Taxes
VAT
The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Tax Code of Ukraine on the abolition of taxation of income received by non-residents in the form of payment for production and/or distribution of advertising and improvement of the taxation procedure for value-added tax transactions for the supply of electronic services by non-residents to individuals” (so called Google Tax Act).
The Law is aimed at increasing the revenues of the State Budget of Ukraine from value added tax (hereinafter – VAT) by adding non-residents who provide electronic services to individuals, whose supply is located in the customs territory of Ukraine to VAT taxation, and creating favorable conditions for efficient and burdensome administration for business and the state of procedures related to tax payment.
The Law supplements the Tax Code of Ukraine with norms on abolition of taxation of income received by non-residents in the form of payment for production and/or distribution of advertising, and norms on improvement of value added tax procedure for transactions on supply of electronic services by non-residents to individuals.
The Law, in particular:
- cancels the rule according to which residents must pay tax at the rate of 20% of the amount of such payments at their own expense when paying income to non-residents for the production and / or distribution of advertising;
- defines the documents certifying the fact of supply of services, compiled in electronic form, the date of such document is the date of such electronic document;
- defines the list of electronic services;
- exempts from VAT the supply of electronic services by providing access to electronic educational (training) resources within the provision of educational services;
- includes non-residents in the list of persons registered as value added tax payers;
- establishes rules for determining the place of supply of electronic services (B2C);
- establishes the form and determines the procedure for sending a tax notice to a non-resident and a complaint against such a decision;
- establishes a simplified procedure for VAT payer registration for non-resident suppliers, which can be carried out remotely in electronic form on a specially developed web portal;
- defines the rules of tax accounting for value added tax for non-residents who provide electronic services to individuals, the place of supply of which is located in the customs territory of Ukraine;
- releases a non-resident from the obligation to register tax invoices;
- provides payment of tax liability for a non-resident in foreign currency.
The new Law will affect non-residents who provide electronic services to individuals through Ukraine via the Internet, mobile applications, TV sets (Smart TVs), other digital devices (except for certain transactions) and do not have permanent offices in our country.
Unified Social Contribution
The State Tax Service of Ukraine has reminded of the amount of the single social contribution (hereinafter – SSC), which is accrued in a situation where the employee works part-time.
If the basis for accrual of SSC does not exceed the amount of the minimum salary established by law for the month for which the income is received, the amount of SSC is calculated as the product of the amount of the minimum salary established by law for the month for which income (profit) is received and contribution rate (Art. 8 of the Law of Ukraine “On the collection and accounting of a single contribution to the obligatory state social insurance” No. 2464-VI of July 8, 2010, hereinafter – Law No. 2464).
An employment contract with the consent of the employee and the employer may establish a part-time working day or a part-time work week. Remuneration in these cases in accordance with Art. 56 of the Labor Code of Ukraine (hereinafter – the Labor Code) is carried out in proportion to the time worked or depending on the output.
Therefore, the employer has the right to charge a part-time employee a salary lower than the minimum wage, but provided that its amount is not less than a part of the minimum wage actually worked.
The employer calculates the amount of SSC as the product of the minimum salary for the month for which salaries (income) are accrued, and the minimum rate of SSC.
It should be reminded that in 2021 the minimum salary is UAH 6,000 and the minimum SSC rate is UAH 1,320.
In the case of accrual of salaries (income) to individuals from sources outside the main place of work, the rate of SSC is applied to a certain accrual base, regardless of its size (para. 3 of Part 5 of Art. 8 of Law No. 2464).
Accounting and Reporting
The Ministry of Finance of Ukraine has published on its website a draft resolution of the Cabinet of Ministers “On Amendments to the Procedure for Submission of Financial Statements” (hereinafter – the draft resolution).
The document amends the Procedure for Submission of Financial Statements, approved by Resolution of the Cabinet of Ministers No. 419 of February 28, 2000, to bring its norms in line with the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” and the Tax Code of Ukraine (hereinafter – the Tax Code).
The amendments, in particular, provide for the extension of the submission of interim financial statements and annual financial statements and improve the provisions for the submission of a single electronic format of annual financial statements for 2020 and interim financial statements for 2021, based on taxonomy of financial statements according to international financial reporting standards.
It is proposed that enterprises belonging to micro, small enterprises, non-entrepreneurial companies and enterprises that keep simplified accounting of income and expenses in accordance with tax legislation, submit annual financial statements to the relevant authorities (except Treasury) no later than February 28 of the year following the reporting one.
