Legislation overview (January 2016)

Legislation overview (January 2016)

Taxes

PIT

In general, 18% of income tax should be withheld from incomes accrued from 01.01.16. Progressive taxation is annulled by the income tax.

Sub-paragraph 169.1.1 of TCU directly states that the amount of total social tax benefits equals to 50% of living minimum wage for able-bodied person (per month), established by law on January 1 of the tax year. The living minimum wage for able-bodied people was established at the level of UAH 1 378 on 01.01.16.

Income amount limit for the applying of social tax benefits in 2016 should be equal to UAH 1 930. When applying of benefits for children under sub-para. 169.1.2 and sub-sec. “a” and “б” of paras. 169.1.3 of TCU, such a maximum value should be increased in multiplies of the number of children to one of the parents, single mother (father), guardians, trustee.

The State Fiscal Service of Ukraine in its letter “On income taxation by the personal income tax, which is paid by the legal entity to the individual entity conducting independent professional activity, in case of failure a copy of a registration in a controlling authority by such an individual” of 29.12.15, № 28031/6/99-99-17-03-03-15 reminded: when a legal entity paid the income to the individual conducting independent professional activity, it was allowed not to withhold the income tax only if such an individual provided a copy of a certificate of registration in tax account in appropriate status (i.e. as an individual conducting independent professional activity).

Unified tax

New rates of the unified tax are in force for the third group of unified tax payers from 1 January 2016 (paras. 1, 2 of para.. 293.3 of TCU):

• for VAT payers – 3% of received income amount of unified tax payer;
• for non-VAT payers – 5% of received income amount of unified tax payer.

The maximum amount of income volume for the calendar year also to be amended that allowed legal entities or individual-entrepreneurs to work in the third group. It was reduced from UAH 20 million to UAH 5 million per calendar year (sub-para.3 of para.291.4 of TCU).

The rates of the unified tax for the fourth group also were increased.

The State Fiscal Service of Ukraine in its letter “On application of the simplified taxation system” of 20.01.16, № 1867/99-99-17-02-02-17 under pressure of the public and the Ministry of Finance of Ukraine radically changed its position on the unified tax payers, who gained incomes more than UAH 5 million (not more than UAH 20 million) in 2015. Now the taxmen assert that such unified tax payers (individual and legal entities) do not lose their right to work on the simplified taxation system.

And the unified tax payers of the third group should count the 5-millions limit starting from 1 January 2016. And only when the incomes exceed this mark in 2016 – they should move to a common system of the quarter following the quarter of exceeding.

It should be reminded that recently the SFSU published a clarification with an opposite conclusion, which caused a huge resonance in business.

The State Fiscal Service of Ukraine by its letter “On the possibility of being on the simplified taxation system” of 22.12.2015, № 27445/6/99-99-19-02-02-15reported: restrictions on the use of the simplified taxation system, provided for by paragraphs 291.5.4 of TCU, related to financial institutions. This provision does not apply to legal entities - business entities that are not financial institutions in their legal status but provide services for leasing of intellectual property.

Therefore, legal entities, which are not financial institutions that engaged in leasing of intellectual property and similar products, except works protected by copyright, have the right to be the unified tax payers, if they carry out other conditions of the simplified taxation system.

Unified Social Contribution

It is not required to withhold the unified social contribution from wages, sickness benefit and maternity, remuneration for work or services under civil law contracts. The unified social contribution remains only in the form of “extra” accruals. In other words payments in the system of social insurance “fall” exclusively on employers.

From 1 January 2016 the accrual rate for all incomes taxable by the unified social contribution - wages, sickness benefit and maternity, remuneration for work or services under civil law contracts, financial support - for all policy holders is the same now - 22%.

The unified social contribution rate of 22% should not be in effect in cases for which the lower rate was established. The unified social contribution should be accrued at special rates:

• for wages, sickness benefit and maternity of disabled employees - 8,41%;
• for wages, sickness benefit and maternity of disabled people, who work at companies and in organizations of public organizations of invalids, where the number of disabled is not less than a half of total employment, and their payroll budget is not less than a quarter of labor costs - 5.5%;
• for wages, sickness benefit and maternity, remuneration for work or services under civil law contracts of all people, who work (do works, provide services) at companies and in organizations of all Ukrainian public organizations of disabled, including Ukrainian Society of the Deaf and Ukrainian Society of the Blind, invalids, where the number of disabled is not less than a half of total employment, and their payroll budget is not less than a quarter of labor costs - 5.3%.

