Legislation Overview (August 2017)

Taxes

VAT

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the legality of forming VAT tax credit on the basis of the account for the supply/transmission of electric energy” of 10.08.17, No. 1569/6/99-99-15-03-02-15/ІПК clarified that the basis for the recognition of a tax credit of the value added tax (hereinafter − VAT) without receipt of a tax invoice may be, in particular, an invoice issued to the VAT payer for services rendered, the value of which to be determined by the indications of accounting devices and contains total amount of payment, tax amount and sales tax number.

According to the representatives of the fiscal department, the right to a tax credit on the basis of the account in the case of electricity supply depends on the terms of the contract with the supplier.

Consequently, if the contract provides for the supply of services, in accordance with paragraph 201.11 of the Tax Code of Ukraine, the basis for the formation of a tax credit by the recipient of services, the value of which is to be determined by the indications of accounting devices, may be an account containing the total amount of payment, the amount of tax and tax number of such supplier provided by the provider of such services.

If the contract provides for the supply of goods, then in the opinion of the controllers, the basis for accruing of VAT amounts, which recorded in the tax credit, by the VAT payer-buyer, is the tax invoice made by the supplier and registered in the Unified Register of tax invoices.

The State Fiscal Service of Ukraine in its Individual Tax Adviсe “On the procedure for forming a tax credit on the basis of documents specified by paragraph 201.11 of Article 201 of Section V of the Tax Code of Ukraine” of 22.08.17, No. 1700/6/99-99-15-03-02-15/ІПК reminded for the value added tax payers (hereinafter − VAT) the procedure for forming a tax credit for documents from para. 201.11 of TCU, in particular for transport tickets and hotel accounts. Since such documents confirm the expenses incurred and reportable person submits them to the accounting department together with the Report on the use of funds issued for business trips or under the report, the date of formation of the tax credit on the basis of such documents is the date of submission of the Report.

It should be recalled that in accordance with para.201.11 of the Tax Code, the basis for calculating tax amounts related to a tax credit without obtaining a tax invoice is also a transport ticket, a hotel account or an account billed to a tax payer for communication services, other services, cost of which are determined by the indications of accounting devices. Mandatory condition - the document must contain the total amount of the payment, the amount of tax and the tax number of the seller (except those whose form is established by international standards).

The State Fiscal Service of Ukraine in its Individual Tax Advice “On preparation of tax invoices by the cash method” of 23.08.17, No. 1729/6/99-99-15-03-02-15/ІПК clarified VAT payers applying the cash method of VAT-account, peculiarities of preparation of consolidated tax invoices. For such payers, the rhythmic nature of the supply is considered to be the payment for goods/services two or more times per month.

This allows cashiers in case of receiving from the buyer − the VAT payer several payments within a month to prepare a consolidated tax invoice for the total amount of funds. And what is important is that the tax authorities are not against the consolidated tax invoice for payment, even if there were no supplies of paid goods/services in that month.

The cash register method of VAT accounting is used, in particular, by payers who supply (including wholesale), transmission, distribution of electric and/or thermal energy, supply of coal and/or products of its enrichment of commodity heading 2701, 2702, 2703 00 00 00, 2704 00 according to UCC FEA, provide centralized water supply and sewage services. The consolidated tax invoice should be issued no later than the last day of the month in which the funds were received (para. 44 of sub-sec. 2 of sec. XX of TCU).

The Ministry of Finance of Ukraine by its order “On Amendments to the Order of the Ministry of Finance of Ukraine dated June 13, 2017 No. 567” of 21.07.17, No. 654, amended the Exhaustive list of documents sufficient for making a decision on the registration of a tax invoice/ adjustment calculation in the Unified Register Tax Invoices. If earlier, VAT payers had the right to choose the form of submission (paper or electronic) of written explanations and copies of documents required in case of suspension of registration of tax invoices, now they have the only one way of submitting - by means of electronic communications.

In addition, the Ministry of Finance has adjusted one of the criteria for stopping the registration of tax invoices: the value, which is compared with the amount of supply in the tax invoice/adjustment calculation submitted for registration, will be differently calculated. A document in which the volume of supply is 1.5 times greater than the difference between the volume of purchases and the volumes of supplies of goods/services made from January 1, 2017 will fall for blocking.

Corporate Income Tax

The State Fiscal Service of Ukraine in the Individual Tax Advice “On Certain Issues of Taxation of Credit Unions” of 30.06.17 No. 930/6/99-99-15-02-02-15/ІПК reported that as of 01.07.17credit unions are taxpayers of the income tax in the general conditions and are obliged to accrue and pay the income tax in accordance with the procedure established by para.III of “Corporate income tax” of TCU.

Credit unions have the right to distribute the income that remains at their disposal by the results of the fiscal year between members of the credit union. Consequently, credit unions can not be included in the new Register of non-profit institutions and organizations. After all, according to para. 133.4.1 of TCU, one of the mandatory requirements for non-profit organizations is the prohibition in the constituent documents of the distribution of the proceeds (profits) or their parts among the founders (participants) or members of such organization.

Consequently, credit unions, which are not included in the new Register of non-profit institutions and organizations, should pay the income tax as new taxpayers of the tax on the basis of a tax return for the annual reporting period beginning on July 1, 2017 and ending December 31, 2017.

The State Fiscal Service of Ukraine on the publicly available information resource (ZIR) in category 102.18 reported that a resident individual who pays to a non-resident legal entity income from a source of origin from Ukraine is obliged to withhold tax from such incomes and at their expense, unless otherwise provided by the provisions of the international agreement of Ukraine with the country of residence of the person for whom the benefit is paid (paragraph 141.4.2 of TCU).

