The Annex was supplemented by lines 4.2.1.2.4, 4.2.2.2.4, 4.3.1.2.4, 4.3.2.2.4 with the name “adjustment factor”.
It should be recalled: the operating organization of nuclear facilities (nuclear power plants), which pay the environmental tax, should calculate the amount of tax liability for the generation of radioactive waste (including already accumulated) taking into account the correction coefficient. Depending on the activity of the radioactive waste, it is 50 for high-level waste, and 2 for intermediate and low-level ones.
The State Fiscal Service of Ukraine updated the State register of cash registers (hereinafter − the State Register of CR). This information is available on the official website of the SFS of Ukraine. The updated State Register of CR, in particular, includes the model of a cash register КСТ-В1 with version of the internal software В1-1 (position 71 of the State Register of CR). Consequently, economic entities that carry out activities of buying and selling of foreign currency will be able to use this specialized model in their activities.
The Ministry of Finance of Ukraine in its letter “On peculiarities of application of primary documents” of 16.02.17, № 31-11410-06-5/4339 provided explanations on this issue. Thus, due to recent changes in sphere of the primary documents, the properly issued invoice can be the basis for reflection in accounting of the accounting of business transaction for the supply of goods, works (services) without making the act of acceptance. However, only in case if it is paid and confirmed by relevant documents.
Documents confirming the payment are: payment order, paycheck, cashier’s check, payment receipt, an extract from the card account, a receipt for income cash order etc.
The invoice can be prepared in hard or soft copies. It should have details that make it possible to identify the business transaction and its participants, in particular: company name, on behalf of which the invoice to be made; the name of the counterparty; the content and scope of business transaction, unit of measurement of business transaction; personal signature or other data enabling to identify the person who participated in preparation of the invoice.
The State Statistics Service of Ukraine by its order “On making amendments to the forms of the state statistical observation № 1-ПВ (quarterly) “Report on work” approved by the State Statistics Service dated June 10, 2016, № 90” of 15.02.17, № 39 updated the form of statistical observation № 1-ПВ (quarterly) “Report on work”. Amendments apply only to sec. IV of this form and provide a new ranking of employees in order of size of salary.
The updated form will be applied starting form the report for the first quarter of 2017.
Labor and Salaries
The Cabinet of Ministers of Ukraine (hereinafter − CMU) by its Resolution “On Amendments to the Procedure for issuance, extension and annulment of permission for the employment of foreigners and persons without citizenship” of 18.01.17, № 28 corrected the Procedure for issuance, extension and annulment of permission for the employment of foreigners and persons without citizenship approved by the Resolution of CMU dated 27.05.13, № 437.
The updated version, in particular, provides that an application for extension of the permit should be submitted not earlier than 40 calendar days before the expiration of the permit. However, as at present, it should be done not later than 20 days before the expiration of the permit.
The State Service of Ukraine on labor issues in its letter “On “labor” penal sanctions” of 04.01.17, № 54/4.1/4.1-ДП-17 noted that sec.2 of Art.265 of the Labor Code of Ukraine (hereinafter − the Labor Code) established penalties for violation of terms of wages, namely:
- violation of established terms of payment of wages to the employees provided by labor legislation, more than a month − a fine of three minimum wage at the time of detection of violations (currently − UAH 9 600);
- violation of minimum state guarantees to labor remuneration (for example, payment of wages at a rate less than the minimum for a fully worked-time, unpaid additional payments in case of night work), the penalty is 10 minimum wages at the time of detection of violations for each employee for which committed infringement (currently − UAH 32 000).
If the employee does not appear to receive wages (in case of payment via cash) and he/she was notified of the appropriate amount in writing, the employer must deposit it. In this case, he/she performs his/her responsibility to ensure the timely payment of wages.
It should be reminded: Art. 115 of the Labor Code provides for that wages for employees should be paid regularly on working days in the terms established by the industry and regional agreements or regulation of the employer, but not less than twice a month through the period of time not exceeding 16 calendar days and not later than seven days after the period for which the payment is carried out. And wages for all time of annual leave − not later than three days before it started.
The Ministry of Social Policy of Ukraine in its letter “On payments for an extra burden” of 15.11.16, № 1571/13/84-16 stated: head of structural subdivision (deputy head) of the performance of duties at the vacant post of civil servant of structural subdivision or at time of his/her temporary absence should not be paid for the additional workload (see paras.4, 5 of sec.2 of the Law of Ukraine “On civil service” of 10.12.15, № 889-VIII). Because the head of structural subdivision (deputy head) should possess knowledge, skills and abilities necessary to perform the tasks assigned to this subdivision.