The State Fiscal Service of Ukraine in its letter “On the Unified contribution” of 15.01.16, № 526/5/99-99-17-03-01-16 noted: in connection with the establishment of 22% flat rate of the unified contribution, the banks to be entitled to transfer the wages (make payments) to company employees only on conditions that paid USC (Unified Social Contribution) amount to be less than 1/5 (now this figure is 1/3) of the funds amount of accrued wages under payment documents.

It should be reminded that earlier the tax authorities enabled the banks not to verify the ratio of the amount and the Unified Contribution of wages, because when the use of decreasing coefficient, the amount of the Unified Contribution in the settlement documents could be lower than 1/3 of the amount of accrued wages.

However, the issue remains unregulated, since there are no any amendments in para.2 of the Procedure for acceptance by the Banks for execution of the settlement documents on payment of wages. Therefore, some banks might verify the payment of 22% of the Unified Contribution.

The State Fiscal Service of Ukraine in its letter “On accrual of the Unified Contribution for transitional vacation pay and sick pay” of 22.01.2016, № 2074/7/99-99-17-03-01-17 noted that the USC on transitional sick pay for the period 2015 accrued by the payer in January 2016 should be calculated based on the USC in force on the day of accrual (calculation, definition) wages (income), on which the USC is accrued at the rate of 22%.

Transitional sick pay accrued in 2015 for the period, which is accounted for by January 2016, is not the subject to recalculation.

VAT

The amounts of retail excise are directly excluded from the tax base in para. 188.1 of TCU. Therefore, when the sale of goods, subjects to retail excise, the VAT payer should calculate VAT from agreed cost without excise.

In addition, the minimum base for VAT accrual when transactions of delivery of independently manufactured goods/services is regular price (see para.14.1.171 of TCU). During 2015 the minimum base was their cost.

The lower limit remains at purchase price for purchased goods/services, and for non-current assets - net assets value according to the accounting, established at the beginning of the reporting (tax) period.

The State Fiscal Service of Ukraine explained on its website (sfs.gov.ua) how the entity of special treatment should identify additional electronic VAT accounts from which the VAT amount to be distributed between the main electronic account and special accounts of an agricultural worker.

The Treasury Department opened such accounts for the entities of special treatment on 05.01.16. According to the controllers, the VAT payer can distinguish them by the balance account number:

• 3753 — for transactions of in agricultural products / services, except grain and industrial crops and livestock products (50% to the budget, 50% - on special account);
• 3754 — for transactions with grain and industrial crops (85% and 15% respectively);
• 3755 — for transactions of livestock products (20% to 80%).

The attribute is the first four numeric symbols in a number of additional electronic account. The entity of special treatment will know other details in a tax agency.

It should be reminded that in 2016 only a part of VAT is at disposal of the entity of special treatment, another part should be transfer to the budget.

The State Fiscal Service of Ukraine in its letter “On reversal of fines and penalty sanctions” of 15.12.15, № 45789/7/99-99-19-03-02-17 informs that the tax debt automatically calculated in the integrated taxpayer card (hereinafter – ITC) due to incorrect filling of Annex 2 to the VAT declaration by the taxpayer, namely the specification in columns 4 and 5 of Table 1 of the tax amounts that exceed the VAT amount accounted in ITC, and its economic and legal essence does not meet the determination of tax debt within the meaning of TCU.

Therefore, fines and penalty sanctions provided for by para. 126.1 of the TCU and calculated in ITC on the amount of the “technical” tax debt automatically formed in ITC due to incorrect filling of Annex 2 to the VAT declaration by the taxpayer, are the subject to reversal by a decision of the supervisory authority at the place of registration of the taxpayer.

