Taxes
VAT
The State Tax Service of Ukraine in individual tax consultation “Concerning the inclusion of the VAT amounts by the lessee in the tax credit paid during the repair works on the renewal of the leased property where the fire occurred and the need to determine the VAT liabilities after the completion of such works in case such lease object continues to be used in the lessee's own business activity” No. 528/6/99-00-07-03-02-06/ІПК dated February 11, 2020, considered the situation when the lessee repairs the lease object which is damaged by fire. The lessee will continue to use such object of lease in business activities.
The lessee is entitled to include in the tax credit the amount of value added tax (hereinafter – VAT) paid (charged) for the purchase of goods/services for the repair of the leased property. Of course, subject to confirmation of their registration in the Unified Register of tax invoices.
Considering that after the repair, the lessee will use the leased object to carry out taxable transactions in the course of his business activity before the lease term expires, it is not required to charge offsetting VAT obligations in accordance with subitem “d” of item 198.5 of the Tax Code of Ukraine.
Unified Social Contribution
The State Tax Service of Ukraine through the Office of Large Taxpayers in letter «On the practical application of the legislation» No. 643/ІПК/28-10-30-02-10 dated February 17, 2020 stated that the value of the permanent ticket purchased by the company, including the value added tax paid (hereinafter – VAT) is the basis for accruing a unified social tax (hereinafter – UST).
After all, the basis for the UST accrual for employers includes the amount of accrued basic and additional salaries, other incentive and compensatory payments, to each insured person, including in kind.
Other incentive and compensation payments of the payroll fund include: payment for an apartment or rented accommodation, hostels, goods, grocery orders, health group subscriptions, subscriptions to newspapers and magazines, prosthetics, compensation for the value of fuel issued to employees in cases not provided for by current legislation.
Considering that the subscription payment is credited to the payroll fund, then the UST is accrued for such payment in the prescribed manner.
At the same time, the payroll in kind equates to the supply of goods in terms of VAT. Therefore, it is subject to VAT.
Corporate Income Tax
The State Tax Service of Ukraine in the category 102.20.01 “ZIR” answered the following question: “By what form identifier in electronic form the income does tax payers submit the corporate income tax return for the reporting (tax) year 2019 (including specifying)?».
On December 20, 2019, Order of the Ministry of Finance No. 481 (hereinafter – Order No. 481), which amended the Corporate income tax return form, approved by the Ministry of Finance Order No. 897 of October 20, 2015 (hereinafter – Return).
Since the issuance of Order No. 481 is due to changes in tax legislation that came into force on January 1, 2019, the taxpayers of corporate income tax are advised to file a declaration for the reporting (tax) year 2019 in an updated form.
At the same time, item 46.6 of the Tax Code of Ukraine (hereinafter – TCU) establishes that if changes in tax rules amend the forms of tax reporting, before determining new forms of returns (settlements) that enter into force for the preparation of statements for the tax period that comes after the tax period, in which they have been made public, the valid forms of return (settlements) are valid until such determination.
The official web-portal of the State Tax Service of Ukraine under the heading “E-reporting” > “E-reporting for taxpayers” > “Information and analytical support” > “Register of forms of electronic documents” contains electronic forms of return (including specifying):
- Return under updated form with ID J0100118;
- Return (as amended by Ministry of Finance Order No. 467 dated April 28, 2017), as amended by Ministry of Finance Order No. 842 dated October 19, 2018, the adoption of which will also be ensured by April 1, 2020 with the form ID J0100117.
Other Taxes and Fees
The State Tax Service of Ukraine in the individual tax consultation “On tourist fee” of No. 595/6/99-00-04-03-03-06/ІПК of February 14, 2020 answered the question: “Can a legal entity pay a tourist fee for a physical person?”.
The tourist fee is paid by the payer immediately prior to accommodation (overnight). The form of payment is not regulated by the TCU.
The customer of hotel services is a natural or legal person, including the subject of tourist activity, which:
- enters into an appropriate agreement for the provision of hotel services on behalf and for the benefit of the consumer;
- makes payment under this agreement (provides guarantees for payment under this agreement) (item 1.3 of the Rules for use of hotels and similar means of accommodation and provision of hotel services, approved by order of the State Tourism Administration dated No. 19 dated March 16, 2004).
The TCU does not restrict the right of legal entities to pay for the tourist fee in lieu of individuals. However, at the time of placement of such persons in the place of residence (overnight stay), they must make a payment of the tourist fee and confirm such payment on behalf of the payer of the tourist fee. After all, the tax agent as the entity of accounting and taxation must have a supporting original document. It contains information about business transaction to pay a certain amount of money by the payer of the tourist fee or a legal entity on behalf of the payer of the tourist fee.
Accounting and Reporting
The State Tax Service of Ukraine in the Individual Tax Consultation “On the possibility of storing part of the cash held through the PTR in the safe at the place of payments for the “official issue” transaction” No. 432/6/99-00-05-04-01-06/ІПК of February 3, 2020 explained how to avoid violations if the company decided not to hand over all the proceeds, but only part of it, and keep the other in the box of the payment transaction recorder (hereinafter – PTR) and safe.
