Legislation Overview (August 2016)

Legislation Overview (August 2016)

Taxes

VAT

The State Fiscal Service of Ukraine through its Public Informational Resource (hereinafter − PIR) updated its response on how to complete a tax invoice (hereinafter − TI) if a seller when supplies of goods/services, provides discounts or sets surcharges to a buyer. The updated response notes that the amount of surcharges/discounts should not be shown in separate lines of TI.

If a seller sets a surcharge, it increases the price of supply and the tax base that should be mentioned in columns 7 and 10 of TI respectively. If a buyer was provided with a discount, the price of supply and the tax base reduced by the amount of discounts.

Interestingly, this response was posted in PIR, but its effect was limited to 01.04.16. Appearance of advice with a similar meaning shows that controller's position remained unchanged.

The State Fiscal Service of Ukraine in its letter «On taxation of VAT transactions on supply by taxpayer of housing facilities (apartments), property rights on which were acquired by taxpayer from developer» of 19.07.2016, № 15532/6/99-99-15-03-02-15 is considered this interesting question.

Fiscal office emphasized that property rights to the investee (real estate (apartments) - the right to obtain into ownership the investee in the future (after taking into service).

After commissioning of the investee, a seller is obliged to transfer to a buyer the investee that is ready to be used in accordance with the relevant act of acceptance of delivery

Property rights of a buyer after acceptance of the investee into operation are realized by entry into ownership rights to such a facility, execution and registration as a taxpayer − as buyer of the relevant legal documents.

Thus, in this case transaction on realization of property rights to real estate (apartments) to a seller (a developer of housing facility) to levy value added tax (hereinafter − VAT) is transaction on the first supplies of housing (housing facility ) that is subject to VAT in generally order at rate 20%.

Transactions on subsequent deliveries of the finished newly built housing to the third parties are exempt from VAT in accordance with paras. 197.1.14 of  the TCU.

The State Fiscal Service of Ukraine in its letter «On the figures recognized by individuals – entrepreneurs in tax returns for VAT» of 17.05.16, № 10714/6/99-99-13-04-02-15 provided clarification on that issue. The controllers noted that individuals-unified taxpayers should keep the primary documents, on the basis of which there were filled books of income, or income and expenditure ledgers, because their data are used for the preparation of tax returns.

Also, individuals-entrepreneurs should have documents (contracts, bank documents, etc.) to confirm the amounts that do not belong to unified taxpayers income, in particular:

• if transit funds received for the execution or organization of performing of transport forwarding services established by the contract;
• the loan amount in foreign currency, interest received from the bank for the use of funds on the account, the deposit amounts;
• if there were returned the funds, which are erroneously entered on the settlement account of individual-unified taxpayer.

The data of tax accounting, including data declarations on value added tax (hereinafter − VAT), can confirm only the original documents that are made during the actual implementation of a business transaction. And if there wasn’t any actual implementation of a business transaction, the relevant documents cannot be considered as primary for the purposes of tax accounting, even if there are all the formal requisites.

The controllers are entitled to impose a penalty in accordance with the para.121.1 of TCU (UAH 510 or UAH 1 020 in case of repeated violations during the year) for non-preservation of primary documents. In addition, an administrative fine should be imposed on the employers who do not conduct or conduct accounting of income and expenses with violation.

The Ministry of Finance of Ukraine by its order “On approval of forms of documents used in the process of amounts compensation of value added tax” of 13.07.16, № 606 approved new forms of such documents:

• Conclusions on the amounts of compensation of value added tax (hereinafter − Conclusion);
• Journal of accounting of conclusions on the amounts of compensation of value added tax transferred by the authorities of the State Fiscal service of Ukraine  to the bodies of the State Treasury Service of Ukraine;
• Register of conclusions on the amounts of compensation of value added tax transferred to the bodies of the State Treasury Service of Ukraine;
• Journal of the registration of conclusions on compensation amounts of value added tax received from the bodies of the State Treasury Service of Ukraine from the authorities of the State Fiscal Service of Ukraine;
• Submissions on the reinforcement with the funds for compensation of value added tax;
• Decisions on the transfer of funds for the compensation of value added tax.