It should be recalled that “technical” tax debt from VAT was formed in ITC in case of incorrect filling of Annex 2 to the VAT declaration in particular of columns 4 and 5 of Table 1, if the taxpayer indicated in these columns the tax amounts, which exceed the amount of negative value accounted in ITC of such a payer. In the case of next submitting of adjusted calculation to such statement to correct errors made when filling Annex 2, the taxpayers in ITC, based on the amount of the tax debt, the VAT penalty sanctions and fines were automatically calculated as provided for by para. 126.1 of the TCU.

The State Fiscal Service of Ukraine in its letter “On the reflection procedure of adjustment (reduction) of the customs value of goods imported into the customs territory of Ukraine under the customs regime of import in VAT tax declaration by court decision” of 22.12.15 № 27404/6/99-99-19-03-02-15 explained how the importer should adjust the tax credit reflected in the import of goods, if the customs value of the product was reduced by court decision or supervisory authority.

The adjustment should be made on the date of entry into force of the court decision or the date of the controllers’ relevant decision. Reduction of import tax credit should be reflected on the basis of adjustment sheet to the customs declaration in line 1.12 of VAT declaration with the sign “minus”.

The State Fiscal Service of Ukraine in its letter “On peculiarities of application of the special regime of taxation in the agricultural sector in 2016” of 05.01.16, № 203/7/99-99-19-03-02-17 explained some innovations in a work of System electronic administration (SEA) of VAT for agrarians–the entities of special regime, which took place  on 01.01.16. This is related to the legislative amendments made to the Tax Code of Ukraine (hereinafter - TCU) by the Law of Ukraine of 24.12.15, № 909-VIII (hereinafter - the Law № 909).

On 05.01.16 additional accounts were opened for agrarians-the entities of special regime in SEA VAT for every activity under the new procedure of distribution of VAT amounts to the state budget and special account (see. para. 209.2 of TCU):

• electronic accounts for transfer of amounts to the state budget (50%) and on special accounts (50%) -  for transactions of supply of agricultural products/services  (except grain and industrial crops and livestock products under para. 209.19 of the TCU);
• for transfer of funds to the state budget (85%) and special accounts (15%) - under transactions of supply of grain and industrial crops determined by the para.209.19 of the TCU;
• for transfer of funds to the state budget (20%) and special accounts (80%) under transactions of supply of livestock products under para. 209.19 of the TCU.

 As fiscals noted, new accounts for the entities of special regime registered on 01.01.16 to be additionally opened to those that already are in force:

• an account, on which the funds for payments to the budget are transferred  (3751);
• an account for funds transferring on a special account (3752).

 There are the following rules of work with “old” and new accounts.

Transactions of supply of agricultural products in 2016

Agrarians should transfer funds for new additional accounts to register the tax invoices (hereinafter - TI), prepared from 01.01.16, in the Unified Register of tax invoices (hereinafter - URTI) and for VAT payment to the budget and on special accounts.

It is needed to be guided by paras.209.19, 209.2 and para. 209.15.1 of TCU to determine the account on which the funds to be transferred. In particular, the transactions of supply of the following commodity items correspond to mentioned accounts:

• grain crops are the cereals of commodity items of 1001-1008 according to Commodity Classification of  Foreign Economic Activities;
• industrial crops are the cereals of commodity items of 1205 and 1206 00 according to Commodity Classification of  Foreign Economic Activities;
• livestock products are the products of commodity items of 0102 and 0401 according to Commodity Classification of  Foreign Economic Activities.

Transactions of supply of agricultural products in 2015

If in 2016 an agrarian needs to register TI prepared in 2015 so he/she needs to transfer funds on an “old” additional account (3752).

The same actions should be made in case when the amount for transfer on special account is determined but it still not charged on a full scale in special declaration of December (0121—0123).

Then the amount, which is not provided for the payment under special declaration of last period 2015, should be transferred on an “old” additional account (3752).

The Cabinet of Ministers of Ukraine by its Resolution “On amendments to the Procedure for maintenance and repair of cash registers” of 20.01.2016, № 21 made amendments to the procedure for maintenance and repair of cash registers, approved by the CMU Resolution dated 12.05.2004, № 601.

