Taxes
VAT
The State Fiscal Service of Ukraine in its Individual Tax Advice “On the Procedure for VAT Taxation in the Supply of Services for the Organization and Conduct of the Conference” of 25.06.2019, No. 2906/6/99-99-15-03-02-15/ІПК, emphasized that the procedure for taxing value added tax (hereinafter – VAT) of transactions on the supply of services for the organization and conduct of a conference depended directly on the place of delivery.
If the delivery of services for the organization and conduct of a conference, the place of delivery of which is determined by the customs territory of Ukraine, such a transaction will be subject to VAT.
The tax base for VAT transactions in the supply of goods/services is determined on the basis of their contractual value, taking into account national taxes and fees. In addition to the excise tax on the sale of excisable goods by entities subject to excise duty, the duty on compulsory state pension insurance, which is charged on the cost of mobile communication services, the value added tax and the excise tax on ethyl alcohol used by producers – business entities for the production of medicinal products, including components of blood and preparations made from them (except for medicines in the form of balsams and elixirs) (para. 188.1 of the Tax Code of Ukraine, hereinafter – TCU).
The contractual value includes any amounts of money, the value of tangible and intangible assets that to be passed by the buyer directly to the taxpayer or through any third party in connection with the compensation of the value of the goods/services.
Thus, if the organization fee is a compensation of the value of the indicated services, such an amount of the organizational fee should be included in the VAT base of such a transaction.
Corporate Income Tax
The State Fiscal Service of Ukraine, through the Office of Large Taxpayers, reminded: a campaign for declaration of the income tax for the second quarter of 2019 is in progress.
The quarterly declaration is submitted within 40 days after the end of the reporting period. Therefore, the last day of the submitting the income tax return for the second quarter is August 9, 2019, and the last day of payment, respectively, is on August 19, 2019.
The Office of Large Taxpayers drew attention to some of the nuances regarding the completeness and correctness of defining objects of taxation of the income tax, in particular, in the relations of payers with non-residents.
How to reflect the payment of the incomes to non-residents in the declaration
The first thing that non-residents need for the income payment is to determine the content of obligations for non-residents: identification of the place of delivery of services, taking into account their essence, availability of international treaties ratified by Ukraine, certificates and information on beneficiaries. This will enable to fully and in a timely manner identify the object of taxation of the income tax, the tax rate and reflect such indicators in the company income tax return for the sec. 23 of TI, sec. 24.
The procedure for the application of the international treaty of Ukraine on avoidance of double taxation with regard to the total or partial exemption from taxation of non-residents’ income with the source of their origin from Ukraine is stipulated in Art. 103 of the Tax Code of Ukraine (hereinafter – TCU).
The reason for the release (reduction) from the taxation of incomes with the source of their origin from Ukraine is the submission by the non-resident of a certificate (or a notarized copy thereof), confirming that the non-resident is a resident of the country with which an international treaty of Ukraine has been concluded (taking into account the specifics envisaged by paras.103.5 and 103.6 of this article, to a person (tax agent) who pays income to him/her), as well as other documents, if provided for by an international agreement of Ukraine (para. 103.4 of TCU).
The certificate is issued by the authorized agency of the respective country, defined by the international agreement of Ukraine, in the form approved in accordance with the legislation of the respective country, and should be duly legalized, translated in accordance with the legislation of Ukraine (para. 103.5 of the TCU).
If necessary, a person who pays income to a non-resident may apply to the controlling authority in his/her place of residence regarding the implementation by the central executive body implementing the state tax and customs policy, the request to the competent authority of the country with which an international treaty of Ukraine has been concluded, about the confirmation of the information indicated in the certificate (para. 103.6 of TCU).
Use of the certificate in electronic form for the purposes of Art. 103 TCU norms of this Code is not provided. In this regard, the certificate, received in electronic form, is not a ground for application of the international agreement on avoidance of double taxation.
The Office of Large Taxpayers noted the need to prepare a report on the amount of tax deductions for the income tax and the reflection of non-taxable income amount.
Unified Social Contribution
The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the Procedure for Granting Additional Financial Support to Family Farms through the Subsidy Payment Mechanism of the Unified Contribution to Mandatory State Social Insurance in favor of Insured Persons – Members/Heads of the Family Farm” of 22.05.2019 No. 565 approved the Procedure for Granting family farms with additional financial support through the mechanism of additional payment of the Unified Social Contribution (hereinafter – USC) in favor of insured persons – members/heads of family farms.
The procedure determines the mechanism of providing additional financial support to family farms through the mechanism of additional payment of the USC in favor of insured persons – members/heads of the family farm.
Members/head of a family farm without a legal entity status, which is formed in accordance with Art. 81 of the Law of Ukraine “On Farming enterprise” and registered by the payer of the unified tax of the fourth group have the right to receive an additional payment.
Additional payment is available in the following sizes:
- 0.9 minimum insurance contribution – the first year;
- 0.8 minimum insurance contribution – the second year;
- 0.7 minimum insurance contribution – the third year;
- 0.6 minimum insurance contribution – the fourth year;
- 0.5 minimum insurance contribution – the fifth year;
- 0.4 minimum insurance contribution – the sixth year;
- 0.3 minimum insurance contribution – the seventh year;
- 0.2 minimum insurance contribution – the eighth year;
- minimum insurance contribution – the ninth and tenth years.
Members/head of family farming, who are subject to insurance on other grounds or are exempted from payment of the USC in accordance with para. 4 of Art. 4 of the Law of Ukraine “On the Collection and Accounting of the Unified Contribution to Mandatory State Social Insurance” and do not take voluntary participation in the system of compulsory state social insurance, do not have the right to receive an additional payment.
The Resolution enters into force on January 1, 2020.
