Taxes
Reducing the tax pressure
The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Tax Code of Ukraine on decreasing tax pressure on taxpayers” of 17.07.15, № 655-VIII (comes into force on the first day of the month following the month of its publication (except para. 2 of ch. II, which enters into force from the day following the day of publication), which provided that the starting date of penalty assessment was postponed by 90 days.
According to the regular amendments to the Tax Code of Ukraine (hereinafter - TCU) by an independent accrual of the amount of a monetary obligation by a payer (which is not repaid in time), the penalty would be charged only after 90 days following the last day of the deadline.
Currently, the penalty is charged from the first working day following the last day of the deadline for payment of the liability to the taxpayers, who do not repay obligations in due time.
Those taxpayers, who in case of independent errors correction (Art.50 of the TCU) would make amendments to the tax returns within 90 days following the last day of the deadline for payment of the liability, will get an exemption from the penalty. Current version of TCU does not provide this.
New policy on tax consulting is introduced by the same law.
Thus, only the SFS of Ukraine and controllers of regional level (including Crimea), Kyiv and Sevastopol, regional territorial bodies of SFS are entitled to provide written consulting (or in electronic form) to the taxpayers. The fiscal authorities of lower level are allowed only oral communication with taxpayers.
Taxmen are obliged in written (electronic) consulting to provide a description of the issues raised by the taxpayer, to substantiate application of norms of the law and provide conclusion on the practical application of certain provisions of tax legislation.
All consultations of the state financial control of regional level and the central office of SFS must be made public on their official web sites within 10 days.
Only the Ministry of Finance should provide the roundup tax consulting. The state financial control is deprived of such right.
The Law amended the TCU concerning recognition criterion of debts as bad.
Thus, two characteristics were adjusted among nine (paras. 14.1.11 of the TCU), the debt should correspond to one of them to be considered as bad, and also the tenth was added, namely:
- the debt should be overdue more than 180 days, and the total amount of creditor’s claims for it should not exceed minimum size of direct creditor’s claims established by the law to commence an insolvency proceeding. For individuals – the debt, which does not exceed 50% of a minimum wage (per year), established on 1 January of the reporting fiscal year (in case of absence of a legislatively approved bankruptcy proceedings of individuals). Relevant amendments were made to item “ґ” of paras.14.1.11 of the TCU. In comparison with current version the term “overdue debt” was added and the requirements for the recognition of such debt as bad disappeared, if measures provided by the law used by the creditor did not lead to its recovery;
- overdue debt of individual or legal entity should be considered as bad if it is not repaid due to insufficient property of such person, provided that enforce recovery actions of the debtor’s property did not lead to full repayment. Item “є” of paras.14.1.11 of the TCU sounds this way.
- the debts of business entities should be considered as bad, which were recognized as bankrupt or liquidated legal entities. This criterion would be entered in item “з” of paras.14.1.11 of the TCU.
VAT
The State Fiscal Service of Ukraine in its letter “On determination of VAT taxation base of transactions during the delivery of independently produced goods” of 08.04.15 р. №7414/6/99-99-19-03-02-15 explained how to determine the base of VAT taxation during the delivery of independently produced goods.
Therefore, taxation base of transactions of delivery of independently produced goods (services) could not be higher than their production cost determined in accordance with Accounting Standards 16 “Expenditures”.
In general taxation base of transactions of delivery is to be determined according to agreed cost (para. 188.1 of the Tax Code of Ukraine, hereinafter - TCU). In addition, delivery time of base of independently produced goods (services) should not be lower than their self-cost.
Produced supplies should be entered to the company balance at the base cost. This is production cost for independently produced supplies. The cost includes:
- direct financial expenses;
- direct labor payment expenses;
- other direct expenses;
- variable and fixed distributed general production expenses.
1. If the first event is an advance payment for yet non-produced goods, the supplier should determine liabilities, based on agreed cost, at the time of receipt of the advance payment. And the supplier should prepare a tax invoice (hereinafter -TI) and register it in the Unified Register of tax invoices (hereinafter - URTI).
If production expense of independently produced goods exceeds agreed cost when recognition of the goods, the second TI should be prepared on excess amount indicating the type of reason “17”. Such TI also should be registered in URTI.
2. If the first event is shipment of independently produced goods and production expenses exceed agreed cost, the second TI should be prepared on the shipment date and registered in URTI:
- the first - taking into account the agreed cost;
- the second (indicating the type of reason “17”) – on the difference between production expenses and agreed cost.