In particular, the amendments provide for that the period of the warranty (post-warranty) repair cannot exceed 7 working days (previously 72 hours). In case of failure of providing of cash registers repair, the maintenance service is required to put into operation the cash register duly registered to a business entity not later than 7 working days from the date of exception of a reserve cash register for repair. The maintenance service has responsibility provided for by Maintenance Service Agreements of cash registers concluded with the users.

According to the amendments of legislative requirements for the use of the cash register, the manufacturer (supplier) is required to update the cash register if technically feasible.

The cash registers users are additionally obliged to inform about cash register malfunction as well as control means damage not only the maintenance service but also the territorial authority of SFS, where it is registered by the taxpayer in terms and manner determined by para.16 of Art.3 of the Law of Ukraine “On the application of cash registers in trade, public catering and services” of 06.07.1995, № 265/95-ВР.

The State Fiscal Service of Ukraine in its letter “On accrual of the Unified Contribution for transitional vacation pay and sick pay” of 22.01.2016, № 2074/7/99-99-17-03-01-17 noted that the USC on transitional sick pay for the period 2015 accrued by the payer in January 2016 should be calculated based on the USC in force on the day of accrual (calculation, definition) wages (income), on which the USC is accrued at the rate of 22%.

Transitional sick pay accrued in 2015 for the period, which is accounted for by January 2016, is not the subject to recalculation.

The State Fiscal Service of Ukraine by its letter “On the possibility of being on the simplified taxation system” of 22.12.2015, № 27445/6/99-99-19-02-02-15 reported: restrictions on the use of the simplified taxation system, provided for by paragraphs 291.5.4 of TCU, related to financial institutions. This provision does not apply to legal entities - business entities that are not financial institutions in their legal status but provide services for leasing of intellectual property.

Therefore, legal entities, which are not financial institutions that engaged in leasing of intellectual property and similar products, except works protected by copyright, have the right to be the unified tax payers, if they carry out other conditions of the simplified taxation system.

The State Fiscal Service of Ukraine in its letter “On reflection in tax accounting of depreciation of fixed assets and material assets that were destroyed in the territory of the antiterrorist operation” of 06.01.2016, № 157/6/99-99-19-02-02-15 explains how to reflect in tax accounting the depreciation of fixed assets and material assets that were destroyed in the territory of the ATO.

1. When determining taxable income in the tax declaration for 2015 the income tax payer adjusts his/her financial result before taxation according to the paragraphs 134.1 пп. 134.1 of TCU on depreciated book value of item of fixed assets when its depreciation.

The depreciation of destroyed material assets (final products and assets of low unit cost) should be conducted in accordance with the accounting regulations.

2. The business entity has the right to use the provisions and para. 189.9 п. 189.9 ПКУ of TCU after establishing the fact of the liquidation of fixed production assets or fixed non-production assets.

However, if the liquidation of fixed production assets or fixed non-production assets took place in connection with the theft, erasure or the destruction as a result of force majeure, which is confirmed under the legislation, such liquidation for the business entity is not considered as supply of fixed production assets or fixed non-production assets at usual prices according to sec.2 of para. 189.9 of TCU.

3. When the depreciation of inventories and final products (for goods, intangible assets purchased prior to July 1, 2015 - in the case when such purchase the tax amounts were included in the tax credit) due to the fact that they cannot be used within the economic activities of VAT payer, the taxpayer, not later than the last day of the reporting (tax) period when their depreciation implemented, should accrue the tax liabilities of VAT at the basic rate, make consolidated tax invoice and register it in URTI in the terms established by law for such registration.

The tax base during the depreciation of such material assets should be determined based on the value of their purchase.

4. To determine the taxable income of a taxpayer, the expenses for repair works of leased premises (lease agreement terminated) that were destroyed should be reflected according to the accounting regulations.

5. After establishing the fact of the liquidation of fixed assets, material assets and if there is a certificate of Chamber of Commerce and Industry of Ukraine confirming the circumstances of insuperable force (force majeure) that occurred on the territory of the antiterrorist operation, the business entity has the right to reflect such liquidation in the financial and / or tax reporting.