Accounting and Reporting
The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for Submitting Financial Statements” of 17.07.2019, No. 625, specified the procedure for submitting the financial statements.
In particular, the government adjusted the list of enterprises that submit the reduced annual financial statements in the balance sheet and the statement of financial results. These are enterprises that belong to:
- micro-enterprises;
- social businesses (except those obliged to prepare financial statements according to International Financial Reporting Standards; hereinafter – IFRS);
- enterprises that conduct a simplified accounting of incomes and expenses in accordance with the tax legislation.
It was also determined that financial reporting and consolidated financial statements in accordance with IFRS should be prepared by the entities operating in the extractive industries. Previously, it was about enterprises that carry out mining activities of national importance. Such clarification was made in accordance with the Law of Ukraine “On ensuring transparency in the extractive industries” of 18.09.2018, No. 2545-VIII.
Control and Responsibility
The Ministry of Finance of Ukraine by its Order “On Approval of the Amendment to Certain Legislative Acts of the Ministry of Finance of Ukraine on Accounting” of 31.05.2019 No. 226 amended the following:
- an order of the Ministry of Finance “On Approval of the Accounting Standard 25 “Financial Report of a Small Business Entity” of 25.02.2000, No. 39. Now this standard to be called “National Accounting Standard 25 “Simplified Financial Statements”;
- an order of the Ministry of Finance “On Approval of the Simplified Plan of Accounts” of 19.04.2001, No. 186. The Simplified Plan of Accounts can be applied by legal entities recognized by micro-enterprises, small enterprises, social businesses, enterprises that conduct a simplified accounting of incomes and expenses, and also representative offices of foreign business entities.
There are also amendments to some legal acts of the Ministry of Finance on accounting, in particular:
- to the Guidelines on the application of the Plan of Accounts of assets, capital, liabilities and business transactions of enterprises and organizations, approved by the order of the Ministry of Finance of Ukraine dated November 30, 1999, No. 291. Now the accounts of class 9 “Expenses of activity” are all enterprises with the opening by its own decision of class 8 “Element Costs”. Earlier, the exception concerned small business entities, as well as other organizations which activities were not aimed at conducting commercial activities;
- it is determined that the National Accounting Standard 25 “Simplified Financial Statements” can be used for the preparation of financial statements of micro enterprises, small enterprises, social businesses, representations of foreign economic entities and enterprises that conduct simplified accounting of income and expenses in accordance with tax legislation (except for companies that, according to law, make financial statements according to international financial reporting standards).
In addition, the financial statements of a small business add separate lines for intangible assets. And the form No. 1 after the line is supplemented with new positions:
- intangible assets – 1000;
- initial cost – 1001;
- accumulated depreciation – 1002.
Financial Market
The National Bank of Ukraine by its Resolution “On Approval of Amendments to the Guidelines for the Collection of Funds and Transfer of Currency Values of Banks in Ukraine” of 25.06.2019, No. 84 specified number of points on the organizational aspects on cash collection and transportation of currency assets of banks in Ukraine.
In particular, it is about clarification:
- determination of currency values in view of recent changes in currency legislation;
- size of the maximum volumes of currency values that are being collected and transported, in view of the increase of the minimum wage;
- forms of the official identification of collectors.
Labor and Salaries
The Civil Service of Ukraine on labor issues described in detail the rules for combining positions at the company.
Combination of professions (positions) is the performance of an employee along with his/her main work, stipulated by an employment contract, additional work on another profession (position) within the working hours of the main work of the same enterprise, institution, organization.
In order to establish a combination of positions in the staffing of the company, a vacant position should be provided for. In the absence of a vacancy or a position in the staffing, the combination of positions is impossible, and the supplement for the combination of posts cannot be carried out.
Combination of positions can be established on the application of the employee or on the basis of a decision taken by the employer. If the combination is initiated by the employer, the employee should be notified of changes in the organization of production and labor in accordance with para. 3 of Art. 32 of the Code of Labor Laws of Ukraine (hereinafter – the Labor Code) not later than in two months.
Since the employee continues to occupy his or her main position, the records of the combination to the employee’s personal card and work record book are not made. At the same time, a copy of the order for the combining can be added to the personal file.
The order obligatory specifies the name of the profession (position), on which the combination will take place, and the amount of the surcharge. Additional payment is made exclusively on an order, because work on the combination of positions is not reflected in the working time accounting table and is set in accordance with the requirements of Art. 105 of the Labor Code on the terms provided for by the collective agreement.
The collective agreement and the order of the combination should clearly indicate from which posts the additional payment is established. After all, the size of the additional payment for the combination is approved only for employees of the budgetary sphere (on the basis of para. 3 of the Resolution No. 1298 “On the payment of workers on the basis of the Unified Tariff Schedule of categories and coefficients for the payment of employees of enterprises, institutions and organizations of certain branches of the budget sphere” in the amount of up to 50% of the official salary (tariff rate) according to the main position).
The mentioned above payment for positions combining is not established for heads of budget enterprises, institutions and organizations, their deputies, heads of structural subdivisions of these enterprises, institutions and organizations, and their deputies.
Combination of professions (positions) usually does not affect the duration of leaves. If an employee is engaged in work with harmful working conditions in his/her main work, performs it in full, as well as performs additional work on the basis of a combination, then the benefits provided by the current legislation in connection with the working conditions continue to be maintained for him/her.
Labor law forbids to engage in other paid activities (and, therefore, to work part-time) to persons authorized to perform state or local government functions (except for teaching, scientific and creative activities, medical practice, instructor and judge practice in sports). This prohibition includes civil servants, officials of local self-government bodies, people’s deputies of Ukraine, professional judges, officials of other state bodies.
It is forbidden to work part-time for heads of state enterprises, institutions and organizations, heads and deputies of structural subdivisions.