There are separate graphs for the amount of VAT in the updated Conclusion:

• which is the subject to the compensation  from the budget on the current account for the reporting (tax) periods to 01.01.16;
• taxpayers that meet and do not meet the criteria of paragraph 200.19 of the Tax Code of Ukraine for obtaining of compensation.

It means that the updated document forms correspond to the requirements of TCU.

The State Fiscal Service of Ukraine in its letter “On taxation of VAT transactions of free distribution of products for advertising purposes” of 22.07.16, № 15920/6/99-99-15-03-02-15 reminded about the features of VAT transactions of free distribution of products for promotional purposes.  In particular, the tax authorities stressed that the cost of products distributed free under certain conditions could be not accrued compensating tax liabilities according to para.198.5 of the Tax Code of Ukraine. Namely − if the cost of goods purchased/manufactured for promotional activities (including those for free distribution) will be included in the cost of sales of finished products.

Corporate Income Tax

The State Fiscal Service of Ukraine by its letter “On the transfer pricing for transactions between non-residents and a representative office in Ukraine” of 14.07.2016, № 15281/6/99-99-15-02-02-15 reports that business transactions between non-residents and a representative office in Ukraine conducted starting from 01.01.2015 are not considered to be controlled.

From 1 January 2015 according to sub-para.39.2.1 of the Tax Code of Ukraine for the purpose of accrual of the company income tax, the controlled transactions are business transactions that affect the subject of taxation of a taxpayer implementing:

• with an associated person – non-resident;
• with a non-resident registered in the country (in the territory), which is included in the list of countries (territories), approved by the Cabinet of Ministers of Ukraine;
• by commission agents − non-residents in the implementation of foreign business transactions for the sale of goods.

Other Taxes and Fees

The State Fiscal Service of Ukraine in its letter “On the import procedure of used vehicles into the customs territory of Ukraine” of 01.08.2016, № 26072/7/99-99-18-02-02-17 noted that the reduced rate of excise duty should not be applied, if passenger cars with their origin  from the country recognized as the state-occupier and/or recognized as the aggressor state towards Ukraine, or imported from the territory of the occupying state (aggressor) and/or from the occupied territory of Ukraine, defined such according to the law of Ukraine.

The documents confirming the country of goods origin are (Article 43 of the Customs Code of Ukraine):

• certificate of origin of goods;
• certified declaration of origin of goods;
• declaration of origin of goods;
• certificate of the regional name of goods.

At the same time, the State Fiscal Service of Ukraine noted: identification number - VIN-code (Vehicle Identification Number), information about which to be provided in the technical datasheet of the transport vehicle, can be classified as information about the origin of the vehicles imported into the customs territory of Ukraine by citizens.

Accounting and Reporting

The State Fiscal Service of Ukraine in its letter “On transactions with change” of 19.05.2016, № 11023/6/99-99-14-05-01-15 noted: cash, issued as change should not be considered as accountable funds of a cashier and he/she to be not obliged to prepare an advance report. Funds (small change) should not be kept in the box office, but should be transferred from the cash of the company to the operational cash (cash register box).

Transactions related to the issuance of change should be reflected in registers of accounting on the debit of sub-account 301 “Operational cash register” and on the credit of sub-account 301 “Cash in the national currency”.

There are not established by current legislation any time limitations for storage at the place of settlement of small change, so the company determines the frequency of delivery of small change in the cash of the company.

At the same time the cash balance (in this case − small change) in the cash register box at the end of working day should not exceed the generally established limit of cash balance for the cash of the company.

The State Statistics Service of Ukraine by its order “On approval of the forms of state statistical observations of Agricultural Affairs” of 01.08.2016, № 136 approved such forms, which would come into force:

1. From the report for 2016:

• № 24 (annual) “Report on the production of livestock products, the number of farm animals and their provision with food”;
• № 21-заг (annual) “Report on the implementation of agricultural production”.

2. From the report for the first quarter of 2017 − № 13-заг (quarterly) “Report on the flow of raw milk to processing plants”.

3. From the report for January of 2017 − № 24-сг (monthly) “Report on livestock production and the number of farm animals”.