The Ministry of Finance of Ukraine by its Order “On approval of Procedure of filling in the documents for transfer in case of payment (collection) of taxes, fees, customs duties, unified contribution, implementation of budget refund of value added tax, return of mistaken or over transferred funds” of 24.07.15, № 666 updated the Procedure of filling in the documents for payment of taxes and fees.
The Procedure approved by the Ministry of Finance regulates filling of settlement documents for:
- transfer in case of payment (collection) of taxes, fees, customs duties, unified contribution;
- implementation of budget refund of VAT;
- return of mistaken or over transferred funds.
Also the document gives the rules and examples of filling of such line of settlement document as “Purpose of payment” in different situations. In addition, the document gives an updated list of codes of types of taxes payment, duties, unified contribution and other payments.
Corporate income tax
The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Tax Code of Ukraine regarding the taxation of non-profit organizations” of 17.07.15, № 652-VIII (comes into force from the day following the day of its publication). The Tax Code of Ukraine has been again amended by this Law. This time it’s related to non-profit organizations. In particular, qualifying standards for non-profit organization are specified.
Company is allowed not to pay the income tax if it meets the following requirements:
- formed and registered in accordance with the procedure established by the law;
- its constituent documents prohibit the distribution of received incomes (revenues) or their parts among founders (participants), members of such organization, employees (except payment for their labor, assessment of the unified social tax), members of management and other related entities;
- its constituent documents provide for the transfer of assets to one or more non-profit organizations of relevant kind or crediting on budget revenue in case of termination of a legal entity (as a result of its liquidation, merger, division, accession or reorganization);
- a company registered in the Register of non-profit institutions and organizations by controlling authority.
The parliamentarians also extended the list of organizations that could be registered as non-profit (subject to mentioned above conditions). These are:
- unions, associations and other legal entities;
- trade unions, their associations and organizations of trade unions as well as organizations of employers and their unions;
- agricultural servicing cooperatives, cooperative associations of agricultural servicing cooperatives;
- other legal entities.
The State Fiscal Service of Ukraine in its letter 'On taxation of joint activities' of 29.07.15, № 27555/7/99-99-15-02-01-17 informed: as in the current wording of p. III TCU no rules on separate accounting of the results of joint activities without founding a legal entity, starting from 01.01.15 joint activities agreements are not separate income tax payers.
The party defined by the contract is obliged to keep separate accounting of joint activities. If there a profit within the joint activities agreement, it should be distributed in proportion to the value of the contributions of participants in the joint property. The amount of such profit is income of each participant. In taxation purpose it is included in income of separate legal entity.
Other taxes and fees
The State Fiscal Service of Ukraine noted that since tobacco for hookah according to its definition is a tobacco product, it is classified as excise goods. Accordingly, the cost of tobacco (with VAT), used when the services of hookah smoking are provided, is tax assessment base of retail excise (see 116.02 category of public information and reference resource of the SFS of Ukraine).
In addition, it should be noted: smoking with the use of hookah provides for filtering and cooling of smoke by water, and fruit juice, wine or distilled spirits sometimes are used instead of water.
That is, in the case of use of alcoholic beverages (excisable goods) instead of water, their cost also should be included in tax assessment base as retail excise.
In its turn, the excise tax on tobacco and alcoholic beverages cost (or other excisable goods), which used for smoke filter instead of water, should be included in calculation of expenses of services hookah smoking (i.e. in Goods declaration of account 23 “Production”).
Mobilization and ATO
The State Fiscal Service of Ukraine in its letter “On application of rules of the tax laws by entrepreneurs from the ATO zone” of 18.06.15, № 5837/М/99-99-17-02-02-1 explained the nuances of providing of tax benefits for entrepreneurs registered in the SFS bodies in the territory of ATO conducting.
1. Unified Contribution. Its payers registered in the SFS bodies, which are in the territory of ATO conducting (announcement of military emergency or state of emergency), are exempted from obligations of assessment and payment of the Contribution and providing of reporting during ATO period.
Duties mentioned above should be performed by these payers after ATO termination.
Those Unified Contribution payers can avoid responsibility for duties failure in the period from 14.04.14 to ATO termination, who submit to the SFS no later than 30 calendar days following the day of ATO termination the statement and certificate of Chamber of Commerce of Ukraine (hereinafter - CCU) that confirm circumstances of insuperable force - force majeure.
2. Land fee. The Law of Ukraine “On temporary measures for the period of the anti-terrorist operation” of 02.09.14, № 1669-VII (Art 6) exempts business entities exercising the activity in the ATO zone from fees for use of land plots of state and municipal property.
However, the state financial control notes that appropriate amendments are not made to the Tax Code of Ukraine (hereinafter - TCU) and also procedure for application of this tax benefit is not developed. Change in the TCU regulations could be implemented exclusively by making amendments to the TCU (para.2.1 of the TCU).