At the same time, representatives of the fiscal department stressed that a resident individual on the basis of the reporting (tax) period (quarter, half year, three quarters, a year), in which he/she paid such income, should file a tax declaration on the company income tax, which form is approved by the order of the Ministry of Finance of Ukraine dated 20.10.15, No. 897. Line 23 and the annex of TI should be filled in it.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Some Issues of Taxation of the Permanent Representation of a Non-Resident” of 10.08.17, No. 1563/6/99-99-15-02-02-15/ІПК reported: if the operator of the agreement on joint activity without the creation of a legal entity is a permanent representation of a non-resident, then every non-resident party to such an agreement must be additionally registered as a permanent representation in the territory of Ukraine.

At the same time, the operator and each participant in the joint contract should submit a tax declaration on the company income tax. The Tax Code of Ukraine (hereinafter − TCU) does not provide for the submission of a separate declaration on the company income tax from joint activities.

PIT and War Tax

The State Fiscal Service of Ukraine in its letter “On the taxation by the personal income, the war tax of the amounts of indexation of wages, and reflection in tax calculation in the form of No. 1DF” of 10.05.17 No. 7955/5/99-99-13-01-01-16 indicates: the amount of wage indexation, in particular for previous periods, should be reflected in the tax calculation in the form No. 1DF in the quarter in which such accrual (payment) is made.

In this case, it is not necessary to distribute the indexation for the months for which it is additionally accounted for. The tax agent is obliged to withhold the tax on personal income and the war tax from the amount of income in the form of wage indexation in the tax period in which such accrual (payment) occurs, the representatives of the fiscal agency point out.

Similarly, for the calculation of the unified contribution of the indexation amounts additionally accounted for previous periods in connection with the detection of errors, should be included in the wages of the month in which such contributions were made. This is evidenced by sub-para.3 of para. 3 of sec. IV of the Guidelines on the procedure for accrual and payment of the Unified contribution to the compulsory state social insurance, approved by the order of the Ministry of Finance of Ukraine of 20.04.15, No. 449.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On Taxation of the Income of a Non-Resident – Individual” of 14.07.17 No. 1197/6/99-99-01-02-02-15/ІПК reminds that in the general case, the incomes of non-residents – individuals obtained from source of origin in Ukraine are the subject to taxation. However, if an international treaty, the consent to which the Verkhovna Rada has made binding, establishes other rules, then the rules of the international agreement are applied.

In addition, it is noted that in the most general case, according to paragraph 2 of Art. 15 of Model Convention of the OECD, the payment, wage and other similar remuneration received by a resident of another country in connection with employment in Ukraine are not taxed in Ukraine, if three conditions are met simultaneously:

a) the recipient is in Ukraine for a period or periods not exceeding a total of 183 days during any 12-month period commencing or ending in the relevant tax year;

b) the remuneration is paid by the employer or on behalf of the employer who is not a resident of Ukraine;

c) the expenses for the payment of remuneration are not borne by the permanent representation or the permanent base which the employer has in Ukraine.

Non-resident income from the provision of professional services (scientific, literary, artistic, art, educational or teaching activity, the activities of doctors, lawyers, engineers, architects, dentists and accountants, etc.) are not taxed in Ukraine, provided that such a non-resident does not have a permanent basis in Ukraine, which is regularly used by them to carry out this activity (para. 1 of Art. 14 of the OECD Convention).

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the issues of taxation of the income tax, if a legal entity (employer) at his/her own expense organizes food (lunch) for individuals (employees)” of 02.08.17, No. 1454/6/99-99-13-02-03-15/ІПК explained: if the employer, at his own expense, arranges lunches for workers which sales price is lower than the cost, then the difference between the cost of food and the sale price should be included in the taxable income of taxpayers as an additional benefit and should be taxed by the income tax and the war tax. In addition, the amount of such a difference is the basis for the accrual of the unified contribution.

Representatives of the fiscal department argue their position, based on para. 164.2.17 of TCU, as well as the fact that the amount of the difference between the cost of organized meals and the sale price is not given in the List of types of payments, for which the unified contribution, approved by the Resolution of the Cabinet of Ministers of Ukraine dated 22.12.10, No. 1170 (hereinafter − List No. 1170), is not accrued.

As for the income tax and the war tax, the position of the fiscal department is more convincing, because sub-para. “e” of para. 164.2.17 of TCU provides for the inclusion in the additional benefit of the cost of goods received at regular prices, as well as the amount of the discount of the usual price individually assigned to such a taxpayer.

It should be recalled that, accruing the income tax for additional benefit, one should not forget about the “natural” coefficient.

Unified Social Contribution

The State Fiscal Service of Ukraine in its Individual Tax Advise “On the calculation of the unified contribution to the compulsory state social insurance in case of payment of the bonus to the dismissed employee” of 04.08.17 No. 1499/6/99-99-13-02-03-15/ІПК explained: when payment of the bonus to the dismissed employee for the time worked before the dismissal, the unified contribution should be calculated on the amount determined by dividing the bonus (income) by the number of months for which it was accrued.