The State Fiscal Service of Ukraine in its letter «On correction of financial result before taxation in the amount of surplus and benefits from recovery of utility of fixed assets» of 04.07.16, № 14494/6/99-99-15-02-02-15 explained if to consider for tax and accounting purposes income from surplus and benefits from recovery of utility of fixed assets (hereinafter − FA), which was up to 01.01.15 marked down (or recognized loss from reducing utility). By the letter the State Fiscal Service representatives explained that because of expenses on markdown and losses on reducing utility of FA up to 01.01.15 did not affect on definition of the object of taxation by corporate income tax, since this date financial result before taxation should be reduced by the amount of surplus and benefits from recovery of utility of fixed assets within these expenses. Such an income should not be considered for tax and accounting purposes.

The State Fiscal Service of Ukraine by its letter «On documents execution during operations with return of fuel received before 01.03.2016 by suppliers» of 28.07.16, № 16330/6/99-99-12-02-02-15 explained how a buyer should arrange return of fuel received from a supplier up to 01.03.16. As this fuel was included into the Electronic Administration of Fuel Realization Systems (hereinafter − EAFRS), in accordance with Act of inventory, adjustment of calculating of excise invoice is not necessary. Instead, return of fuel is arranged as a transaction of realization − a buyer prepares and registers excise invoice in EAFRS.

The State Fiscal Service of Ukraine in its letter «On reflection in tax accounting operations on sale by bank non-productive fixed assets and investment property» of 08.06.2016, № 12660/6/99-99-15-02-02-15 considered the question.

In the letter is reported that in case of sale of the assets, financial result before taxation increases according to para. 138.1 of the Tax Code of Ukraine (hereinafter – the TCU) in the amount of depreciated book value of the assets determined in accordance with accounting, and decreases according to para. 138.2 of the TCU in the amount of the original value of  such an assets determined in accordance with accounting

In case of transactions on sale of investment property that is accounted in the financial accounting at fair value (depreciation and impairment are not recognized), corrections of financial result before taxation according to paras. 138.1 and 138.2 of  the TCU are not performed. Result from sale of these assets is determined in accordance with accounting rules and reflected in profit or loss before taxation without any adjustments.

The State Fiscal Service of Ukraine in its letter “On the adjustment of financial result before tax on the amount of interest on loans, borrowings and other debt obligations” of 18.07.16, № 15386/6/99-99-15-02-02-15 explained the procedure for accounting for the tax-profitable purposes of interests paid in favor of nonresidents - related parties in the reporting period, as well as interest, which in previous periods increased financial result before tax in accordance with the requirements of para. 140.2 of the Tax Code of Ukraine (hereinafter - TCU).

In particular, it should be taken into account paid interests this year in the decrease in financial result before tax of the reporting year, plus the amount of percentages unaccounted last year (decreased by 5%) in the amount not exceeding the limit according to para.140.2 of TCU. In other words, the standard is common for reporting interests and for the last year paid to non-residents − related parties.

Regarding the balance of 5% of the interest amount of previous periods, the taxpayer has no right to continue to take into account a balance of future reporting periods.

The State Fiscal Service of Ukraine in its letter “On the definition of differences on reserves (provisions) for compensation of future expenses” of 15.07.16, № 15291/6/99-99-15-02-02-15 reported that the taxpayer should increase the financial result before tax the sum of the formation of provisions for the reimbursement of costs for future expenses, that are reimbursed at the expense of reserves. The taxpayer carries out this procedure, regardless of which category spending it is reflected (current, work in progress, finished goods rests).

Actually tax officials insist on that the financial result adjustment should be carried out regardless of whether expenses for the establishment of security costs are included in the accounting expenses of the current period.

The Ministry of Finance of Ukraine by its order “On approval of the Guidelines on the registration by the authorities of duties and revenues of the materials on administrative offenses” of 02.07.2016, № 566 actualized the procedure of registration of materials on administrative offenses in the duties and revenues authorities, the procedure of preparation of protocols on administrative violations, consideration of cases on administrative offenses by the authorities of duties and revenues, record keeping on these matters, as well as ensuring of proper consideration of complaints against decisions on the cases of administrative offenses.