3. Extension of deadlines of provision of tax reporting. Taxpayers of Donetsk and Luhansk regions are entitled to apply to the tax authority at their location with the application for extension of deadlines of provision of tax reporting. The reason is effect of force majeure.
This application should be submitted with certificate of CCU within 30 days following the day of end of such circumstances.
The state financial control also stopped at activities such as the right to receive deferral (instalment) of money liabilities (tax debt) and the write-off of tax debt as bad.
The Cabinet of Ministers of Ukraine by its Resolution “On approval of Procedure for refund of expenses and loses due to use of transportation and floating craft of individuals or legal entities by military servicemen of National Guard” of 19.08.15, № 611 regulated issues how to compensate loses of transportation use by National Guard to vehicle owners.
This is about the use of vehicles in accordance with para.10 of chap. I of Art.13 of the Law of Ukraine “On the National Guard of Ukraine” of 13.03.14, № 876-VII for:
- stop an offense;
- vehicular access to place of accident, natural disasters;
- convoy to hospitals of those people who need emergency medical care;
- prosecution of offenders and their accompaniment (or convoy) to Internal Affairs Agencies.
The Procedure does not apply to transport of diplomatic representations and consular posts of foreign states as well as special purpose vehicles.
The use of means of transport is their temporary withdrawal by military servicemen of National Guard for a term, which does not exceed time required to perform mentioned above functions.
The vehicle owners will have compensation for the expense of funds provided for by the state budget for the maintenance of the National Guard.
The vehicle owners to receive the compensation should apply to the General Directorate of the National Guard (military control body of operational and territorial association, unit, military unit (subdivision), higher educational institutions, Training Units (of center), base, institution, agencies of the National Guard) and provide the following documents:
- application for reimbursement of expenses;
- copy of act (or card) of temporary use of vehicles;
- copy of documents confirming the ownership of the vehicle to its owner;
- copies of documents, calculations confirming the expenses and losses incurred by the owner of the vehicle due to the use.
Within 5 working days the documents are sent to the General Directorate of the National Guard, where they are examined and the decision is made on the compensation of expenses in the terms defined by the Law of Ukraine “On appeals of citizens” of 02.10.96, №393/96-VR.
Internal investigation could be conducted until the circumstances of use of vehicles are clarified, then the decision date would be increased.
Temporarily Occupied Territories
The National Bank of Ukraine in its letter 'Explanation regarding compulsory sale of foreign currency earnings in favor of residents of the Crimea' of 03.08.15, № 40-02015/54281 explained that earnings in foreign currency from the borders of the continental territory of Ukraine in favor of residents of the Crimea are the subject to compulsory sale on the interbank currency market of Ukraine.
For the application of NBU standards person located on the territory of FEZ 'Crimea' equated to non-residents. Payments from the continental territory of Ukraine into the territory of FEZ 'Crimea' (or vice versa) is should be carried out in a manner prescribed by NBU standards for transfer funds outside Ukraine/inside Ukraine (p.p. 1, 2 Resolution of NBU 'On the application of certain rules of currency legislation during the temporary occupation of the territory of the free economic zone 'Crimea' of 03.11.14, № 699).
The Law of Ukraine 'On creation of free economic zone 'Crimea' and the peculiarities of the economic activity in the temporarily occupied territory of Ukraine' of 12.08.14, № 1636-VII exempt from compulsory sale proceeds in foreign currency in favor of the Crimea subjects. However, this law does not exempt from sales of foreign currency earnings in favor of residents of the Crimea.
The procedure and amount of sale of foreign currency set by the Resolution of NBU 'On the settlement of the situation in the money and foreign exchange markets of Ukraine' of 03.06.15, № 354.
The Ministry of Finance of Ukraine explained: companies (their structural subdivisions) located in occupied Crimea and / or in the territory of ATO conducting (or their separate property) make inventory when it is safe and unimpeded access of authorized officers to assets, primary documents and registers of accounting, where liabilities and owner capital of these companies are reflected (see letter of the Ministry of Finance of Ukraine “On providing explanations [about inventory by companies in temporarily occupied territory of Ukraine and in zone of the antiterrorist operation, reflection in the accounting transactions of periodicals transcription, dates of prepayments when purchasing for budget funds]” of 03.06.15, № 31-11420-08-10/18126). Such business entities should make an inventory on the 1st day of the month following the month when deterrent of access to be disappeared, and should reflect its results in accounting of relevant reporting period.