This conclusion can be made on the basis of Part 2 of Art. 7 of the Law of Ukraine “On the Collection and Accounting of the Unified Contribution to the Compulsory State Social Insurance” of 08.07.10, No.  2464-VI, which stipulates the procedure for accrual of the unified contribution in the event that after the dismissal, the salary (income) was accrued to the individual for worked time. The bonus is the same salary (because it is included in the wage fund in accordance with the Instruction on wage statistics, approved by the order of the State Statistics Committee dated 13.01.04, No. 5), it is paid for time worked, so it is also subject to such a procedure for the accrual of the unified contribution.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On Payment by Affiliated Companies of the Unified Contribution to the Mandatory State Social Insurance” of 11.08.17 No. 1585/6/99-99-08-02-01-15/ІПК clarified the specifics of payment of the Unified Contribution by affiliated companies. Therefore:

• if a branch or other separated unit has a separate balance sheet, independently conducts payments to insured persons, it is a payer of the unified contribution, then such a separated unit is required to report and pay the unified contribution to the controlling authority in which it is registered;
• if the separated unit does not maintain a separate balance sheet and does not make payments with the insured persons, then the legal entity must notify the controlling authority at the location of such a separate subdivision. In this case, the payer of the unified contribution is a legal entity, which is obliged to report and pay the unified contribution, including a separate unit, to the controlling authority at its main place of accounting.

Representatives of the fiscal department reminded that according to paragraph 8 of sec. II of the Procedure for the registration of payers of the unified contribution to the mandatory state social insurance, approved by the order of the Ministry of Finance of Ukraine dated 24.11.14, No. 1162, the separated units are accounted as insured taking into account such peculiarities.

First, in the case of receiving a message from the state registrar or information from the Unified State Register on the establishment of a separate unit of a legal entity, such a newly created unit should be accounted with the note “Non-payer”.

Second, if a legal entity decides to allocate a separate subdivision to a separate balance sheet and transition to independent settlement of accounts with insured persons, he/she should inform the fiscal service at the location of the unit within a period of 10 days from the date of such decision. On the basis of this notice, legal entities should account a separate unit as a payer of the unified contribution.

Third, if a legal entity decides to reorganize a separate subdivision − the insurer into a unit that does not have the duties or authority to maintain a separate balance sheet and independently carry out its calculations, he/she will again notify about it the fiscal service at the location of such a division within 10 days of the day of such a decision. In the absence of arrears on the basis of such a report of legal entities, separate division should be accounted for with the mark “Non-payer”.

The controlling authority during the verification of unified contribution payer, processing of its reporting may establish the existence of a separate balance sheet in a separate subdivision and independent calculation of payment for labor with insured persons.

Simplified Tax System

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for the Transition of Taxpayers of the Company Income Tax to the submission of a simplified tax declaration of such tax and a simplified tax declaration form of the Company Income Tax, which is taxed at the rate of 0 percent in accordance with paragraph 44 of subsection 4 of section XX “Transitional Provisions” of the Tax Code of Ukraine” of 09.08.17, No. 592 approved the form of a simplified tax declaration of the company income tax, which to be taxed at the rate of 0% in accordance with paragraph 44 of subsection of 4 of sec. ХХ of the Tax Code of Ukraine (hereinafter − TCU).

It should be recalled that from 01.01.17 to 31.12.21 zero rate of the income tax is to be applied by payers, whose annual income does not exceed UAH 3 million, the salary of employees accrued for each month of the reporting period is higher than 2 minimum wages and which meet one of the following criteria:

• registered after January 1, 2017;
• operating whose annual income did not exceed UAH 3 million during the three previous years, and the average number of employees amounts to 5−20 people;
• registered by the payers of the unified tax to January 1, 2017, and whose amount of proceeds from the sale of products was up to UAH 3 million in the last calendar year, and the average number of employees amounts to 5−50 people.

Other Taxes and Fees

The Ministry of Finance of Ukraine by its Order “On Amendments to the Tax Declaration for Transport Tax” of 27.06.17, No. 595 approved an updated form of the tax declaration for the transport tax. In particular, taxpayers will have to inform tax officers in more details about their car. Now, the following should be indicated in a new declaration:

• type of fuel used by the passenger car;
• International Vehicle Identification Number (VIN-code).

It should be recalled that the transport tax should be paid by the individuals and legal entities who have their own cars registered in Ukraine in accordance with the current legislation, with a period of not more than five years (inclusive) and their average market value more than 375 sizes of minimal salary (established on January 1 of the reporting year).

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the necessity of registration of the Company by the payer of the excise tax, the statement and registration of the excise tax note in the case of the transactions of refuelling own fuel, leased, involved in the contract of equipment and the necessity of using cash register during the delivery of fuel” of 05.07.17, No. 998/6/99-99-15-03-03-15/ІПК responded to the question of compulsory registration of an economic entity by the taxpayer in case of the transaction of refuelling the leased fuel, as well as the equipment involved in contract work.

In the case of equipment lease (without crew and with crew), subject to acceptance for use in accordance with the act of acceptance-transfer, the entity will use the fuel exclusively for its own needs, namely for refuelling machinery that for a specified period of time was granted to him/her for use on conditions of Lease agreement. Such transactions are not the sale of fuel in the sense of the paragraph of the second subparagraph 14.1.212 of TCU. Consequently, company should not be registered by the excise tax on the sale of fuel.

However, when refuelling vehicles of third parties (executors) engaged by the customer under the terms of the contract or service contract, it should be made the transfer (release) of fuel from the customer to the contractor (executor), which is a transaction on the sale of fuel in the sense of paragraph 14.1.212 of TCU. Therefore, the customer during the implementation of such transactions is a person who sells fuel, and must be pre-registered as the payer of excise tax.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the procedure for taxation of non-residents’ incomes in the form of interest on granted credits/loans, if such interests are not paid to a non-resident, but are taken into account in increasing the amount of credit/loan” of 25.07.17, No. 1343/6/99-99-15-02-02-15/ІПК reported that non-resident’s incomes with source of their origin from Ukraine in the form of interest should be taxed on repatriation in accordance with the provisions of para. 141.4 of TCU independently from the method of payment of such income, including by enrolment at the expense of increase of the authorized capital or amount of credit/loan.

