Taxes
VAT
The State Tax Service of Ukraine in category 101.04 “ЗІР” answered the following question: “Are the services for the provision of communal property by the lessor subject to VAT and how is the tax invoice for such transactions prepared?”.
Services for the provision of communal property by the lessor are subject to value added tax (hereinafter – VAT), regardless of whether the tenant distributes the amount of rent or transfers it to the lessor’s account in full (except for transactions specified in paragraph 196.1.15 of the Tax Code of Ukraine; hereinafter – the Tax Code).
In particular, the operation of paying rent for leased communal property is not subject to taxation if the following conditions are met:
- an integral property complex of a communal enterprise (its structural subdivision) is leased;
- the lessor under the contract is a local government body;
- rent payments are credited in full to the local budget.
At the date of VAT liability, the lessor utility (regardless of whether the lessee distributes the amount of rent or transfers it to the lessor's account in full) draws up a tax invoice for the entire amount of rent provided for in the lease agreement.
Excise Tax
The Ministry of Finance of Ukraine by Order “On approval of application forms for registration of excise tax payer for the sale of fuel or alcohol ethyl and/or excise warehouses, excise invoice, calculation of excise invoice adjustment, application for replenishment (adjustment) of fuel balance, application for replenishment (adjustment) of ethyl alcohol balance, the Procedure for filling out the excise invoice, calculating the adjustment of the excise invoice, application for replenishment (adjustment) of fuel balance, application for replenishment (adjustment) of ethyl alcohol balance of the Ministry of Finance” No. 729 of November 27, 2020 approved new forms of excise invoice and calculation to it.
The new version contains section C “Tax liabilities for the sale of fuel”, and section D “Tax liabilities for cars, their bodies, trailers and semi-trailers, motorcycles (including mopeds), bicycles with an auxiliary motor, with wheelchairs or without them, motor vehicles designed to carry 10 people or more, motor vehicles for the carriage of goods” has new additional lines.
New annex 14 “Calculation of the amount of excise tax on the sale of fuel during a change in tax conditions in accordance with paragraph 229.8.13 of item 229.8 of Article 229 of Chapter VI of the Code” has appeared.
We also have new editions for the following annexes:
- Annex 2 “Calculation of the amount of excise tax on tobacco products for which specific and ad valorem rates of excise tax are set at the same time”;
- Annex 6 “Calculation of the amount of excise tax on the sale of excisable goods by retail trade entities”;
- Annex 7 “Calculation of the amount of excise tax on the sale of electricity”.
For each reporting period, regardless of whether the taxpayers conducted business activities in the reporting period and whether there are tax liabilities for the payment of excise tax, the following subjects fill in and submit the relevant sections and annexes to the declaration:
- business entities that in accordance with item 212.1 of the Tax Code of Ukraine (hereinafter – the Tax Code) are excise tax payers and have valid (including suspended) licenses to conduct activities with excisable products that are subject to licensing in accordance with the law;
- payers specified in paragraph 212.1.15 of the Tax Code.
Other taxpayers fill in and submit sections and annexes to the declaration only for those transactions that they carry out and for which they have tax liabilities for the payment of excise tax.
Other Taxes and Fees
The State Tax Service of Ukraine reminded that on January 1, 2021, Ukraine introduced a single account for the payment of taxes and fees, a single contribution to the mandatory state social insurance (hereinafter – SSC).
The single account for payment of monetary obligations and/or tax debt on taxes and fees, SSC and other payments, the control of which is entrusted to the State Tax Service of Ukraine (hereinafter – STSU), arrears of other payments may be used by the taxpayers at their request.
The use of a single account by the payer begins on the business day following the day the payer submits a notice of use of such account. If the payer – a legal entity has separate divisions, the notice of use or refusal to use a single account must be submitted by such payer for each separate division.
All current payments, tax debt on such payments and arrears of the single contribution, monetary liabilities, which are determined on the basis of tax notices-decisions, can be paid through a single account.
However, the single account cannot be used to pay monetary obligations and/or tax debt on value added tax, excise tax on the sale of fuel and ethyl alcohol, as well as to pay part of the net profit to the budget by state and municipal enterprises and their compounds.
In the case of using a single account, the payer is obliged to make payments only through a single account, except in the cases mentioned above. Funds paid by the payer to other accounts opened in the name of the Treasury for payment of monetary obligations and/or tax debt (arrears) of taxes and fees, SSC and other payments, the control of which is entrusted to the STSU, are considered erroneously paid monetary obligations and subject to return in the manner prescribed by Art. 43 of the Tax Code of Ukraine (hereinafter – the Tax Code).
