An approximate maintenance checklist (hereinafter - MC) of motor vehicles is listed in the Regulation on maintenance and repair of road vehicles of automobile transport, approved by the order of the Ministry of Transport of Ukraine of 30.03.1998, № 102 (hereinafter - Regulation № 102). In addition, manufacturer’s guide for Vehicle Operation should be examined. This is the document where the required MC is spelled out. When it would be conclusively established that made Vehicle works (Operations) are not classified ascurrent or capital repair but they are classified asMC, these works could be reflected in accounting.
Financial accounting
Para.15 of Accounting Regulations 7 “Fixed assets” defines that any expenses, which the company provides for the maintenance of fixed assets in working condition (conducting of technical inspection, servicing, maintenance, repair etc.) and receipt of primary defined amount of future economic benefits from its use, should be included into expenses of reporting period.
The same statement is given in para.32 of Methodical guidelines on accounting of fixed assets, approved by the Ministry of Finance of Ukraine of 30.09.2003, № 561.
It should be reminded that economic benefit is considered to be the potential opportunity of the company to receive monetary funds from use of assets (Art. 1 of the Law of Ukraine “On Accounting and Financial Statements in Ukraine” dated 16.07.1999, № 996-XIV).
Consequently, expenditures on MC are not classified as capital investment (it is not an improvement, retooling or modernization). These expenses should be included into reporting period of their occurrence.
Expenditures on MC of a vehicle should be included into relevant group of expenses depending on what purposes the car is used. Therefore, if a car is involved in production purposes of company, conducting of its maintenance should be classified as GD account 23 “Production” (para. 14 of Accounting Regulations 16 “Expenses”).
If a car is involved in general production purposes, the amount of maintenance cost should be included into GD account 91 “General expenses” (para.15 of Accounting Regulations 16).
Expenses for maintenance should be “settled” in GD account 92 “Administrative expenses” if a car is used for general business (administrative) purpose (para.18 of Accounting Regulations 16).
If a car is used for production distribution, expenses for its maintenance are reflected in GD account 92 “Marketing expenses” (para.19 of Accounting Regulations 16).
In all other cases the costs of maintenance of a vehicle to be used for other purposes should be reflected in GD subsidiary account 949 “Other operating expenses” (para.20 of Accounting Regulations 16).
Tax Accounting
Income Tax
On 01.01.2015, according to para.134.1 of the Tax Code of Ukraine (hereinafter – NCU) the subject to the income tax is income with a source of origin from Ukraine and abroad, which is determined by adjusting (increase or decrease) in financial results to taxation (income or loss), defined in the financial statements of a company in accordance with National regulations (standards) of accounting or International Financial Reporting Standards, on tax differences arising under this paragraph.
If the income of the company during the reporting period does not exceed UAH 20 million, adjustment of the financial result, determined according to Accounting Regulations or IFRS, could be waived.
Today the updated section III of the TCU does not provide any tax differences regarding expenditure on vehicles maintenance or their current repair. Therefore, any adjustments are not required in tax accounting.
VAT
Today the TCU provides for that tax credit could include all the input VAT, confirmed by the tax invoice from URTI regardless whether these goods (services) are used or not in economic activity and taxable transactions.
If the purchased goods (services) are not used in taxable transactions (purchased for preferential activity) or business activity, the tax liabilities should be determined based on the para. 189.1 of the TCU (for goods / services - purchase price, for Non-current Assets - balance sheet value).