At the same time, according to representatives of the fiscal department, the tax on non-residents’ incomes in the form of interest should be paid entering of the counter claims of the same kind.

The State Fiscal Service of Ukraine in its Individual Tax Advise “On the Tax on Real Estate and the Definition of Industrial Buildings” of 09.08.17 No. 1540/Б/99-99-13-03-01/ІПК noted that the industrial buildings excluded from the subject to the tax on immovable property, different from the land plot, according to sub-para. “є” of para. 266.2.2 of the Tax Code of Ukraine included objects of class 1251 “Industrial buildings” taking into account the classification features and functional purpose of such objects (State Classifier of Buildings and Structures ДК 018-2000).

Accounting and Reporting

The Ministry of Finance of Ukraine by its Order “On Approval the Form of the Book of Income and Expenses Accounting for the Determination of the Amount of the Total Annual Taxable Income and the Procedure for Accounting for Income and Expenses to Determine the Amount of the Total Annual Taxable Income” of 23.06.17 No. 591 approved a new form of accounting of incomes and expenses for determining the amount of total annual taxable income. This is about a book of accounting for ordinary non-business individuals. It differs from its predecessor, in particular, by having separate graphs to reflect the costs associated with obtaining a tax discount and the cost of transactions with investment assets.

Accordingly, a new Procedure for keeping records of income and expenses appeared to determine the amount of total annual taxable income.

The National Bank of Ukraine in its letter “On Amendments to the Chart of Accounts for Banks Accounting” of 23.08.17, No. 60-0004/59123 recalled that due to the introduction of IFRS 9, certain changes were made to the chart of accounts for banks accounting. Therefore, the regulator explained when and how to transfer balances of funds from “old” accounts to new ones. In particular:

• from 01.12.17 to 14.12.17 (inclusive) it is necessary to transfer the balance of funds from the accounts for the account of the discount, the premium for the granted loans/deposits, short-term, long-term, overdue loans/deposits, overdue accrued income/expenses on loans/deposits of the current Chart of Accounts, approved by the NBU Board Resolution No. 280 of 17.06.04 (hereinafter − Chart of Accounts No. 280), to the corresponding accounts of a new Chart of Accounts. At the same time, it should be noted that from 01.12.17 to 24.12.17 for the accounts on account of discounts on granted loans/deposits, the reference R020 will identify the sign of these accounts of the AP (active and passive);
• from 18.12.17 to 24.12.17 (inclusive) it is necessary to transfer amount of balances from the accounts of the following group to the corresponding accounts with the account of the provisions of classes 1, 2, 3 of the Chart of Accounts No. 280:
• 149 “Provisions for impairment of debt securities refinanced by the National Bank of Ukraine”;
• 159 “Provisions for other banks’ debts”;
• 240 “Provision for loan arrears granted to customers”;
• 319 “Provisions for impairment of financial investments in the Bank’s portfolio for sale”;
• 329 “Provisions for impairment of securities in the bank’s portfolio until repayment”;
• 359 “Provision for accounts receivable under bank transaction”.

New Chart of Accounts, except for the accounts of sections 65, 75, takes effect from 25.12.17.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the use of the cash register not registered in the SFS authorities on the condition of daily printing of the X-report and reflecting its data in the company’s cashbook” of 18.07.17 No. 1258/6/99-99-14-05-01-15/ІПК clarifies that company may not use cash register while trading its own production products. In this case, it is obliged to make payments to the cash the company with the registration of income and cash payment vouchers and issue the corresponding receipts signed and stamped in accordance with the established procedure. Such an opportunity is provided in para.1 of Art. 9 of the Law of Ukraine “On the Application of Cash Registers of Settlement Transactions in the Field of Trade, Catering and Services” of 06.07.95 No. 265/95-ВР.

If an entity does not want to take advantage of this privilege, the entity should use cash registers registered, sealed in the established order and transferred to the fiscal mode of work with the printing and issuance of relevant settlement documents confirming the execution of settlement transactions.

The State Fiscal Service of Ukraine in its letter “On peculiarities of submitting of tax reporting on the income tax by non-profit organizations” of 10.08.17, No. 21192/7/99-99-12-02-04-17 reported that a non-profit organization that did not bring its constituent documents in line with the current tax-non-profit requirements to 01.07.17, paid the income tax as a newly formed taxpayer on the basis of the tax return for the annual reporting period, which begins on 01.07.17 and ends on 31.12.17.

Therefore:

• for the period from 01.01.17 to 30.06.17, a non-profit organization must submit to the controlling authority the Report for the basic reporting (tax) period equal to the calendar year and the financial statements for the first half of 2017 (that is, the deadline for submission of the Report is March 1, 2018);
• for the period from 01.07.17 to 31.12.17, such an organization must submit to the controlling authority a declaration of the company income tax for the basic reporting (tax) period equal to the calendar year and financial statements for 2017 (the deadline for submission of the declaration also is not later than March 1, 2018).

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Application of Cash Registers by Individuals − Entrepreneurs at the Simplified Taxation System, which carry out activities under the Commissions Contracts” of 16.08.17, No. 1633/Б/99-99-13-01-02-14/ІПК reported how the self-employed individual-unified tax payer conducting activities under the commission agreement should use a cash register.