According to representatives of the tax department, this can be done if the safe is located at the place of payments. However, the amount of cash at the place of settlement (in the PTR box and safe deposit box) must correspond to the amount indicated in the registrar's daily report.
Deposit or cash withdrawal from the settlement location must be registered through the PTR using the “official deposit” and “official issue” transactions, unless such deposit or issue is related to the settlement transactions. In addition, the transaction “official deposit” is used to register the amount of cash stored at the place of payment at the time of registration of the first settlement transaction, which is carried out after the execution of the “Z-report”.
At the same time, cash received at the cash desks is collected on the day of its receipt in full amount (item 11, p. II of the Regulation on conducting cash operations in national currency in Ukraine, approved by resolution of the Board of the National Bank No. 148 of December 29, 2017).
Therefore, in order to avoid possible violation of the law, such situation should be stipulated in the internal order of the enterprise, in which it should be noted that only the proceeds from sales using PTR should be stored in the safe located at the place of settlement.
Control and Responsibility
The Verkhovna Rada of Ukraine adopted draft law No. 1220 on the removal of legislative conflicts and vacuum.
Registration of property rights and fixed charge
It is proposed to amend the Law on Notaries and give notaries the right to demand from individuals and legal entities the information and documents necessary for committing notarial acts, conducting state registration of real property rights and fixed charge, as well as for the fulfillment of others powers provided by law.
Certify inscriptions will also be made when issuing a duplicate of the document, imposing a ban on alienation of immovable property (property rights to immovable property).
At the request of a natural or legal person, any transaction involving them may be notarized.
Place of notarial acts, certification of documents
It is also provided that notarial acts may be carried out at the premises of a diplomatic mission or consular post. Officials of consular offices of Ukraine will be able to certify the accuracy of copies of documents and the authenticity of the signature on the documents.
Life certificate
The notary attests to the fact that the individual is alive at his/her request.
At the request of legal representatives (parents, adoptive parents, guardian), the fact that a minor child, incapacitated natural person is alive is certified.
At the same time, the fact that a minor child, an individual with a disability, is alive is attested at their request and with the consent of legal representatives (parents, adoptive parents, guardians).
A life certificate is issued to confirm that the person is alive.
Certificate of fact of stay of an individual in a certain place
Having attested to the fact of a person being in a certain place, the notary issues a certificate.
The fact is attested at the request of the physical person; at the request of legal representatives of a minor, incapacitated person; at the request of a minor, a person with disabilities (subject to the consent of legal representatives).
Labor and Salaries
The State Employment Service explained the meaning of the “unjustified” refusal to hire.
Everyone has the right to exercise his or her ability to work and apply for the job according to his calling. However, employers make their own decisions regarding the selection of candidates for the position that meet their requirements and ideas. Employment law is designed to balance the interests of job seekers and those who offer job. However, when applying its rules, many questions arise, in particular due to the existence of different concepts. This, in particular, includes the notion of “unjustified” refusal to hire.
Indeed, establishing restrictions or benefits when entering into an employment contract on the basis of certain personal characteristics of candidate can be understood as discrimination, except when different treatment is provided for by law. There are a number of circumstances that make a refusal to hire legal. In particular, the requirements may include:
- citizenship of Ukraine (for example, for civil service posts);
- age (in particular, for work with severe and harmful conditions or work that may impair the moral development of minors);
- gender (for example, for work with difficult and harmful working conditions);
- level of education (for example, a person with appropriate education can work as a health worker);
- working experience (for example, the requirement of a minimum length of service in a specialty to occupy a position is acceptable);
- health (in particular, persons with appropriate health are allowed to work on the ship);
- criminal record or bans on holding certain positions (for example, persons with a criminal record for a self-serving crime cannot hold management and liability positions), etc.
Requirements regarding age, level of education, health of an employee may be established by the legislation of Ukraine (Article 22 of the Labor Code of Ukraine, hereinafter – LCU). This means that the employer cannot place higher requirements on the availability of education than is provided in the relevant qualification guidelines.
The employer has the right to refuse the applicant for whom such work is contraindicated for health reasons by medical opinion. The employer may also impose restrictions on co-operation in the same enterprise of persons who are close relatives, in the cases referred to in Art. 251 of the LCU.
The State Employment Service experts advised the employer.
- The employer must determine whether the job applicant belongs to the categories that are not allowed to be refused in employment. It should also be determined whether a written form of refusal is mandatory (Article 184 of the LCU).
- The employer is obliged to justify in writing the refusal to hire the unemployed, who are directed to the employer by the employment center. At the root of the referral for employment, which the employment center issues to the unemployed for their visit to employer, the column “Response to the decision” (regarding employment) is filled in by the employer. The employer ticks (or explains) the proper reason for the refusal of employment.
- It should be remembered that refusal cannot be justified if the job applicant has not even been interviewed. It is necessary to analyze information about the candidate's skills and abilities and to compare them with the requirements stipulated in the job description.