The State Service of Ukraine on labour issues (hereinafter – State Labour) in its letter “On “labour” fines” of 04.01.17, № 57/4.1/4.1-ДП-17 stated that the provisions on penalties determined by Art.265 of the Labour Code of Ukraine (hereinafter − Labour Code) and entered into force 01.01.15, could be used only for violations committed after that date or which are continuing.
Therefore, there is a following disappointing conclusion: if the employer does not accrue the indexation for the employees, he/she faces a fine of UAH 32 thousand per each employee, for which infringement committed (para.4 of sec. 2 of Art. 265 of the Labour Code). By the way, such a penalty could be imposed for non-accruing of indexing to the employees, who have long been retired. The only one thing that can save the offender is the additional charges of appropriate amounts of indexation to all employees.
The officials of the State Labour are entitled to impose penalties, indicated in Art.265 of the Labour Code, according to the results of the audit (para. 2 of the Procedure of imposing of penalties for violation of labour legislation and employment, approved by the Cabinet of Ministers of 17.07.13, № 509).
Social Insurance Fund for Temporary Disability (hereinafter − TD Fund) in its letter “On documents that are the basis for the appointment of sickness benefits and maternity leave payments to the employees – internal part time employees” of 17.01.17, № 5.2-28-65 note that for the appointment of sickness benefits (maternity) to the part time employee, it is necessary a copy of a medical disability certificate signed by the head and seal of the major employer (para.1 of Art.31 of the Law of Ukraine “On Compulsory State Social Insurance” of 23.09.99, № 1105, sec.2 of para.30 of the Procedure for calculating of the average wage (income, financial support) to calculate the payments on compulsory state social insurance, approved by the Cabinet of Ministers of 26.09.01, № 1266 (hereinafter − Procedure № 1266).
The Procedure № 1266 does not make difference between internal and external part time employees, therefore, the calculation of the average wage should be carried out by the insured separately for each place of work. So, it should be calculated the financial support for the main place of work on the back side of the original medical disability certificate, and on the back side of its copy − for part-time work.
The Ministry of Social Policy of Ukraine in its letter “On the inclusion of indexation into the payments taken into account of salary when providing its minimum size” of 13.02.17, № 317/0/101-17/282 states that indexation should be included into the salary payments, which are taken into account for comparison with the level of minimum living wage (but not accruing the indexation over the minimum wage). Representatives of the Office explain it by the fact that in sec. 2 of Art.31 of the Law of Ukraine “On payment for labour” of 24.03.95, № 108/95-ВР it is presented comprehensive list of revenues that are not taken into account when calculating wages for providing its minimum level. Since the indexation is not mentioned there, it should be taken into account.
Control and Responsibility
The Ministry of Justice of Ukraine by its Order “On Approval of the Procedure of information interaction between the Unified State Register of Legal Entities and individuals − entrepreneurs and community groups and the automated enforcement system” of 24.01.17, № 173/5 determined the mechanism of information transferring on the opening and completion of enforcement proceedings of automated enforcement system in the Unified state register of legal entities and individuals − entrepreneurs and community groups (hereinafter − USR).
The information included in the automated enforcement system, during the working day should be automatically transferred to the USR on the day of their introduction.
Prior to the introduction of such interaction, the information transfer should be carried out no later than 10:00 on the next working day after their introduction in the Unified State Register of enforcement proceedings. Then it is necessary to apply the digital signature using the enhanced certificate key.
Currently, the following information on enforcement proceedings is transferred in the USR:
- number in the automated enforcement system (Unified State Register of enforcement proceedings);
- date of opening/completion of enforcement proceedings, cancellation of Resolution on opening/closing of enforcement, recovery of enforcement proceedings;
- replacement of the debtor in the enforcement proceedings;
- State Enforcement Service authority, private executor who entered information about the enforcement proceedings in the automated enforcement system.
The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the procedure for access to the State Register of rights to immovable property” of 25.01.17, № 45 expanded the range of subjects that could have direct access to the State Register of Immovable Property Right (hereinafter − Register). In particular, private performers and the Public Council of virtue have the right.
Such subjects should conclude the relevant contract with the technical administrator of the Register for this purpose.