Before inventory the information on assets, to which no access, should be reflected according to accounting in annual financial statements. Liabilities and owner capital that cannot be documented because of lack of access to primary documentation and accounting registers should be reflected in the financial statements by the same procedure.
Key spending units of budget funds together with the consolidated annual financial and budget statements should submit consolidated financial and budget statements of managers and recipients that are in occupied territory.
It should be recalled that previously the Ministry of Finance explained: entities that are in the temporarily occupied territory of Ukraine should be accounted as assets of the company. In addition, negative effect of changes in economic and legal environment should be evaluated, and also losses from asset impairment are to be recognized.
Control and Responsibility
The President of Ukraine signed the Law of Ukraine 'On the national police' of 02.07.15, № 580-VІІІ (coming into force from 07.11.15, except for some provisions).
The law prescribes that the police is composed of the criminal police, the patrol force, the prejudicial inquiry authorities, guards police service, special police, special purposes police.
It is forbidden for the police to strike at by rubber (plastic) sticks on the head, neck and collarbone area, genitals, lower back (coccyx) and stomach, throw grenades and shoot into the crowd, to use water cannons when the air temperature below + 10 ° C.
The first engage to the police with the appointment of junior police must be carry out the results of the competition.
Every year, the head of police and heads of territorial police agencies publish on the official web portal of the police report on the activities of the police.
The local authorities have the right to adopt a resolution of no confidence in the head of the police agency (unit) that is the ground for dismissal from his post.
The police also has the right to inspect involving administration of legal entities, private individuals (including private individuals - entrepreneurs) or their authorized representatives the premises with the weapons and special vehicles, ammunition, explosives, other items, materials and substances for storage and use of which are defined specific rules or procedure and which are covered by the licensing system of internal affairs authorities, and also directly inspect places of its storage to check compliance with the rules of handling and rules for their use.
The Verkhovna Rada of Ukraine introduced automatically fixation of violations of drivers on the way by the Law of Ukraine “On amendments to some legislative acts of Ukraine on improvement of regulation of relations in the field of road traffic safety” of 14.07.15, № 596-VIII (partially entered into force on 08.08.15).
Now the administrative liability for violations in the sphere of Road Traffic Safety by legal entities and individuals, on which the vehicle is registered, are to be if the violations are automatically fixed. In other words, the violation is fixed via technical means that enable to make photography or video, and that operate according to the legislation on the information protection in telecommunication systems.
In addition, 150 points are calculated for every citizen, who has driver license, every year since the beginning of the year (after receipt of the driver license) until the end of the year. And the amount of penalty points provided for the relevant offenses would be deducted from them for the administrative violation automatically fixed.
The Ministry of Social Policy of Ukraine reported: demobilized workers who do not continue military service under the terms of the contract, taking into account the transportation time to the places of residence (stay), should start to work (see. The Letter of The Ministry of Social Policy of Ukraine 'On the application of disciplinary penalties to employees for absenteeism without good causes'of 16.07.15, № 302/06/186-15).
To demobilized people who without good reasons don’t start working, the employer has the right to apply disciplinary actions. For example, dismissal for absenteeism without good reason.
In accordance with Art. 149 of the Labour Code (hereinafter – the LC) the owner or its authorized authority before applying disciplinary actions should receive a written explanation of the violator of labour discipline. Of course, in choosing the type of penalty the owner or its authorized authority must take into account the severity of the offense committed and the damage caused to him, the circumstances under which the offense is committed, and the previous work of the employee.
An extreme disciplinary action may be cancellation of an employment agreement for absenteeism (including absence from work for more than three hours during the working day) without good reason (p. 4 ch. 1, Art. 40 of the LC).
In timesheet absence from work for valid reasons it is advisable to mark the symbol 'O' - other causes of non-attendance and absence from work without good reason - the symbol 'AB' - absenteeism.
Non-profit Institutions and Organizations
The State Fiscal Service of Ukraine explained plan of actions due to the adoption of new Register of non-profit institutions and organizations (see 102.01.01 category of public information and reference resource of the SFS of Ukraine).
The Regulation on the Register of non-profit institutions and organizations, approved by the order of the Ministry of Finance of Ukraine of 24.01.13 № 37, operates now until new Register to be approved by the Cabinet of Ministers.