There are no any principal document updates compared to the previous procedure prescribed by the STA of Ukraine.  

Also the protocol forms on administrative offenses are approved, decision on imposing administrative penalties, the decision for termination of the administrative case the decision on consideration of the complaint against the decision in the case of an administrative offense.

The State Fiscal Service of Ukraine in subcategory 116.13.03 of “ZIR” system emphasized that the lack of data in column 3 “Volumes of realized fuel in kg” of excise invoice is grounds for refusal of registration of the excise invoice in the Unified Register of excise invoices (hereinafter − UREI).

The tax authorities explained their clarification referring to:

• para.7 of sec. II of the Procedure of filling excise invoice, adjustments calculation of excise invoice, request for replenishment (adjustment) of fuel residue, approved by the Ministry of Finance of 25.02.2016, № 218, which established that, in particular, in columns 3 and 4 of the tabular part of excise invoice should be indicated information about the volume of realized (shipped, lost) fuel: in kilograms (column 3) and litres, normalized to temperature of 15 ° C (column 4);
• para.9 of the Procedure of maintaining of the Unified Register of excise invoices, approved by the Cabinet of Ministers of 24.02.2016, № 114, which establishes that the cause of rejection of excise invoice/adjustments calculation for the registration in UREI is, in particular, the presence of errors in the preparation of excise invoice/adjustment calculation.

The Ministry of Finance of Ukraine by its Order “On Amendments to Certain guidelines on accounting for public sector entities” of 28.07.2016, № 709 made amendments in the guidelines of the Accounting of the public sector entities.

In particular, the Guidelines for accounting of fixed assets of the public sector entities brought in line with the National Accounting Regulations in public sector 121 “Fixed assets”, according to which from 10.05.2016 there was an increase to UAH 6 000 (excluding VAT) in value criteria within which public agencies should register purchased tangible assets as low value non-current tangible assets.

It was clarified that in acts of the cancellation there are data characterizing the items of fixed assets: name of object, inventory (nomenclature) number, starting for use of the object, the original (overestimate) cost, the amount of depreciation, a brief description of the object, reasons for disposal, etc.

The norm is added to the Guidelines on accounting for intangible assets of the public sector, which requires the intangible assets item, obtained in use, to be accounted by the entity of public sector (the licensee) on off-balance account in evaluating defined on the basis of remuneration established in the contract. Thus the payments for the given right to use intellectual property in the form of periodic payments, calculated in the manner and terms set by the agreement, should be included by the licensee in the cost of reporting period.

Labor and Salaries

The Ministry of Social Policy of Ukraine in its letter «On indexation of the salaries of foreign staff» of 15.07.16, № 332/10/136-16 reported that conditions of indexation for foreign missions  staff should be included into labor contracts. The reason of this response is the fact that the laws on indexation of income of people do not cover the salaries in foreign currency.

This statement also applies to all other foreign employees who receive salaries in foreign currency.

The Ministry of Social Policy of Ukraine on its official site promulgated the calculation of rate of duration of working time for 2017. According to expert estimates, Ukrainians will work 1 986 hours (in 2016 – 2 003 hours) at 40-hour working week in the following year.

According to Art.73 of the Labor Code, there are the following non-working days and holidays in companies, institutions and organizations:

• 1 January – New Year;
• 7 January  – Christmas;
• 8 March – International Women’s Day;
• 16 April – Easter;
• 1 and 2 May – International Workers’ Day;
• 9 May – Day of Victory over Nazism in World War II (Victory Day);
• 4 June  – Trinity;
• 28 June  – Day of the Constitution of Ukraine;
• 24 August  – Independence Day of Ukraine;
• 14 October – Day of Defender of Ukraine.

According to sec. 3 of Art. 67 of the Labour Code, if a holiday or day off coincides with the weekend, a day off should be postponed to the following day after the holiday or non-working day.

Therefore, according to the schedule of five-day working week with days off on Saturdays and Sundays in 2017 a day off will be:

• On Monday  January 2 for Sunday January 1;
• On Monday January 9 for Saturday  January 7;
• On Monday April 17 for Sunday  April 16;
• On Monday June 5 for Sunday June 4;
• On Monday October 16 for Saturday October 14.