The State Fiscal Service of Ukraine in its letter “On amendments to the Tax Code of Ukraine and indexing of regulatory monetary value of lands” of 19.01.2016, № 1656/7/99-99-17-04-02-16 reported: the value of coefficient of indexing of regulatory monetary value of agricultural lands (arable lands, perennial plantings, hayfields, pastures and fallows) for 2015 should be 1.2, and for settlement lands and other non-agricultural land - 1.433. Additionally, the letter noted that tax declarations of amounts of land tax and lease payments for lands of state and municipal property in 2016 should be submitted within the period not later than 20 February 2016, taking into account the changed indexation coefficients specified on 1 January 2016 of monetary value of lands.

The State Fiscal Service of Ukraine by its letter “On peculiarities of payment by VAT payers - agricultural companies in 2016” of 27.01.2016, № 2533/7/99-99-19-03-01-17 explained peculiarities of payment by VAT payers agricultural companies in 2016.

Thus, in order to determine the VAT amounts to be paid to the state budget and be transferred to the special/current accounts of taxpayers, the entities of special taxation treatment and payers-agricultural companies that meet the requirements of para. 209.18 of TCU, the amounts of tax liabilities and tax credit of the reporting (tax) period should be determined under each transaction type. If the goods/services, fixed assets produced and/or acquired, partly used by the agricultural company for the production of cereal crops and industrial crops and/or partially for animal production, and/or partly for other agricultural products/services, the amount of paid (accrued) tax credit should be distributed based on the proportion of the cost of such cereal and industrial crops, animal products and other agricultural products/services in the total value of all agricultural goods/services supplied for 12 consecutive previous reporting (tax) periods (sub-para. “a” of para.209.15.1 of TCU).

The calculation of the proportion should be carried out in Annex 9 to VAT declaration, where the results of activities to be shown within the special tax regime (0121-0123)/activities within the paragraph 209.18 of TCU (0130).

In order to implement determined by TCU mechanism of partial payment of VAT to the budget and on the special/current accounts of taxpayers and also keeping of a separate tax account under the SFS transaction types was drafted the order on approval of tax accounting form for VAT, which, except a new form of tax declaration of VAT, provides for amendments to Annex 9 of declaration and approval of a new application for tax accounting under certain transactions types.

Transport Tax

In general, from 01.01.2016, the transport tax should be paid by owners of cars aged less than 5 years, which average market value is more than 750 minimum wages established by the law on January 1 of the tax (reporting) year (sub-para. 267.2.1 of TCU). It is UAH 1 033 500 now (as of 01.01.16 minimum wage is UAH 1378).

The average market price should be determined by the Ministry for Economic Development of Ukraine under method approved by the Cabinet of Ministers. In addition, should be taken in account the vehicle brand, model, year of manufacture, engine type, engine cylinder volume, type of gearbox, mileage of a car.

Information on the average market price of the vehicle should be released on the website of the Ministry for Economic Development of Ukraine (www.me.gov.ua).

Corporate Income Tax

The tax (reporting) period for income tax is amended, when its payers are required to file their declarations and accordingly to pay tax obligations declared there. So from 01.01.16 this period is calendar quarter and year.

Annual tax (reporting) period should be applied by:

1) new income tax payers;

2) producers of agricultural products determined by Art. 209 of TCU;

3) companies, which annual income from any activity (excluding indirect taxes), determined according to the accounting rules for the previous tax year (reporting) period, does not exceed UAH 20 million.

The quarterly tax (reporting) period should be applied by the income tax payers, which annual income determined according to the accounting rules (excluding indirect taxes) for the previous annual accounting period, does not exceed UAH 20 million.

From 01.01.16, the income tax payers are not required any more to pay monthly advance payments. According to the paragraph 9 of sub-section 4 of sec. XX of TCU in January - December 2015 the taxpayers are required to pay monthly advance payments from the income tax under para. 57.1 of TCU in the version that was in force to 01.01.15. Since 1 January 2016, the monthly advance payments from company income tax should not be paid.

It should be additionally noted that para.38 of sub-sec.4 of sec. XX of TCU stated that the company income tax payers should pay to 31 December 2016 the advance payment from the tax in the amount of 2/9 of income tax accrued in the tax accounting for three quarters of 2016.

The calculation of such an advance payment should be submitted by the taxpayer in a tax declaration for three quarters of 2016. The amount of advance payments determined in calculation is considered to be agreed amount of monetary obligations.