Non-profit organizations, which were included in this Register on 13.08.15 (the date of entry into force of the Law of Ukraine “On Amendments to the Tax Code of Ukraine regarding the taxation of non-profit organizations” of 17.07.15, № 652-VIII), should not be exempted to 01.01.17. But at the same time:
- those of them, which meet requirements of para. 133.4 of the Tax Code of Ukraine (hereinafter - TCU), are to be included in new Register of non-profit institutions and organizations. The non-profit organizations at wish could submit copies of constituent documents to the state financial control;
- those non-profit organizations that do not meet the requirements of para. 133.4 of the TCU should reconcile their constituent documents with norms of the TCU to 01.01.17. Also they should provide copies of those documents to the state financial control to be registered in new Register of non-profit institutions and organizations. The non-profit organizations that do not meet the requirements will be excluded from the Register after this date by the state financial control.
Labour and Salaries
The Ministry of Social Policy of Ukraine informed: at the place of mobilized employee employer may employ another person, concluding with fixed-term contract for the time of staying the principal officer in the Armed Forces of Ukraine. It is allowed by Art. 23 of the Labour Code (letter The Ministry of Social Policy of Ukraine 'On employees called up for military service' of 10.06.15, № 231/06/186-15).
An employee who informed the employer after the demobilization of intends to return to its workplace, may starting work on the basis of appropriate administrative act of the employer.
The date of dismissal of an employee who worked at the post on a temporary employment contract shall be the day before the day of starting work the main. This should be reflected in administrative act of the employer.
The Ministry of Justice of Ukraine reported that young specialists, who studied for budget funds and intended to resignation from employer work, should not refund cost of educating to the State. The reason - not currently approved system of compensation of education cost by such graduates (see letter of the Ministry of Justice of Ukraine “On possibility of termination of employment contract (resignation) by young specialist, who studied under the direction of the state order, and refund procedures of education cost” of 12.08.15, № ПІ-К-2626).
It should be recalled: graduate, who studied by state order, obtains employment on the basis of referral work in accordance with the agreement concluded between the employer, the head of university and the graduate. The graduate has to work at least three years for employer.
In case of resignation such graduate is obliged to refund education cost and compensate all employer costs in accordance with established order to the state budget. Today the procedure for determining and compensation of education cost by graduates in case of breach of conditions of employment agreement by them is not approved, and the Ministry of Justice has not released acts in this behalf.
The other things
The Cabinet of Ministers of Ukraine reduced number of licensing authorities by its Resolution “On approval of list of licensing authorities as invalid, some Resolutions of the Cabinet of Ministers of Ukraine” of 05.08.15, № 609.
New List of licensing authorities (hereinafter – the List) includes the following licensing authorities:
1. The Ministry of Finance.
2. State Service of Ukraine on Labor.
3. The Ministry of Environment.
4. The Ministry of Economic Development (in some cases together with regional administration and Kyiv City Administration).
5. State Architectural and Construction Inspectorate.
6. Administration of State Service of Special Communication.
7. State Emergency Service of Ukraine (SESU).
8. The Ministry of Social Policy.
9. The State Fiscal Service of Ukraine (SFSU).
10. The Ministry of Internal Affairs of Ukraine (MIA).
11. The Ministry of Healthcare of Ukraine (MHU).
12. State Security Service of Ukraine (SSSU).
13. The Ministry of Education and Science of Ukraine (MESU).
14. The National Committee on Fisheries.
15. State Service of Ukraine on Transport Safety.
16. State Aviation Service.
17. The National Committee of financial services.
18. State Nuclear Regulatory Committee of Ukraine (SNRCU).
19. The National Securities and Stock Market Commission (NSSMC).
20. The National Commission for the State Regulation of Communications and Informatization (NCSRCI).
21. The National Commission for the State Regulation of Energy and Utilities (NCSREU) (in some cases together with regional administration and Kyiv City Administration).
22. State Administration on Medical Products and drug control.
23. The National Television and Radio Broadcasting Council of Ukraine.
24. State Administration for food safety and consumer rights protection.
The Cabinet of Ministers of Ukraine defined the procedure for distribution of medical subsidy between local budgets by its Resolution “On approval of the distribution formula of amount of medical subvention to local budgets from the State budget” of 19.08.15, № 618 (comes into force on 1 January 2016). The adoption of Government Resolution was due to updating of the Budget Code of Ukraine (hereinafter - BCU).
Estimated expenditures of volume of medical subvention expenses (Art. 1034 BCU) from next year should be determined depending on the population size living in relevant administrative-territorial unit as of 1 January 2016. Volumes of allocated funds (particularly for treatment of diabetics and patients with chronic kidney disease, etc.) should be taken into account in calculations.
Please note that in the current year main subventions are calculated according to formulas that are registered in Articles 26, 27 of the Law of Ukraine “On State Budget of Ukraine for 2015” of 28.12.14, № 80-VIII. Besides, formulas from government should be used since the beginning of the next year. Also, they should be used when the drawing up of budget for 2016.
