Income tax
The peculiarities of the accounting of the liquidation (writing off) of the items of fixed assets (hereinafter - FA) in the income tax accounting are opened very briefly for today in the updated section III of the Tax Code of Ukraine of 02.12.2010, № 2755-VІ (hereinafter - TCU). In general, such transaction would be shown in the tax accounting according to the Accounting Standards (see Regulations of Art. 134 of the TCU).
Nevertheless, in the case of liquidation of the FA item, the financial result before the taxation (formed by the accounting standards, in fact by the National Accounting Standards (NAS) or the International Accounting Standard (IAS) - see Art. 134 of the TCU) should be increased by the amount of residual value of a separate FA item defined by the rules of NAS, and reduced by the residual value of a separate FA item defined by the rules of Art. 138 of the TCU.
VAT
In accordance with sub-s “д” of subparagraph 14.1.191 of the TCU, the liquidation of non-current assets by the VAT payer at will, particularly, is meant the goods delivery.
In addition, sub-paragraph 1 of paragraph 189.9 of the TCU provides for: if the fixed production or nonproduction assets are liquidated at will of the taxpayer, such liquidation for tax purposes is considered to be as the supply of such fixed production or nonproduction assets at regular prices, but not below the book value at the moment of liquidation.
But sub-paragraph 2 of paragraph 189.9 of the TCU should be recalled, which states that the requirements of sub-paragraph 1 para. 189.9 of the TCU do not apply to the cases where the fixed production or nonproduction assets are liquidated due to their destruction or the destruction as a result of force majeure. In other cases, when such liquidation is performed without the consent of the taxpayer, including cases when fixed production or nonproduction assets have been stolen, this should be confirmed in accordance with the law, or when the taxpayer submits to the controlling authority the relevant document of destruction, takedown or conversion of the fixed production or nonproduction assets in other ways, as a result of which they cannot be used for the initial appointment.
Specified cases of FA liquidation in sub-paragraph 2 of paragraph 189.9 of the TCU are not the goods delivery (see. para. 14.1.191 of the TCU), and therefore are not the subject to VAT. Thus, it is not required to accrue the VAT liabilities when such FA liquidation under condition of submittal to the controlling authority of the relevant documents of destruction, takedown or conversion of the fixed production or nonproduction assets in other ways, as a result of which they cannot be used for the initial appointment.
The documents confirming the FA liquidation, according to the author, could be the following:
- the order of company’s chief executive;
- the conclusion of the commission on impossibility of use of these FA for the initial appointment in the future;
- the writing-off act of FA (see typical forms of such document approved by the Order of the Ministry of Statistics of Ukraine dated 29.12.95, № 352: form № ОЗ-3 “The act of writing-off of fixed assets”; form № ОЗ-4 “The act of writing-off of motor vehicles”).