In addition, the Ministry on its official resource acquainted with the calculation of rate of duration of working time for 2017 according to the calendar of a five-day working week with two days off on Saturday and Sunday with the same duration of working time per day during working week and corresponding decrease in the duration of the work on the eve of public holidays and non-working days:

• at the 40-hour working week – 1 986.0 hours;
• at the 39-hour working week – 1 942.2 hours;
• at the 38.5-hour working week – 1 917.3 hours;
• at the 36-hour working week – 1 792.8 hours;
• at the 33-hour working week – 1 643.4 hours;
• at the 30-hour working week – 1 494 hours;
• at the 25-hour working week – 1 245 hours;
• at the 24-hour working week – 1 195.2 hours;
• at the 20-hour working week – 996 hours;
• at the 18-hour working week – 896.4 hours.

Control and Responsibility

The State Fiscal Service of Ukraine in its letter “On the provision of consultation on questions of notification of controlling authorities on withdrawal by law enforcement agencies of documents and financial reporting, the need to take measures for their restoration, as well as the accounting procedure of  copies of such documents during the audit” of 28.07.2016, № 16292/6/99-99-14-03-03-15 explained: if before the opening or at the time of the audit, the original of primary documents were confiscated by law enforcement and other authorities, these authorities to be required to provide copies of such documents for the audit to the controlling authorities or to provide access to the verification of the documents.

Copies certified by the seal and signatures of public officials of law enforcement and other authorities, should be submitted within three working days from the date of receipt of the written request of the controlling authority.

Thus, in case of withdrawal of documents, time of the audit including started, should be transferred on the date of receipt of mentioned copies of the documents or make them accessible.

The Ministry of Justice of Ukraine by its order “On approval of the Guidelines on preparation of materials on administrative violations in the sphere of state registration” of 12.08.16, № 2473/5 approved the rules of preparation of materials on administrative violations in the sphere of state registration of legal entities, individuals and community groups, as well as rights in rem.

In particular, there was approved the procedure for preparation of protocols on administrative violations, processing and storage of materials of administrative cases and presenting them to the bodies authorized to consider such cases.

It should be recalled that the power to the compilation of the protocols on administrative violations in this area belong to the officials of the Ministry of Justice, the main territorial departments of Justice of the Ministry of Justice in the ARC, in the regions, in Kyiv and Sevastopol cities, namely to the Secretary of the Commission for the review of complaints related to state registration, and in case of absence of the Secretary − to a person who performs his/her responsibilities.

The Cabinet of Ministers of Ukraine adopted a resolution on the optimization of activity of central executive authorities of state system of intellectual property protection. It is reported on the official website of the Government.

The Resolution provides:

• liquidation of the State Intellectual Property Service;
• transfer of functions of implementing of state policy in the field of intellectual property to the Ministry of Economic Development;
• transfer of “Ukrpatent” state company, “Ukrainian Agency of Copyright and Related Rights” state organization and “Intelzakhyst” state company of  management sphere of the State Intellectual Property Service to the Ministry of Economic Development.

The State Intellectual Property Service will continue to perform its functions before the entry into force of a separate Act of the Government on performance characteristics of respective powers by the Ministry of Economic Development.

The State Fiscal Service of Ukraine in subcategory 119.08 of “ZIR” system reported that in case of liquidation of the bank, notification of closure of accounts of taxpayers should submit a chairman of  liquidation committee or liquidator or a person authorized by the Deposit Insurance Fund for the liquidation of the bank (hereinafter − the bank liquidator).

If the bank liquidator has no possibility of sending/receiving of e-mail messages by means of telecommunications, the notification of closure of accounts of taxpayers should be submitted by the liquidator in hard copy on the day of closing an account in person or sent by mail with notification of delivery to the address of relevant controlling authority, where the taxpayer is registered as a payer of taxes and duties. The notification of closure of accounts of taxpayers should be signed by the liquidator of the bank and sealed by the bank or the bank liquidator (if available).