The decisive moment for an entrepreneur in this situation will be the amount of income received by him/her during the calendar year. It should be reminded: only the amount of reward of the unified tax payer, who sells the goods under the contract commission, is got into his/her income. Consequently, the obligation to use cash register will arise only at the moment of exceeding his/her income (including in the form of remuneration) of mark UAH 1 million.

The State Statistics Service of Ukraine by its order “On approval of the form of the state statistical observation No. 7-trade (annual) “Report on the existence of a trading network” of 21.07.17 No. 188 approved a new form of statistical observation No. 7-trading (annual) “Report on the existence of a trading network”.

It should be recalled that the form No. 7-trade is submitted by legal entities that carry out retail activities. It is required to report under the new form already starting from the report for 2017.

The State Statistics Service of Ukraine by its order “On Approval of Forms of State Statistical Surveillance on Agricultural Product Sales by Agricultural Companies” of 12.07.17, No. 165, “On Approval of the Form of State Statistical Surveillance Regarding Plots, Gross Collection, and Productivity of Agricultural Cultures” of 17.07.17, No. 170, “On approval of the form of state statistical observation No. 2-farm (annual) “Report on expenditures on production of agricultural products (works, services)” of 21.07.17, No. 193 updated the following forms of statistical reports for agricultural companies:

• No. 21 (monthly) “Report on the implementation of agricultural products” − put into effect starting from the report for January 2018;
• No. 21 (annual) “Report on the implementation of agricultural products” − put into effect starting from the report for 2018;
• No. 29 (annual) “Report on the area and gross collections of crops, fruits, berries and grapes” − put into effect starting from the report as of December 1, 2017;
• No. 2-farms (annual) “Report on expenditures on production of agricultural products (works, services)” − put into effect starting from the report for 2017.

Control and Responsibility

The President of Ukraine signed the Law of Ukraine “On the Constitutional Court of Ukraine” of 13.07.17 No. 2136-VIII, according to which the Constitutional Court of Ukraine (hereinafter − CCU) would work under the new rules. The main purpose of the new CCU work is real protection of the rights and freedoms of human and citizen, and the rule of law.

The innovations introduced by the regulatory act include the fact that appeals to the CCU will have three forms now: constitutional appeal, constitutional petition and constitutional complaint.

Anyone, who believes that the law of Ukraine (its separate provisions) used in the final judicial decision in his/her case is contrary to the Constitution of Ukraine, can take advantage of the latter one.

Please, pay attention to the change of the structure of the CCU. Now Grand Chamber, the Senate and two six boards are in its composition.

The Cabinet of Ministers of Ukraine approved a draft law “On basic requirements for buildings, as well as terms of placement of building products in the market”. This is reported on the Government portal. The document, in particular, provides for European approaches to the safety of buildings, the transition to a declarative principle in the validation of the suitability of construction products for use, and the enhancement of efficiency of state market surveillance measures in accordance with the new EU Regulation No. 305/2011.

Now the manufacturer of building products will be required to provide a declaration of performance characteristics or a technical approval certificate. These documents should indicate the characteristics of mechanical resistance, fire safety, energy efficiency, accessibility, etc. In fact, in this way, the manufacturer will inform consumers about the quality and safety of their building products.

After the adoption of the bill by the Parliament, in Ukraine an organizational structure will be created, which will deal with the pre-operational inspection of building products similar to European ones.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine dated December 27, 2010, No. 1231” of 18.08.17, No. 618 updated the procedure for the write-off of outstanding monetary obligations or tax debt after the liquidation of the unrelated taxpayer with bankruptcy.

The Resolution, in particular, details the list of documents on the basis of which the head of the tax authority makes a decision to cancel the taxpayer’s bad tax debt. Such documents are:

• information from the Unified State Register (hereinafter − USR) on the state registration of the termination of a legal person and its separate subdivision, a separate subdivision of a foreign non-governmental organization, a representative office, a branch of a foreign charitable organization, state registration of termination of entrepreneurial activity of an individual-entrepreneur, which is the basis for de-registration from controlling authorities and/or other actions in accordance with the law. Until 01.01.19. Regarding separate subdivisions of a foreign non-governmental organization, representations, branches of a foreign charitable organization - information from the Register of public associations;
• notification or documentary confirmation of information to the state registration authority on the liquidation or reorganization of the payer, the closure of a separate subdivision of the payer or information from the EDRPOU (Unified State Register of Enterprises and Organizations of Ukraine) (for taxpayers, information of which are not entered into the Unified State Register);
• information (extract) from the State Register of Acts of Civil Status of Citizens, information to the state registration body of civil status, a copy of the certificate of death of an individual;
• a court decision on the recognition of an individual as missing or incapacitated or announcing him/her as a deceased person;
• documented information of the relevant state body, which registers the independent activity or issues the documents on the right to conduct such activities (certificates, permits, certificates, etc.).

The Ministry of Finance of Ukraine by its Order “On Approval of the Procedure for the functioning of the Electronic Office” of 14.07.17, No. 637 approved the Procedure for the Operation of the Electronic Office. It provides for that in case of detecting problems in the work of the Electronic Office, the user will be able to send a corresponding message about error that emerged during the work in the information and telecommunications system “Electronic office” (a form of message is approved in the appendix to this Procedure) to the State Fiscal Service of Ukraine (hereinafter − SFSU).

The SFSU will be obliged to confirm or refute the existence of this error within 72 hours of receipt of such message.