It should be recalled that the Public Council of virtue to be formed for assistance of the High Qualification Commission of Judges of Ukraine to establish compliance of a judge (candidate for the post of judge) with the criteria of professional ethics and virtues for qualification assessment purposes.
The State Fiscal Service of Ukraine in its letter “On the violation of the terms of enrolment of taxes and duties to the budgets” of 24.01.17, № 1575/7/99-99-12-03 emphasized: despite the reason of non-payment of tax liabilities, in particular in the case of violations by the bank of terms of performance or failure of customer orders to transfer funds, the payer should not be exempt from the obligation to pay the principal amount of tax liability or tax debt. The tax authority, respectively, from the collection of the tax debt and/or transfer of payments made through the offices of other banks, should credit the funds deposited by the payer to repay the tax debt, defined by the taxpayer, according to the order of its occurrence, regardless of the direction of payment.
Thus, in a situation when there is sufficient availability of funds in a bank account opened at a financial institution, where it is introduced a temporary administration and the movement on the current accounts is suspended for an indefinite period, the company can not use them to pay taxes and fees, the payer is required to provide to the supervisory authority the confirming documents that mentioned circumstances regarding non-transfer of taxes and fees in the budget arose due to the fault of the bank. These documents, particularly, but not exclusively, can be letters of appeal to the bank authority with a request to transfer the taxes, payment orders prepared in hard copy, etc.
Tax payer’s debt, which arose due to the fault of the bank, should remain at such a taxpayer and should be transferred to the budget by him/her.
The State Fiscal Service of Ukraine in its letter “On the recognition of net profit (income) as the tax debt” of 24.01.17, № 1310/6/99-99-15-02-02-15 noted that a part of the net income (profit), not paid to the state budget by state unitary companies and their associations in the set terms, to be not the tax debt within the meaning of the TCU. The tax officers made the conclusion due to the fact that Articles 9 and 10 of TCU, which determine the list of taxes and duties, do not specify such payment.
Thus, if the unitary state companies make late payments of a part of net profit, so the penalties under para. 126.1 of TCU and fines under 129.1 of TCU could not be applied on them.
The Cabinet of Ministers of Ukraine by its Resolution “On approval of the procedure of the distribution of budget subsidies for development of agricultural commodity producers and promotion of agricultural products in 2017” of 08.02.17, № 83 approved the procedure for the distribution of budget subsidies for the development of agricultural commodity producers and promotion of agricultural production in 2017. The document provides for:
- the right to receive subsidies of individual-entrepreneurs whose main activity is the supply of agricultural products;
- calculation of the ratio of agricultural commodities under agricultural products, which belong to groups 1−24 of UCC FEA (Ukrainian Classification of Commodities for Foreign Economic Activity) according to the Law of Ukraine “On Customs Tariff of Ukraine” of 05.04.01, № 2371-III;
- payment of budgetary subsidies monthly in proportion to the share of the value added tax (hereinafter − VAT) paid to the budget by an agrarian under subsidized activities in the total amount of VAT.
Controlled Transactions and Transfer Pricing
The State Fiscal Service of Ukraine in its letter “On Amendments to the Tax Code of Ukraine regarding transfer pricing” of 02.02.17, № 2376/7/99-99-15-02-01-17 notes that September 29, 2017 is the deadline for submission of the Report on the controlled transactions for 2016. The requirements of the updated paragraph 39.4.2 of the Tax Code of Ukraine (hereinafter − TCU) from 01.01.17 is already used for reporting in 2016. Corresponding amendments prolonged the deadline for submission of the Report of the controlled transactions from May 1 to October 1 of the year following the reporting one.
Controllers emphasize that information on controlled transactions of 2016 should be indicated in the report with taking into account and in accordance with the criteria that to be in effect that year. That is, it should be used the standards of sub-paragra.39.2.1 of TCU as worded to 01.01.17.
Financial Markets
The National Bank of Ukraine in its letter “On control of the export transactions” of 07.02.17, № 40-0005/9793 indicates that since January 3, 2017, banks do not control of the residents’ meeting the established by the law deadlines of settlements with export services (excluding transport and insurance), intellectual property rights, copyright and related rights (including cases of incomplete payments for mentioned export transactions). Such transactions, previously taken for control by the bank, are the subject to removal from control. This is due to the cancellation of deadlines on transfer of currency for services provided (excluding transport and insurance).