Therefore, mentioned above advance payment from income tax should be paid by only income tax payers, which would report quarterly in 2016 (para. 137.4 and para. 137.5 of TCU). The amount of advance payment - 2/9 from the income tax accrued in declaration for three quarters of 2016. The deadline for payment of the advance payment is December 30, 2016.

The Cabinet of Ministers of Ukraine by its Resolution “On amendments to paragraph 1 of the Procedure of payments to the state budget of net profit (income) by the state unitary enterprises and their associations” of 30.12.2015, № 1156 made amendments to the Procedure of payments to the state budget of net profit (income) by the state unitary enterprises and their associations.

The previous sizes of the share 30% and 15% were removed, and one was established – in amount of 75%. Thus, the state unitary enterprises and their associations are required to transfer to the state budget 75 percent of net profit for the corresponding period.

The State Fiscal Service of Ukraine in its letter “On approval of the declaration on the company income tax” of 04.01.16, № 102/7/99-99-19-02-01-17 clarified the forms under which the statements on the income tax to be submitted for 2015.

Thus, in general case the income tax payers for 2015 should report under the Company income tax return approved by the Ministry of Finance of Ukraine from 20.10.15, № 897. 

Non-residents that conduct activities in Ukraine through a permanent establishment should submit a Calculation of tax liabilities for income tax in the form approved by the Ministry of Finance of Ukraine of 25.06.13, № 610.

The state financial control recommends to non-profit organizations, before the approval of specified sub-para. 133.4.3 of the TCU of the Report on use of income (profits) of non-profit organization, to submit tax report on the use of non-profit institutions and organizations approved by the Ministry of Revenues of Ukraine dated 27.01.14, № 85.

The state financial control did not forget about the income tax payers who applied the 0% rate in accordance with para. 154.6 of the TCU as in force before 01.01.15 and para.16 of sub-sec.4 of sec. XX of the TCU. They should report for 2015 under the form approved by the CMU of 15.02.12, № 98 till the new simplified tax return to be established.

In addition, the state financial control reminded to the non-profit organizations and “zero income organizations” of the right to submit a supplement in any form according to para. 46.4 of the TCU to the statements.

Besides, the state fiscal control drew attention of payers of dividend advance payments that the balance of dividend advance payments, not credited in a decrease of income tax for reporting year, should not be deferred to the next reporting years.

Excise tax

The State Fiscal Service of Ukraine in its letter “On the procedure for declaration of excise tax” of 21.01.16, № 1903/7/99-99-19-03-03-17 reported when the excise tax payers should be registered.

On 01.01.16 another category was added to the payers of excise tax – individual selling the fuel (sub-para. 212.1.15 of the Tax Code of Ukraine). However, implementation of electronic administration system of fuel selling and establishment of excise invoice connected with this innovation was scheduled for 01.03.16.

Unfortunately, the fuel sellers had a number of questions due to lack of clear transitional provisions in the TCU.

Now controllers try to reassure taxpayers and inform:

· March 2016 should be the first reporting (tax) period for excise tax payers- individuals, who sell fuel;

· individuals, who sell fuel, will be required to be registered as an excise tax payer after approving the Procedure for keeping the register of payers of excise tax on fuel selling and the Application for registration of the excise tax payer for the fuel selling.

Other taxes and fees

The State Fiscal Service of Ukraine by its letter “On calculation rent payments” of 09.12.15, № 26722/10/28-10-06-11 explained: if a mining plant-subsoil user extracted fresh groundwater water and used it as a raw material for their own manufacture of beverages (such as juices, fruit drinks, nectars), the rental payment for the use of subsoil should be calculated by the settlement method.

The amount of economic activity expenses in mining should be multiplicatively increased by the amount of normative profit when the calculation of tax base of the rental payment of extracted groundwater on settlement method.

The amount of normative profit of mining plant should be recorded in the form of coefficient of profitability of mining plant in the protocols of the State Commission of Ukraine on the Mineral Reserves.