If an error is acknowledged, the SFSU should eliminate it within a time period that is determined by it, taking into account the criticality of the error found and the technical feasibility of eliminating it.

At the same time, if a methodological mistake leads to a violation of the rights of the taxpayer or involves prosecution, the SFSU must send to the Electronic office and to the taxpayer’s e-mail a document stating the existence of the methodological error and the time required for its elimination and recovery of violated rights of the taxpayer.

It should be recalled: such procedure of error message is provided by paras. 421.7−421.9 of TCU. In this case, the TCU exempts the taxpayer from liability (in the presence of a document confirming the existence of an error). Such exemption from penal sanctions is provided for by para. 421.10 of TCU.

The Ministry of Finance of Ukraine in its letter “On Implementation of Certain Provisions of the Budget Code of Ukraine on the Calculation and Payment of Benefits” of 16.06.17, No. 09010-20-10/16034 reported that budget commitments for the payment of subsidies, assistance, payment privileges housing and utilities and communications services, compensations to citizens from the budget are accounted by the Treasury of Ukraine, regardless of the budget allocations determined for this purpose. The financing of expenses for the provision of benefits is carried out within the established social norms (standards) regardless of the amount of funds provided in the state or local budgets for the relevant year.

The Ministry of Social Policy of Ukraine by its Order “On Approval of the List of Documents Submitted for the Recognition of Cargo (goods), Funds, Including in Foreign Currency, Works Performed, Services rendered by Humanitarian Aid” of 06.04.17, No. 573 approved the list of documents required to recognize cargo, goods and money for humanitarian aid.

Thus, in order to recognize cargo and goods as humanitarian aid, the benefactor must submit to the Ministry of Social Policy Department on humanitarian aid the following:

• an application for the recognition of cargo (goods) for humanitarian aid, prepared according to the established form;
• a copy of the written proposal of the donor for the provision of humanitarian aid (another grant document) or a copy of the documents with an exhaustive list of the cargo composition, its quantity and weight for each item (VAT invoice, way-bill, specification, invoice, packing list, etc.);
• a plan for distributing humanitarian aid among purchasers, prepared in a prescribed form, with copies of letters of receipt of the purchasers − legal entities on the need for humanitarian aid;
• letters from central executive authorities, local state administrations regarding the expediency of recognizing the goods as humanitarian aid (if available).

The Ministry of Internal Affairs of Ukraine by its Order “On approval of the Methodology for the Planning of Evacuation Measures” of 10.07.17 No. 579 approved general requirements for the development of documents on the planning of measures for evacuation of the population and material and cultural values from areas of emergencies and areas of armed conflict.

Business entities for evacuation planning form a commission for evacuation. If the number of employees of a company is less than 50 persons, one must appoint a person who performs the functions of the said commission.

Business entities should develop plans for the evacuation of the population (workers). The commission on evacuation is directly responsible for this duty. Its head puts a signature on such a project, and the head of the economic entity that has formed such a commission approves. Also, the plan of evacuation of workers should be agreed with the body in which territory the planned evacuation of the population.

The plan of evacuation of workers is annually updated by March 1 as of January 1 of the current year. Made amendments to it are confirmed by the signature of the head of the evacuation commission.

The State Fiscal Service of Ukraine in its Individual Tax Advise “On the imposition of a fine in case of submission of clarifying reporting” of 04.08.17 No. 1488/6/99-99-12-03-06-15/ІПК reminded that on the overdue amounts of monetary obligation determined by the controlling authority (including the amount of penalties at their disposal and excluding the amount of the fine) should be calculated fine at the rate (if amount is not set) for each calendar day of delayed payment of the monetary obligation, including the day of repayment, at the rate of 120% per annum of the discount rate of the NBU, which operates on each such day.

If the tax liability determined by the taxpayer or a tax agent is past due, then the penalty will be calculated at the rate of 100% annual NBU discount rate, which is valid for each such day.

The State Fiscal Service of Ukraine in its Individual Tax Adviсe “On the postponing by the controlling authorities of the length of the period of documentary unscheduled on-site audit when the taxpayer reported about the loss of primary accounting documents” of 22.08.17, No. 1701/6/99-99-14-03-03-15/ІПК considered the issue whether it is possible to postpone documentary unscheduled audit in the event of loss or damage of the original documentation by the payer.

Consequently, it is possible to postpone the audit, if the payer informs the controllers in writing about the fact of the loss or damage to the accounting primary documentation. Along with this message, he/she must provide a document confirming this fact. In particular, this may be a copy of the application or notification to the law enforcement agencies of a criminal offense. The indicated documents and messages must reach the tax authorities within five days from the date of detection of such loss.

The payer has 90 calendar days from the date of receipt of a written notice to the controllers for the restoration of lost primary documents. After that, he/she must notify the controllers of the recovery of the documents.

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the Eligibility of Entrepreneurial Activities by a Public Organization Included in the Register of Non-Profit Institutions and Organizations” of 20.07.17 No. 1286/6/99-99-15-02-02-15/ІПК explained that a public association can carry out activities with the status of a legal entity or without such a status. This is clearly provided for in para. 5 of Art. 1 of the Law of Ukraine “On Public Associations” of 22.03.12 No. 4572-VI.

Thus, a public association with the status of a legal entity is a non-profit company which main purpose is not profit making.

Thus, according to the representatives of the fiscal department, the Register of non-profit institutions and organizations can include only public associations which meet the requirements of para. 133.4.1 of TCU, only with the status of a legal entity.