To credit funds to a single account, the payer must fill in a settlement document for transfer in accordance with the requirements of the Procedure for filling in transfer documents in case of payment (collection) of taxes, fees, customs duties, single contribution, budget reimbursement of value added tax, return of erroneously or excessively credited funds approved by Order of the Ministry of Finance No. 666 of July 24, 2015.
Formation of the register of payments from the single account according to the separate payer to STSU occurs on the basis of rules of items 35.5, 35.7 of the Tax Code, taking into account the order of payment specified in item 35.6 of the Tax Code.
The register of payments from the single account for an individual payer as part of the consolidated register of payments from the single account is the basis for the transfer by the Treasury of payments to the recipients specified therein.
If the payer refuses to use the single account, such use must be terminated from January 1 of the following calendar year on the basis of a notice of refusal to use the single account.
Notification of the use or refusal to use the single account is submitted by the taxpayer in electronic form through the electronic cabinet using form J/F 1307001. The taxpayer has the right to notify the use or refusal to use the single account once a calendar year.
Accounting and Reporting
The State Statistics Service of Ukraine informed that respondents should submit financial statements for 2020 in electronic form using forms approved by the relevant orders of the Ministry of Finance of Ukraine, taking into account Order of the Ministry of Finance of Ukraine "On Amendments to Certain Legal Acts of the Ministry of Finance of Ukraine concerning Accounting” No. 588 of September 29, 2020 (hereinafter – Order No. 588).
The financial statements of the microenterprise are submitted using form S0111005.
It should be recalled that Order No. 588 made some changes to NAS 25 “Simplified Financial Statements”. In particular:
- the mention of the debt of the founders for the formation of the authorized capital was removed from the item “Current receivables”;
- it is provided that the item “Unpaid capital” reflects the amount of debt of owners (participants) for contributions to the authorized capital. Amounts under this item are calculated when determining the amount of equity;
- form No. 1-мс after the item “Retained earnings (uncovered loss)” is supplemented with a new item “Unpaid capital”.
Control and Responsibility
The Cabinet of Ministers of Ukraine extended the quarantine in Ukraine until April 30, 2021. The relevant decision was adopted at a meeting of the Government on February 17, 2021.
At the same time, the Government is easing some quarantine restrictions. Ukraine will return to the adaptive quarantine model. Different quarantine restrictions will be imposed in the regions depending on the epidemic situation.
As last time, there are four levels of epidemic danger, each of which has clear restrictions and criteria. This was announced by the Prime Minister of Ukraine at a meeting of the Government.
According to the draft resolution, which was supported by the Government, there are four levels of epidemic danger: green, yellow, orange and red.
The green level is the indicator that should be achieved to reduce or eliminate anti-epidemic measures. It can be established provided that the incidence of flu and ARVI in at least 13 regions of Ukraine does not exceed 50% of the epidemic threshold established for the region. The second criterion is the detection of cases of COVID-19 infection (by PCR and antigen determination) – less than 5%.
The yellow level is basic for the whole country and provides for appropriate restrictions and anti-epidemic measures, but with some mitigations.
In particular:
- it is allowed to hold mass events (cultural, sports, etc., if there is 4 square meters per person, or with a hall capacity of more than 50% of seats. Previously, there were restrictions that no more than 20 people could participate in events with 5 square meters of area per person provided;
- groups of more than 20 people are allowed to visit educational institutions;
- it is possible to hold matches of team sports, but provided that half of the planned seats are occupied;
- restaurants, cafes, bars and canteens are opened until 00:00 (previously until 23:00);
- pools are allowed, more people will be able to stay in gyms and fitness centers.
The orange level is set after the yellow and indicates a complication of the epidemic situation. It does not provide for the introduction of additional restrictions at the state level, but signals the danger of approaching the red level.
The red level provides for the introduction of strict quarantine restrictions, which were in effect during the January lockdown.
In particular:
- the activity of public catering establishments will be prohibited (except for address delivery and “take away” service);
- the work of shopping and entertainment centers and other entertainment establishments – cinemas, theaters, etc. is prohibited;
- educational institutions will not work (except for kindergartens and primary schools);
- non-food markets and shops, gyms, swimming pools, fitness centers will be closed.
The decision was made with a finalization within one day.
The government decree enters into force on February 24, 2021.
Financial Markets
The National Bank of Ukraine by Resolution “On Amendments to the Regulations on Protection Measures and Determining the Procedure for Conducting Certain Transactions in Foreign Currency” No. 14 of February 3, 2021 doubled the e-limit for a number of foreign exchange transactions of individuals to transfer funds abroad or to the accounts of non-resident legal entities, opened in Ukraine – up to 200 thousand euros.