Enterprises that are required to disclose annual financial statements submit to the statistical authorities and tax authorities a report on the financial condition (balance sheet) and a profit and loss statement and other comprehensive income (statement of financial performance) (except consolidated) using the automated system “Unified electronic reporting window” for the reporting year not later than February 28 of the following reporting year, for the I quarter, the first half of the year, nine months – not later than the 30th day of the month following the reporting quarter.
Entities that apply International Financial Reporting Standards, submit annual financial statements and annual consolidated financial statements based on the taxonomy of financial statements together with the relevant audit reports to the financial reporting center no later than June 1 of the year following the reporting year.
Enterprises belonging to medium-sized enterprises submit annual financial statements and annual consolidated financial statements to the relevant bodies (except for Treasury bodies) no later than June 1 of the year following the reporting one.
Interim financial statements (I quarter, first half of the year, nine months), in addition to the consolidated, are submitted by enterprises to the relevant authorities (except for the Treasury) no later than the 30th day of the month following the reporting quarter.
Interim (I quarter, first half, nine months) or annual financial statements are submitted by enterprises to the tax authorities within the time limits provided by the Tax Code.
Enterprises that are required by law to submit financial statements in a single electronic format to the center of financial reporting, submit annual financial statements and annual consolidated financial statements for 2020, interim financial statements for 2021 (I quarter, first half, nine months), compiled on the basis of the taxonomy of financial statements in accordance with international financial reporting standards, to the center for collecting financial statements in electronic format no later than December 31, 2021.
It is assumed that the resolution comes into force from the date of its publication, except for para. 6 item 2 of the amendments approved by this resolution (concerning the submission of interim financial statements), which enters into force on January 1, 2022.
Control and Responsibility
The State Tax Service of Ukraine has clarified the procedure, grounds and terms for extending the term of tax audits.
In accordance with para. 2 item 82.1 of the Tax code of Ukraine (hereinafter – the Tax Code) extension of terms of carrying out documentary planned checks (item 77 of the Tax Code) is possible by the decision of the head (deputy or the authorized person) of controlling body no more than for 15 working days for large taxpayers, for small businesses – no more than five working days, other taxpayers – no more than 10 working days.
It is possible to extend the terms of unscheduled inspections by the decision of the head (deputy or authorized person) of the controlling body for no more than 10 working days for large taxpayers, for small businesses – no more than two working days, other taxpayers - no more than five working days, as defined in para. 2 item 82.2 of the Tax Code.
The duration of actual inspections should not exceed 10 days, and the extension of such inspections is carried out by the decision of the head (deputy or authorized person) of the controlling body for no more than five days.
The grounds for extending the inspection period are:
- statement of the business entity (if necessary, the submission of documents relating to the inspection);
- shift-based working hours or summary accounting of working time of the business entity and/or its business facilities.
Documentary scheduled and unscheduled audit of the taxpayer, except for the taxpayer – small business entity, may be suspended by the decision of the head (deputy or authorized person) of the supervisory authority, issued by order, a copy of which is delivered to the taxpayer or authorized representative against a receipt or sent to the taxpayer in the manner prescribed by Art. 42 of the Tax Code, with the subsequent resumption of its conduct for an unused period.
Suspension of documentary scheduled, unscheduled inspection interrupts the course of the inspection in the case of delivery of the order on suspension of such inspection to the taxpayer or authorized representative in the manner prescribed by para. 1 item 82.4 of the Tax Code.
In this case, the inspection may be suspended for a total period not exceeding 30 working days, and in case of need for examination, obtaining information from foreign government agencies on the activities of the taxpayer, completion of court proceedings on issues related to the subject of inspection, recovery the taxpayer of lost documents may suspend the inspection for the period necessary to complete such procedures.
The general term of carrying out the inspections defined in item 200.10 and 200.11 of the Tax Code, taking into account the suspension periods established by item 82.4 of the Tax Code, may not exceed 60 calendar days.
Therefore, the extension of the terms of inspections and the suspension of the inspection by the employees of the controlling bodies is carried out by the decision of the head of the tax authority.
Terms of extension of inspection depend on the type of inspection and the category of the taxpayer established by Art. 82 of the Tax Code.