The National Bank of Ukraine in its letter “On the establishment of the final beneficial owner (controller) of a customer” of 10.02.17, № 25-0008/10883 note that recently individuals who wish to hide their involvement in the business, actively use the services of so-called nominal service (when the person, who legally owned voting rights in a legal entity, actually performs only agency functions). At the same time, the real owners of legal entities from countries with offshore status maintain complete confidentiality.
In addition, the National Bank explained to banks which factors may indicate the nominee:
- a person, who “comes” to take all the documents (including relevant registers) as the final beneficial owner, also controls on the paper many other legal entities from offshore countries;
- a client stated that the beneficiary is a certain individual from offshore countries, but public sources of information indicate otherwise;
- in accordance with information received from the client, it is determined that final beneficial owner (controller) of a customer − legal entity is an individual. At the same time, this legal entity − a rather large business entity (company) owns industrial facilities, provides financial transactions for significant amounts, receives considerable income and etc. According to the results of analysis of the customer is established that the person, determined as a final beneficial owner (controller) of the customer, does not actually affect his/her business, and the real impact on the activities of the company is carried out by another person that does not show his/herself publicly as the owner of the company, but receives income from his/her business. Also, it should be noted that such an individual, that is the real final beneficial owner (controller) of the mentioned legal entity, could be, for example, a famous social or political figure.
If the bank is unable to establish the real final beneficial owners (controllers) of a customer, it must terminate business relations with him/her and refuse to conduct financial transactions.
The National Bank of Ukraine by its Resolution “On Amendments to the Resolution of the National Bank of Ukraine dated December 13, 2016 № 410” of 22.02.17, № 13 continued to mitigate currency restrictions. In particular, the regulator released the revenues in foreign currency from non-residents from mandatory sale, if such funds received as cash collateral (initial margin, collateral, advance payment, deposit, guarantee) of participation in auctions, tenders or bidding held by residents.
In addition, the National Bank provided an opportunity to the banks to buy foreign currency for the customers, not including the total amount of available currency balance on resident’s accounts, which was received as allowance from non-resident for participation in bidding, tenders or auctions.
Resolution also allowed banks to buy foreign currency for customers, if the amount of the balance on the customer’s account does not exceed USD 100 thousand. Earlier, the customer for the purchase of foreign currency should have the balance in the account less than USD 25 thousand (equivalent).
The Resolution came into force on 23.02.17.
The Other Things
The Cabinet of Ministers of Ukraine (hereinafter − CMU) adopted the Resolution “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine dated June 4, 1998, № 802 and invalidating certain Resolutions of the Cabinet of Ministers of Ukraine” of 25.01.17, № 41, having stated in a new version the Regulations of trade in precious metals (except bank metals) and precious stones, precious stones of organogenic origin and semi-precious stones in raw and processed form, and products made from them, belonging to business entities in the ownership, approved by the Resolution of the CMU of 04.06.98, № 802.
The amendments are aimed to simplify the Implementing Rules of certain transactions in trade of jewellery and household articles made of precious metals and precious stones. In addition, articles labelling conditions were amended.
he Cabinet of Ministers of Ukraine due to anthracite shortage, caused by “blockade” of uncontrolled territories, decided to take temporary emergency measures in the electricity market. In thermal power plants, for which the anthracite coal is a major in the production of energy, it will be introduced the special measures of savings of raw materials: they move to energy-saving mode. The load will be increased on nuclear power plants and thermal power stations operating on another group of coal. This was reported on a single web portal of the executive power.
At the same time, the officials inform that it will be done everything in order to minimize any negative consequences for Ukrainian citizens. “Fan” disconnection of houses from electric power is possible only in extreme cases, and people will be informed on this in advance.
The Auditors' Chamber of Ukraine by its decision “On Amendments to the Regulations on certification of auditors” of 26.01.17, № 338/10 laid out in a new wording the Regulation on certification of auditors approved by the ACU decision of 31.05.07, № 178/6. There are no any significant changes in order of obtaining the certificate of the auditor. The changes are mainly cosmetic.
In particular, it is provided for that the first phase of qualifying examination should be carried out in the ACU, and the implementation of the administration of the second phase of the qualification examination is assigned to the Group on the administration of the exam. It consists of individuals acting on a permanent basis, which are not connected persons with ACU members, ACU Secretariat staff and persons, who take the qualifying examination. Thus, if someone of the candidates has an associated person from the Group of the exam administration, then a member of the Group of the exam administration can not participate in the work.