- In the broad sense, “unjustified” is a refusal that does not contain specific reasons or refers to reasons that are not related to the job or professional qualifications of the applicant for the position. Reference to the norms of the legislation is necessary, and the absence of “business qualities” must be proved (it should be noted what qualities the applicant lacks). Refusal of employment will not be considered unjustified if the company does not have a vacancy. If there is a written requirement to issue a refusal, the employer must state the reasons in writing. It is considered that such refusal should be granted as soon as another applicant is accepted.
- It is inadmissible to refuse employment for discriminatory reasons. The list of features prohibiting the restriction of rights is contained, in particular, in Art. 21 of the LCU.
In case the employer fails to fulfill the quota for employment of citizens with additional guarantees in favor of employment during the year (part 1 of Article 14 of the Law of Ukraine on Employment of the Population, hereinafter – the Law), he/she must be fined for any unjustified refusal of employment for such persons. within the relevant quota, twice the minimum wage established at the time of detection of the violation (Article 53 of the Law). As of today, the amount of such sanction is 9 446 UAH.
If, however, the applicant for the job does not belong to certain categories of citizens, then, if the State Labor Inspector determines that the employer's actions are unjustified, the employer may be considered as violating other requirements of the labor law. According to Art. 265 of the LCU, such violation is punishable by a financial penalty of one minimum wage.
In addition, current law allows the court to challenge such refusal. As set out in Part 2 of Art. 232 of the LCU, courts arbitrate the disputes concerning refusal of employment initiated by:
1) employees invited to work in the order of transfer from another enterprise, institution, organization;
2) young specialists who have graduated from a higher education institution and are directed to work for an enterprise, an institution, an organization in due course;
3) pregnant women, women who have children under three years of age or a child with a disability, and single mothers (parent) in the case of a child under 14 years of age;
4) elected employees after the expiration of their term of office;
5) employees who have been granted the right to return to work;
6) other persons with whom the owner or the body authorized under the current legislation is obliged to conclude an employment contract.
Summary of Court Rulings
The Supreme Court of Ukraine considered the complaint about the consideration by the permanent representative office of the amounts of value added tax (hereinafter – VAT) paid by the parent company in the framework of the economic activity of that representative office as a part of the tax credit.
According to the position of controllers, the funds paid by a non-resident parent company to non-residents for services rendered in the territory of Ukraine cannot be taken into account as a negative item for the disputed period and, as a consequence, declared for budgetary compensation. After all, such funds are not paid by the recipient of the services contrary to the provisions of para. “b”, item 200.4 of the TCU.
At the same time, the complainant pointed out that the representative office, given the peculiarities of the Ukrainian legislation, had no right to transfer funds to the accounts of non-resident legal entities on its own, except for the non-resident legal entity whose interests it represented. With this in mind, the parent company made the appropriate payment to the service providers.
Having analyzed the rules of the TCU, the Supreme Court of Ukraine issued the following ruling of December 9, 2019 in case no. 805/1740/16-a.
In the case of registration of a non-resident representative as a VAT payer, the rules of the Tax Code stipulated for VAT payers shall apply to him/her. Permanent representation, in accordance with the requirements of the current legislation of Ukraine, is deprived of the opportunity to transfer funds from its current account to the account of a non-resident legal entity, except for the person it represents. However, the latter, as a VAT payer in the case of the acquisition in the course of business activities of services supplied by non-residents to the customs territory of Ukraine, has the right to make a tax invoice, which is the basis for attributing the VAT amounts to the tax credit of subsequent periods. However, provided that the tax liability is included in the tax return for the relevant period.
Therefore, the court finds the stated conclusion of the supervisory authority erroneous.
From 1 January 2015, one of the mandatory conditions for the taxpayer to receive a budget refund is the fact that such amounts are paid to the State Budget or to suppliers.
In this case, there was no actual VAT payment for business operations to provide services by non-residents to the representative office with their place of delivery in the customs territory of Ukraine. However, by virtue of item 200.12 of the TCU, the representation had duly recorded such amounts in the tax liabilities of the previous reporting period and the tax credit of subsequent periods.
In the opinion of the panel of judges, the negative value created in such circumstances cannot be used by the taxpayer as a part of the amounts subject to budgetary compensation. It can only be used to pay off tax debt (if any) or to be included in the tax credit for the next reporting period. Therefore, the amount is such that the complainant wrongfully included in the amounts subject to budgetary compensation, but is legitimately reflected as a component of a negative value formed in previous periods.
The Other Things
The Cabinet of Ministers of Ukraine lifted a ban on space activities for private companies. Such decision was taken to implement the Law of Ukraine “On Amendments to Certain Laws of Ukraine on State Regulation of Space Activity”.
In particular, it is provided that from now on the private businesses will be able to obtain permit to conduct the following space activities:
1) testing (except for computerized) of launch vehicles, including their aggregates and components and spacecraft;
2) launching of launch vehicles and/or spacecraft;
3) control of spacecraft in Earth orbit or in space;
4) return of spacecraft and/or their components from Earth's orbit or outer space.
In addition, private enterprises intend to carry out space activities must submit a declaration on the business activity to the central body of executive power that ensures the implementation of state policy in the field of space activities. Such declaration is an instrument of entry into the space technology market for private space entities.