The Ministry of Justice of Ukraine by its order “On Approval of Regulation on automated system of enforcement proceedings” of 05.01.16, № 2432/5 identified the mechanism of functioning of automated enforcement system (hereinafter – the System), which starts working from 05.01.17.

The system will provide the automatic distribution of executive documents between public performers, the giving of information about enforcement proceedings to the parties of enforcement proceedings, the making of documents of enforcement proceedings, the centralized document storage of enforcement proceedings, the registration of incoming and outgoing correspondence and stages of its passage, the transfer of enforcement proceedings documents to electronic archives.

It is easy to trace the deadlines of any enforcement process and judicial decision-making.

Access to the systems will be free and free of charge on the official website of the Ministry of Justice with the possibility to browse, search, copy and print information without restrictions and on a 24-hour basis in form of open data on the debtor and the claimant, number, date and state of enforcement proceedings as well as the name of the public enforcement service (private enforcement), where (which) opened the enforcement proceedings.

The parties of the enforcement proceedings will receive the access identifier to the System in the decision of the enforcement proceedings. They will be able to get information about the decision (enforcement actions) done by the performer, with the date of their adoption (commit) and with the possibility of printing of such information.

The Ministry of Justice of Ukraine by its order “On approval of the procedure of formation and keeping the Unified Register of private enforcement agents of Ukraine” of 05.08.16, № 2431/5 approved the rules for the formation and maintenance of the Unified Register of private enforcement agents of Ukraine (hereinafter − the Unified Register).

It is possible to get an access to the Unified Register (search, browse, copy and print information) on a 24-hour basis and without restrictions on the official website of the Ministry of Justice of Ukraine on a free-of-charge basis.

The following information will be in the Unified register:

• first and last name of a private executive;
• date of decision of qualification commission of private enforcement agents or temporary qualification commission of private enforcement agents on the providing of the rights for implementation of activities of a private executive;
• license number;
• executive district, where a private executive conducts the activity;
• Private Executive Office;
• details of the contract of insurance of civil liability of private enforcement, the term of the contract, details of the insurer and the insured amount;
• information about the suspension of a private executive;
• date and number of decisions on bringing the private artist to disciplinary liability and type of disciplinary penalty;
• first and last name of assistants of a private executive (if available);
• information on the termination of a private executive.

The data retrieval in the Unified register could be made on the totality or on one of the following details: first and last name of a private executive, certificate number, and executive district. A briefing note will be given as a result of data retrieval.

Mobilization and ATO

The President of Ukraine signed the Law of Ukraine «On Amendments to the Law of Ukraine 'On state social assistance to needy families» for social protection of families of the antiterrorist operation participants' of 14.07.16, № 1462-VIII, that came into force on 06.08.2016.

According to the legal act the total family income for the calculation of state assistance will be determined without considering the cash security of military servicemen and commanders who are directly involved in antiterrorist operation (hereinafter − ATO) at the time of its executing.

In the declaration, that is submitted for getting assistance by needy families, the cash security is not required to show. However, to the statement on the right to get assistance should be added the reference in prescribed form on direct participation the person in ATO.

Financial Services Market

The National Bank of Ukraine by its Resolution “On Amendments to the Regulations on the organization procedure and implementation of foreign exchange transactions in the territory of Ukraine” of 02.08.2016, № 364 simplified the carrying out of transactions with cash foreign exchange for the population.

Therefore, from August 10, 2016, when the corresponding resolution will enter into force, the individuals will be able to exchange currency in the amount of up to UAH 150 thousand in equivalent without providing documents. The requirement of documents provision in transactions amounting to over UAH 150 thousand remained in accordance with the legislation of Ukraine on prevention and counteraction to legalization (laundering) of proceeds from crime or financing of terrorism.

The National Bank of Ukraine in its letter “On the calculation of the term of calculations on export, import transactions and informing the tax authorities about identified facts of violations of period of calculation in the reporting month” of 10.08.16, № 22-0003/67025 explained for the violation of which period of calculation in export-import transactions, the appropriate sanctions to be imposed on the results of July 2016.