In addition, tax officers come to the conclusion: in case if a business association with the status of a legal entity carries out commercial activities, such association must re-register in the Unified State Register with its further exception from the Register of non-profit institutions and organizations.

After all, if a public association carries out commercial activities and receives profits, then this activity is classified as entrepreneurship (Article 42 of the Commercial Code of Ukraine) and does not correspond to the essence of the concept of non-profit activities of non-profit institutions.

The State Property Fund of Ukraine by its order “On Amending Certain Legislative Acts of the State Property Fund of Ukraine” of 08.06.17 No. 924 defined the conditions for considering the question of depriving of the appraiser of qualification certificate (qualification document). Now consideration of such a question is possible not only on the request of the interested party.

It is sufficient that the reviewers of the State Property Fund of Ukraine (hereinafter − SPFU) (its regional departments), based on the results of the review of the report on the assessment of the property, that the fact that it does not meet the requirements of normative legal acts on valuation of property is sufficiently inadequate and unprofessional.

Also, consideration of the issue of the cancellation of a qualification certificate is possible in the course of conducting by the SPFU of the unified database of assessment reports for the purposes of taxation and the calculation and payment of other mandatory payments, which are made in accordance with the legislation.

Public Procurements

The Ministry of Economic Development and Trade of Ukraine by its letter “On the implementation of procurement under separate parts of the procurement item (lots)” of 02.08.17, No. 3304-06/26774-06 clarified some aspects of the purchase of certain parts (lots) of goods, services or works in the unified procurement procedure.

In particular, the auction may be canceled in part (under lot). Also, the customer has the right to accept bids as failed in part (under lot). If the necessity of purchase has not disappeared, the customer carries out a new procurement, guided by the cost limits, tender legislation. If the cost of the purchase is less than these cost limits, the customer makes such purchase without the use of procurement procedures. At the same time, it is possible to volunteer use ProZorro electronic public procurement system.

The procurement contract should be concluded on the basis of the procurement procedure with the winner under each lot separately. If the winner of all lots is the same entity, the customer can conclude one procurement contract, provided that such possibility was provided by the tender documentation and the draft agreement.

Financial Markets

The National Bank of Ukraine by its Resolution “On Approval of the Regulation on the Procedure for Granting to Non-Bank Financial Institutions a License for Money Transfers in National Currency without Opening Accounts” of 17.08.17, No. 80 approved the relevant provision and improved the procedure for issuing a license for money transfers in national currency without opening accounts to the non-bank financial institutions (hereinafter − NFI).

Thus:

• in order to obtain a license, it is not necessary to file internal documents on financial monitoring. At the same time, the NFIs are obliged to develop and approve such documents within one month from the date of receipt of the license;
• requirements to the NFIs were introduced to disclose information about their ownership structure and to determine the procedure for submitting such information;
• requirements to the financial position of the NFIs, their business reputation, as well as the business reputation of their managers and owners of substantial participation in them are established;
• the NFIs that have received money transfer licenses and provide cash withdrawal services for their further transfer must specify in their internal documents the procedure for calculating the cash balance limit at the cash desk and the frequency with which cash funds are collected;
• the list of grounds for denial of licenses has been expanded.

Labor and Salaries

The Ministry of Social Policy of Ukraine by its Order “On Amendments to the Regulations on the Development of Guidelines for Occupational Safety” of 30.03.17, No. 526 amended the Regulations on the Development of Guidelines for Occupational Safety by stating it in a new version.

As before, the safety instructions are mandatory for the employees of the relevant professions or the performers of the relevant work.

From now on, the requirements of the provision will apply not only to legal entities, but also to individuals, who use hired labor. Previously, ministries, other bodies of executive power, enterprises, institutions and organizations were subject to this provision.

Accordingly, two types of instructions disappeared from the provision: those that belong to the state intersectoral labor protection acts, and model guidelines. The first ones were approved by the relevant authorities of state supervision of labor protection in agreement with the ministries or other bodies, others − by ministries or other executive authorities, industrial, scientific-production and other associations of enterprises.

Model guidelines together with state and intersectoral industry regulations on labor protection were taken by the companies as a basis when developing their own guidelines.  From now on, employers will develop guidelines based on regulations on labor protection and technological documentation of the company, taking into account specific production conditions and safety requirements.

As before, employers continue to monitor compliance with the requirements of the instructions by the employees.

Instructions should contain five mandatory sections:

• general provisions;
• safety requirements before starting work;
• safety requirements during work execution;
• safety requirements upon completion of work;
• safety requirements in emergencies.

If necessary, instructions can be supplemented by other sections.

The review of the instructions in force at the company will be carried out within the time limits provided for by normative-legal acts on labor protection, but not less than once every five years, and for work with high danger or where there is a need for professional selection, − at least once every three years.

The Ministry of Social Policy of Ukraine by its Order “On Approval of the form of accounting cards of data of labor inspector” of 11.07.17, No. 1127 approved the form of the data record of the Labor Inspectorate. The card contains photos, information on the surname, name and patronymic of the labor inspector, the position, date and number of the act of appointment, transfer to position, information on education and work experience.

The compliance of the data will be confirmed by the managers of the city council of the city of regional significance, village, town, city council, united territorial community.

It should be recalled that, according to part three of Art. 34 of the Law of Ukraine “On Local Government in Ukraine” of 21.05.97 No. 280/97-ВР executive bodies of city councils of cities of regional significance and united territorial communities have the authority to exercise control over compliance of legislation on labor and employment of the population in order established by law, as well as to impose fines for violation of labor legislation. For this purpose, local government bodies may have labor inspectors in their staff, whose controlling authority will be confirmed by an official certificate issued by the State Labor Office. The reason for issuing a labor inspector’s license to an official of the executive body of the council is a letter from the village, town, city mayor, to which a completed data record of labor inspector must be added.