Among such operations:
- investment abroad;
- placement of funds in own foreign accounts;
- transfer of funds under a life insurance contract;
- lending to non-residents.
“According to the National Bank, this decision in the direction of currency liberalization will not have a significant impact on the functioning of the foreign exchange market of Ukraine, including given that individuals for more than a year have the opportunity to freely buy non-cash foreign currency without any obligations and grounds. In 2020, individuals transferred about 274 million euros abroad within the e-limit. This amount is less than the average daily trading volume on the interbank foreign exchange market,” Yurii Heletii, Deputy Governor of the National Bank, said.
The positive situation in the foreign exchange market creates appropriate preconditions for the gradual liberalization of currency regulation, the next step of which is to increase the relevant e-limit.
Complete removal of the e-limit for individuals to invest abroad is one of the priorities of the National Bank, provided by the Roadmap for currency liberalization. This will be possible after the final adoption and implementation of the package of bills on combating BEPS (Plan to combat the base erosion and profit shifting).
The National Bank also continues to promote the use of digital analogues of paper documents. To this end, banks and non-bank financial institutions are allowed to use digital passports in the “Diya” mobile application when conducting foreign exchange transactions with individuals, provided that the necessary technological capabilities are available.
Labor and Salaries
The Verkhovna Rada of Ukraine adopted the Law “On Amendments to Certain Legislative Acts of Ukraine Concerning the Recording of Employee Employment in Electronic Form” (draft No. 3623).
The Law introduces the registration of labor activity of an employee in electronic form in the register of insured persons of the State Register of Compulsory State Social Insurance.
The Law regulates the mechanism of accumulation, processing and use of this information, in particular, to confirm the existing length of service and the appointment of pensions.
Relevant amendments have been made to the Labor Code of Ukraine, Fundamentals of Legislation of Ukraine on Compulsory State Social Insurance, Laws of Ukraine “On Collection and Accounting of a Single Contribution for Compulsory State Social Insurance”, “On Compulsory State Pension Insurance”, “On Service in Local Self-Government Bodies”, “On Civil Service” and some other legislative acts.
The law prescribes:
- to establish a five-year transition period for inclusion in the State Register of information from paper employment records on the employee's employment (during this period, both the paper employment record and the electronic form of existing or entered information on employee employment from the State Register will be used);
- to determine that the entry of information on employment in the State Register through the web portal of electronic services of the Pension Fund of Ukraine in the form of scanned or digitized copies of documents provided by law (employment records, certificates, etc.) is carried out by an employee and employer with a qualified electronic signature;
- to establish that after entering information about the employee's employment in the State Register, the employer is obliged to hand over the original paper records to the employee for signature, while the employer is also obliged to enter in the paper employment records at the employee's request the information about hiring, transfer and dismissal;
- to introduce the possibility of automatic appointment of a pension (without personal application by a person) while retaining the right to defer retirement, and if a person postpones the appointment of pension and continues employment, the amount of the pension will increase by 0.5–0.75%. Within the framework of automatic assignment of pensions, it is also possible to determine with the help of the State Register software the most advantageous option for assigning a pension, including the date of such assignment.
Such a reform will create opportunities for:
- reducing the costs of employers for paperwork;
- simplification of access to information on the length of service of employees for the purpose of paying benefits for compulsory state social insurance, especially in the case of temporary disability,
- taking into account data on education and qualifications that the working population has and that young people receive, to ensure the coordination of proposals that exist in the labor market, and planning the training (retraining) of specialists in relevant areas;
- elimination of possible risks and negative consequences of loss of employment record, its physical damage, falsification and introduction of inaccurate information to this document.
However, the final text of the Law has not yet been made public.
The Other Things
The President of Ukraine signed Law of Ukraine “On State Support of Investment Projects with Significant Investments in Ukraine” No. 1116-ІХ, which was adopted by the Verkhovna Rada on December 17, 2020.
This document will help restore investment activity in Ukraine after the crisis of 2020.
The law provides for state support to Ukrainian and foreign investors with a total investment of 20 million euros.
In particular, the possibility of obtaining tax benefits, providing investment projects with related infrastructure, granting the preemptive right to use land plots of state or communal property for investment projects, securing investor guarantees through a direct agreement with the Government of Ukraine. In this case, the total amount of state support may not exceed 30% of the amount of investment in the project.
According to the document, support will be provided to enterprises operating in the processing industry, transport, education, science and technology; in the field of health care, art, culture, sports, tourism and resort and recreation.
It also provides for the establishment of a special government authorized institution that will support investment projects, assist investors from the beginning of the project and throughout its duration.