It should be recalled that the Resolution of the Board of the National Bank of Ukraine (hereinafter − the NBU) of 28.07.16, № 361, which entered into force on 29.07.16, this deadline increased from 90 to 120 calendar days. Therefore a question arose: whether it is possible to use a weakened time for transactions which arose before that date, but the calculations (supply of goods) of them have not passed yet? The NBU experts point out that the legislation makes it possible to reverse the action of normative legal acts that weaken or annul the responsibility.

Taking into consideration the above, the banks for the previous reporting month - July:

• provide to the tax authorities the information on violations during the reporting month the 120-day period of calculations;
• do not provide such information to the tax authorities in cases when during the reporting month, the 90-day period of calculations was exceeded without  exceeding the 120-day period.

The National Bank of Ukraine by its Resolution “On Annulment of certain normative acts of the National Bank of Ukraine” of 18.08.16, № 372 cancelled the requirement for the provision of the act of pricing expertise of the State Information and Analytical Centre for payment for imports of services by the residents. This decision was made within the policy of gradual liberalization.

Previously, the resident should get the act of pricing examination of the State information and analytical monitoring centre of external product markets for payments for services (for work, intellectual property rights) purchased from non-residents, the cost of which exceeded EUR 50 000. The act should certify the compliance of contract prices for services of market conditions.

Securities Market

The National Commission on Securities and Stock Market (hereinafter – NCSSM) by its decision “On Amendments to the procedure for register maintaining of audit firms, which are entitled to audit the professional participants of securities market” of 31.05.16, № 615 amended the rules of the procedure for register maintaining of audit firms, which are entitled to audit the professional participants of securities market (hereinafter − the Register).

Currently, an audit firm should meet the updated requirements to be included in the Register:

• to have a staff of employees that consists of at least three auditors, who work in the auditing firm at the primary employment and each of them is a certified auditor and has a document confirming the passing of education by training according to the relevant education program;
• to have a valid certificate of compliance of quality control system, issued by the Audit Chamber of Ukraine;
• to have a website of an audit firm.

Also, according to new rules, the certificate of registration in the Register should be signed by not the NCSSM member but the person authorized by the NCSSM. In addition, there were approved new forms of the certificate of registration in the register of audit firms, which are entitled to audit the professional participants of securities market, declarations on amendments to register and registration card on the entering into the register.

Summary of Court Rulings

The Higher Administrative Court of Ukraine in its decision of 11.07.2016 in case № 2а-6113/12/2670 states: the decision to cancel the earlier decision of the instalments of monetary obligations is the basis for early termination of the contract. Tax legislation does not determine that the early termination of the contract should be agreed between the controlling authority and the taxpayer through the conclusion of the respective contract.

Thus, a contract on instalment of a tax obligation should be considered terminated from the moment of the decision on the abolition of the earlier decision of the instalment (postponement) of monetary obligations.

The plaintiff arguments on necessity of the conclusion of a contract between the controlling authority and the taxpayer of termination of the contract on instalment of monetary obligation are unfounded.

Public Procurement

The Ministry of Economic Development and Trade of Ukraine in its letter «On procurement of works» of 05.08.2016, № 3302-06/24782-06 expressed its position on this issue.

According to Ch. 4. Art. 36 of the Law of Ukraine «On public procurement» of 25.12.2015, № 922-VIII (hereinafter − the Law) conditions of the purchase agreement should not be differ from the content of the tender offer by result of auction (including price per unit) of winner of the procurement procedure or offer price of participant in case of appliance the negotiating process.

The Law does not contain requirements concerning submitting by a participant in tender offer calculation of contractual price prior to electronic auction.

Thus, if the subject of procurement are works, the customer can set a requirement to provide by participants in tender offer the range and scope of work in accordance with technical specifications, mentioned in the tender documents, without specifying cost of every components of works.

If work is doing according to the estimate drawn up by the contractor, the estimate comes into force and becomes a part  of contract agreement after confirmation by its customer.

However, by paras. 6.2.4 of ДСТУ Б.Д.1.1-1:2013 «Rules of construction costs determination» (hereinafter − ДСТУ) determined that the offer price of the tender winner is a bargain price on construction object, which is formed by contractor involving subcontractors and is agreed with customer.