The State Service of Ukraine on Labor Affairs by it Order “On the Approval of the Procedure for Notifying Registration of Inspection Visits and the Labor Inspector decision on the Visit of the Employer” of 22.06.17, No. 76 approved the Procedure for the Notifying Registration of Inspection Visits and the decisions of the Labor Inspectorate on visiting the employer. The procedure determines the procedure for notification of registration of inspection visits and decisions of the labor inspector on visits of the employer.

The information about the visits of employers by the labor inspectors will be registered by the territorial authorities of the State Labor Organization, and in case if the company will be visited by inspectors from the apparatus of the State Labor Organization, registration of the visit will be conducted by the Department of Labor Affairs of the State Labor Organization.

The information about the visiting inspector and the site of visit will be entered into the Register of Inspection visits and the decisions of the Labor Inspectorate on the visit of the employer. Each visit is given a number, which consists of an appropriate index of region and the sequence number of the entry record on the visiting entered in the Register.

It should be recalled that labor inspection hide banal checks under beautiful formulation of “inspection visits”, obviously, to deprive this process of negative color.

Controlled Transactions and Transfer Pricing

The State Fiscal Service of Ukraine in the Individual Tax Advice “On the recognition of transactions for the free transfer of goods to a non-resident − related person as controlled, methods of setting conditions for a controlled transaction, indicators of profitability” of 17.07.17 No. 1233/6/99-99-15-02-02-15/ІПК answered the question about the possibility of assigning a transaction for the free transfer of goods to a related non-resident to a controlled one.

The logic of reasoning by the representatives of the fiscal department is as follows:

• the condition for the recognition of a transaction as controlled is the possibility of its impact on the object of taxation of income tax (para. 39.2.1 of the Tax Code of Ukraine, hereinafter − TCU);
• the free transfer of goods in tax accounting is equated to the sale (para. 14.1.202 of TCU);
• the value of free-of-charge goods should be reflected in the accounting expense, accordingly, it affects the accounting result, and consequently, the object of taxation of income.

The conclusion is based on these three theses: if the recipient of free goods is a “related” non-resident, then the economic transaction falls under the definition of controlled.

The State Fiscal Service of Ukraine in its letter “On the entry into force of the resolution of the Cabinet of Ministers of Ukraine dated July 4, 2017, No. 480” of 14.08.17, No. 21674/7/99-99-14-01-02-17 reported that transactions with a non-resident, which does not pay the income tax (corporate tax) in his/her country, is considered to be controlled. It recognizes a non-resident who is discharged according to the legislation of the country of registration from paying this tax in the reported year, regardless of the reasons and considerations for such a release, or the corporate income tax rate (corporate tax) for such a non-resident is set at zero percent. At the same time, such transactions could be recognized as controlled from 27.07.17 (date of entry into force by the relevant list of organizational and legal forms of non-residents who do not pay income tax (corporate tax). At the same time, the criteria for recognizing transactions as controlled (for example, an income criterion) should be calculated on the basis of the total reporting (calendar) year for 2017.

If a non-resident counterpart has provided the taxpayer with a certificate from the relevant institution of his/her country-residence, that he/she paid the income tax in the reported year, then business transactions of the taxpayers with such a non-resident should not be recognized as being controlled, even if the organization legal form of non-resident is included in the list of “non-profitable” (of course, if there are no other criteria for the recognition of the transaction controlled).

The Other Things

The Cabinet of Ministers of Ukraine adopted the Energy Strategy of Ukraine for the period to 2035 “Security, Energy Efficiency, Competitiveness”. This information is available on the Government portal.

This is a program document outlining the whole range of large-scale reforms in the energy sector of the state.

According to the document, the new structure of energy needs is as follows: nuclear energy will give 50% of the country’s electricity by 2035, renewable sources − 25%, hydropower – 13 % and the rest will be covered by thermal power plants.

This strategic document was processed in different versions for two years. The most respected scientific centres of the country, including the National Institute for Strategic Studies, international and domestic experts, and public organizations participated in the work on it. This is a generalizing document that defines the goals of our state by 2035 and the global steps to achieve them.

The Ministry of Social Policy of Ukraine in its letter “On the indexation of scholarships” of 16.03.17, No. 30/0/66-17/163 stressed that if a student lost the right of an academic scholarship and received only a social scholarship, then in accordance with the results of semester control, the academic scholarship was re-appointed, then the calculation of the consumer price index for the indexation of such a scholarship should be made from the month of the re-appointment of the academic scholarship (paragraph 101 of the Procedure for indexing the cash income of the population, approved by the resolution CMU dated July 17, 2003, No. 1078).

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Eligibility of Obtaining the Status of a Non-Profit Organization by Representation of a Non-Resident” of 11.08.17, No. 1584/6/99-99-15-02-02-15/ІПК stated that representation of non-residents can not obtain non-profit status and, accordingly, to be entered to the Register of non-profit organizations.

The conclusion of the representatives of the fiscal department is based on the fact that foreign public (charitable) organizations are not legal entities in accordance with the legislation. Therefore, one of the mandatory requirements for non-profitable status has not been met.

It should be recalled that in order to obtain non-profit status, enterprises should simultaneously meet the requirements of para. 133.4 of TCU.