The mining plants, which conduct economic activity in the extraction of underground water according to special permission for use of subsoil, the state geological and economic evaluation of which was not executed or permission for special water use within the mineral resources, the state geological and economic evaluation of which was not executed so as in the past, - industry average index of profitability coefficient of the mining plants should be used for the relevant calendar year. The State Commission of Ukraine on the Mineral Reserves promulgates it. The index was 22% in 2015.

Budgetary relations

The Cabinet of Ministers of Ukraine by its Resolution “Some Regulation Issues of intergovernmental fiscal relations” of 18.01.16, № 15 enabled to finance budgetary institutions in 2016 currently from two budgets.

The Cabinet enabled in 2016 to make expenditures from the budgets of villages, towns and cities of district importance for the maintenance of budget institutions, which are simultaneously financed from the district budget.

It should be reminded that earlier the Verkhovna Rada of Ukraine enabled to finance preschool education and culture at the expense of village budget in current year.

Land relations

The State Fiscal Service of Ukraine in its letter “On amendments to the Tax Code of Ukraine and indexing of regulatory monetary value of lands” of 19.01.2016, № 1656/7/99-99-17-04-02-16 reported: the value of coefficient of indexing of regulatory monetary value of agricultural lands (arable lands, perennial plantings, hayfields, pastures and fallows) for 2015 should be 1.2, and for settlement lands and other non-agricultural land - 1.433. Additionally, the letter noted that tax declarations of amounts of land tax and lease payments for lands of state and municipal property in 2016 should be submitted within the period not later than 20 February 2016, taking into account the changed indexation coefficients specified on 1 January 2016 of monetary value of lands.

ATO and temporarily occupied territories

The State Fiscal Service of Ukraine in its letter “On reflection in tax accounting of depreciation of fixed assets and material assets that were destroyed in the territory of the antiterrorist operation” of 06.01.2016, № 157/6/99-99-19-02-02-15 explains how to reflect in tax accounting the depreciation of fixed assets and material assets that were destroyed in the territory of the ATO.

1. When determining taxable income in the tax declaration for 2015 the income tax payer adjusts his/her financial result before taxation according to the paragraphs 134.1 пп. 134.1 of TCU on depreciated book value of item of fixed assets when its depreciation.

The depreciation of destroyed material assets (final products and assets of low unit cost) should be conducted in accordance with the accounting regulations.

2. The business entity has the right to use the provisions and para. 189.9 п. 189.9 ПКУ of TCU after establishing the fact of the liquidation of fixed production assets or fixed non-production assets.

However, if the liquidation of fixed production assets or fixed non-production assets took place in connection with the theft, erasure or the destruction as a result of force majeure, which is confirmed under the legislation, such liquidation for the business entity is not considered as supply of fixed production assets or fixed non-production assets at usual prices according to sec.2 of para. 189.9 of TCU.

3. When the depreciation of inventories and final products (for goods, intangible assets purchased prior to July 1, 2015 - in the case when such purchase the tax amounts were included in the tax credit) due to the fact that they cannot be used within the economic activities of VAT payer, the taxpayer, not later than the last day of the reporting (tax) period when their depreciation implemented, should accrue the tax liabilities of VAT at the basic rate, make consolidated tax invoice and register it in URTI in the terms established by law for such registration.

The tax base during the depreciation of such material assets should be determined based on the value of their purchase.

4. To determine the taxable income of a taxpayer, the expenses for repair works of leased premises (lease agreement terminated) that were destroyed should be reflected according to the accounting regulations.

5. After establishing the fact of the liquidation of fixed assets, material assets and if there is a certificate of Chamber of Commerce and Industry of Ukraine confirming the circumstances of insuperable force (force majeure) that occurred on the territory of the antiterrorist operation, the business entity has the right to reflect such liquidation in the financial and / or tax reporting.

Control and Responsibility

The Cabinet of Ministers of Ukraine by its Resolution “On amendments to the Procedure for maintenance and repair of cash registers” of 20.01.2016, № 21 made amendments to the procedure for maintenance and repair of cash registers, approved by the CMU Resolution dated 12.05.2004, № 601.

In particular, the amendments provide for that the period of the warranty (post-warranty) repair cannot exceed 7 working days (previously 72 hours). In case of failure of providing of cash registers repair, the maintenance service is required to put into operation the cash register duly registered to a business entity not later than 7 working days from the date of exception of a reserve cash register for repair. The maintenance service has responsibility provided for by Maintenance Service Agreements of cash registers concluded with the users.