Financial Markets
The National Bank of Ukraine by the Resolution “On Approval of Amendments to the Regulations on the Procedure for Issuing Electronic Payment Instruments and Carrying Out Transactions Using Them” No. 60 of June 25, 2021, which entered into force on July 1, 2021, expanded the possibilities of business corporate payment funds(electronic payment instruments). To do this, the regulator has modernized the procedure for issuing payment cards and transactions with their use.
In particular, to promote the use of corporate payment cards, the National Bank of Ukraine has:
- granted business (business entity) the right to independently determine the persons who have the right to use corporate payment cards issued to its account;
- delineated the responsibilities of the business entity and the holder of the corporate payment card.
In addition, the regulator:
- simplified the receipt of the payment card by the authorized person/representative of the individual – the account holder;
- determined that the transfer initiated with the use of a payment card (electronic payment instrument) is a non-cash payment.
The National Bank expects that the provisions of this document will promote the wider use of corporate (business) payment cards and increase the volume of non-cash payments.
Labor and Salaries
The State Labor Service of Ukraine (hereinafter – the State Labor Service), summarizing the results of inspections, identified the most common mistakes among employers:
- payment of salaries is made in violation of the terms established by part one of Art. 115 of the Labor Code and Part 1 of Art. 24 of Law of Ukraine No. 108, namely later than seven days after the end of the period for which the payment is to be made. Such a violation is present in almost every second business entity (Part 1 of Art. 115 of the Labor Code);
- salaries to employees for the entire period of annual leave are paid later than three days before the leave (Part 4 of Art. 115 of the Labor Code);
- an employment contract concluded for an indefinite period is terminated by the employee in the absence of a written warning of the owner or authorized body two weeks prior (Part 1 of Art. 38 of the Labor Code);
- in the case of dismissal of employees, the payment of all amounts due to them from the enterprise, institution, organization, is not made on the day of dismissal. In connection with the non-payment of due amounts to the dismissed person during the dismissal within the terms specified in Art. 116 of the Labor Code, due to the fault of the owner or authorized body, the latter did not pay the average salary for the entire period of delay until the day of actual settlement (Art. 116, 117 of the Labor Code);
- untimely submission of a notification to the State Tax Service on hiring an employee (Resolution of the Cabinet of Ministers No. 413);
- employees are not acquainted with the rules of internal labor regulations at the enterprise (Art. 29 of the Labor Code);
- salary indexation is not carried out (Art. 95 of the Labor Code);
- employees have not been notified two months prior about a change in significant working conditions (Art. 32 of the Labor Code);
- holiday, overtime and night are not paid in accordance with current legislation (Art. 106, 107, 108 of the Labor Code);
- vacation schedules are not drawn up at enterprises (Art. 79 of the Labor Code);
- work on weekends is carried out without the permission of the elected body of the primary trade union organization (trade union representative) (Art. 71 of the Labor Code);
- the employer does not provide reliable accounting of the work performed by the employee (Art. 30 of the Labor Code);
- employment record book is not issued to the employee on the day of dismissal (Art. 47 of the Labor Code);
- leave without pay is more than 15 calendar days a year (Art. 84 of the Labor Code);
- employees work overtime more than 120 hours a year (Art. 65 of the Labor Code);
- temporary disability benefits to insured persons working on the terms of an employment contract, on other grounds provided by law, are not paid in the nearest period after the day of appointment of benefits, set for the payment of salaries.
The Other Things
The Cabinet of Ministers of Ukraine reminds that one of the most important and most anticipated reforms in the history of independent Ukraine will start on July 1 – the land market will open.
The Prime Minister of Ukraine is convinced that Ukrainians will become the real owners of their land, as they will be able not only to own it, but also to dispose of it freely. This is something that is enshrined in the Constitution, but in fact was impossible due to the moratorium.
The official believes that the introduction of the land market is an important step to protect the rights of Ukrainian farmers. The implementation of the mechanism of the preemptive right to purchase the land leased by farmers is envisaged.
Land reform also provides for the establishment of a Partial Loan Guarantee for Agriculture. Even small farmers who cultivate up to 500 hectares of land and do not have a credit history will be able to get a loan.
In addition, to buy land you need to officially show your money. All transactions will go through the bank, and contracts will be checked by notaries. The Ministry of Agrarian Policy has already launched an information campaign explaining the benefits and details of the land market. Therefore, citizens will be able to get all the answers to their questions.