At the same time, para. 3.15 ДСТУ stipulates: contract price is estimates that determine the cost of work agreed by the parties (customer and contractor) and stipulated by contract agreement.

Thus, as price of  tender offer of participants may be reduced according to the results of electronic auction that will lead to the need for recalculation by participant estimates, and taking into account that the conditions of the procurement contract should not be differ from the content of the tender offer, in case of purchase of works contract price (the estimate) can agree by the parties at the moment of  conclusion of the purchase agreement in compliance with the Law and the Civil Code of Ukraine (hereinafter − CCU).

The order of price agreement (estimate) of winner of the procurement procedure can also be applied in the procurement of design works and services of maintenance, other services whose value is calculated according to the prescribed regulations.

The Other Things

The National Agency for the Prevention of Corruption by its decision “On approval of the List of positions with high and increased level of corruption risks” of 17.06.2016, № 2 approved the mentioned above List. It included:

1. Positions of the Head of Administration of the President of Ukraine and his deputies.

2. Positions of heads and deputy heads of offices as a part of independent structural subdivisions of central administrative office of the National Bank of Ukraine.

3. Positions of heads and deputy heads of independent structural subdivisions of territorial departments of the State Judicial Administration of Ukraine.

4. Positions of heads of state enterprises, institutions, organizations and other business entities of state ownership and their deputies, the purpose of which is carried out by governmental authorities.

5. Positions of public service, determined by the structure government agencies, which jurisdiction covers the entire territory of Ukraine, in case of inappropriate formation of subdivisions.

6. Positions in local government:

• first deputies, deputy of municipal (cities of regional, republican in the Autonomous Republic of Crimea, of regional value) heads, deputies of rural heads;
• deputy chairmen of regional and district councils in the cities;
• secretaries of municipal (cities of regional, republican in the Autonomous Republic of Crimea, of regional value), rural councils;
• governing the affairs of the executive committees of the urban (cities − regional centres and Simferopol city, the cities of regional, republican value in Autonomous Republic of Crimea) councils;
• heads of permanent commissions on budget issues of regional, Kyiv and Sevastopol city councils (if they work in the Council on a permanent basis).

It should be reminded: according to sec.1 of Art. 50 of the Law of Ukraine “On Prevention of Corruption” of 14.10.2014, № 1700-VII, the subjects to complete inspection are anti-corruption declaration of officials occupying positions associated with high levels of corruption risks, the list of which is approved by the National Agency for countering corruption (hereinafter − NACC). And according to sec.1 of Art.56 of the Law in respect of persons applying for positions with a high risk of corruption, the list of which is approved by NACC, a special inspection should be carried out.

The National Agency for Corruption Prevention by its decision «On approval of the Procedure  for an execution of protocols on administrative offenses and making regulations by the National Agency for Corruption Prevention» of  09.06.16, № 5 determined the procedure for an execution of protocols on related to corruption administrative offenses and making regulations.

It is determined that protocols on administrative offenses authorized persons of the National Agency execute, particularly in case of violation of restrictions on plurality and dual job in respect of receiving gifts, non-compliance with requirements of financial control and illegal use of information that has become known in connection with official duties.

In cases of violations regarding ethical conduct and on prevention and settlement of conflict of interests of persons authorized to perform state functions, the National Agency will make regulations. Failure to comply with requirements within ten working days since the day of its  sending will lead to a protocol on administrative offenses execution.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to Annex 2 to the methodology for calculating rental charges for state property and proportions of its distribution” of 08.08.16, № 516 changed method of calculating rental charges  for the use of state property for public organizations of disabled persons and creative workshops.

Public organizations of persons with disabilities will pay for the rental of premises area to 100 m² at the rate of 1%, and the rent of rest square metres of more than 100 m² should be calculated at the rate of 7%. A similar approach was introduced for creative workshops, namely: it should be paid at the rate of 1% for area of 50 m², and for all other meters − 3%.

Previously, for the premises, which exceeds the limit established for the business entities mentioned above (50 m² and 100 m² respectively) there were paid at a higher rate for the entire area, not for part of it.