According to the amendments of legislative requirements for the use of the cash register, the manufacturer (supplier) is required to update the cash register if technically feasible.

The cash registers users are additionally obliged to inform about cash register malfunction as well as control means damage not only the maintenance service but also the territorial authority of SFS, where it is registered by the taxpayer in terms and manner determined by para.16 of Art.3 of the Law of Ukraine “On the application of cash registers in trade, public catering and services” of 06.07.1995, № 265/95-ВР.

Labor and Salaries

The Ministry of Social Policy of Ukraine by its order of 02.12.15, № 1167 (comes into force after its official publication) corrected the Regulations on financial assistance providing on repayable and non-repayable basis and the special-purpose loan at the expense of the amounts of administrative sanctions and penalties received by the state budget for the failure of the normative of workspaces for disabled people approved by the Ministry of Labour and Social Policy of Ukraine of 06.09.10, № 270 (hereinafter - Regulations № 270).The main changes are as follows:

1. The number of documents to be added to the application for providing financial assistance and targeted loans is reduced.

The following documents are excluded from the list of securities to be submitted to the Social Security disability fund (hereinafter - Fund)together with the application for financial assistance and target loans:

• copy of a certificate of registration of the taxpayer or excerpt from the register of non-profit institutions;
• employment centre certificate on absence for 6 months preceding the month of the issue of providing financial assistance, violations of the Law of Ukraine “On Compulsory State Social Unemployment Insurance” of 02.03.2000 № 1533-ІІІ, “On employment of population” of 01.03.91, № 803-ХІІ and non-use of penal sanctions.

In addition, together with the application among other documents (listed in para. 2.2-2.8 of Regulations № 270) the employers will submit a written agreement of the founder of the receipt by the employer-applicant of financial assistance at the expense of the Fund’s finances under the stated direction.

2. The Fund will check the presence of all necessary documents during reception of the application. The detachable stub of the application with the date of registration will be issued to the applicant on the day of its adoption. If all necessary documents are added to the application, the Fund department on registration day should record in detachable stub the list of documents to be added. The applicant should submit the missing documents to the department of the Fund not later than 10 working days from the date of registration of the application.

It should be reminded: earlier the Fund informed the applicants about the lack number of documents within 10 working days of the application receiving. And the applicant for submission of papers had 30 calendar days from the date of the application.

Summary of Court Rulings

The Supreme Court of Ukraine in its Resolution “On recognition of the illegal Order on conducting of documentary remote unscheduled inspection and invalidation actions” of 27.01.2015 in case № 21-425а14 noted that in case of the appointment of documentary remote unscheduled inspection the taxpayer should be informed of the order of beginning date and place before its start in a way established by law. Failure to comply with the requirements of paragraphs 78.1.1 of TCU пп. 78.1.1 ПКУ leads to the recognition of the inspection as illegal and lack of its legal consequences.

It should be recalled that the inspection can be conducted when the facts indicating the violations of tax, currency and other legislation by the taxpayer are revealed based on the results of audits of other taxpayers or receiving of tax information. The control over compliance with the legislation is entrusted to regulatory authorities if the taxpayer does not provide within 10 working days explanations and their documentary confirmation required for a written request from the regulatory authority, where the violations of tax, currency and other legislations by the taxpayer are indicated. In other words amendments were aimed at guaranteeing the rights of taxpayers, narrowing the grounds for the inspection, eliminating the possibility of abuse of verification right.

Оther Things

The Ministry of Economic Development and Trade of Ukraine by its Order “On Amendments to the list of products subject to mandatory certification in Ukraine and invalidation of some orders” of 17.12.15, № 1699 cancelled mandatory certification of agricultural equipment, in particular, seeding-machines, fertilizer distributors, spraying machines, combine harvesters, loaders, trailers, liquid storage tanks, bucket milking units and devices for milk processing, vehicles and machinery for feed making.

A full list of products subject to mandatory certification in Ukraine is approved by the State Committee of Ukraine for Technical Regulation and Consumer Policy of 01.02.05, № 28.