Accounting of property insuranceexpenses is not always easy. Accountants have a lot of issues and we try to give a response to them. Let’s consider the peculiarities of tax accounting.
Company income tax
According to the norms of para.134.1 of the Tax Code of Ukraine of 02.12.2010, № 2755-VI (hereinafter - TCU), the subject to the company income tax is the income with the source of origin from Ukraine and abroad, which is determined by adjusting (increase or decrease) of the financial result before taxation (profit or loss), defined in the financial statements of the company according to the National Accounting Regulations (Standards) (hereinafter - Accounting Regulations) or International Financial Reporting Standards (hereinafter - IFRS), on differences that arise in accordance with the provisions of the TCU.
If the income of the company does not exceed 20 million hryvnias for the reporting period, the adjustment of the financial result before taxation, established according to Accounting Regulations or IRFS, is not required to be implemented.
Even if in determining of the subject of taxation, the company uses the differences prescribed by sec.IIIof TCU, today in the tax accounting there are no any special regulations of reflection of expenses on the property insurance incurred by the company. Therefore, these transactions are reflected exclusively according to the Accounting Regulations.
VAT
As determined by subpara.196.1.3 of TCU, transactions of provision of insurance services, coinsurance or reinsurance by entities, which have a license to conduct insurance activity in accordance with the law as well as related to such an activity of services of insurance (reinsurance) brokers and insurance agents are not the subject to VAT. Therefore, the property insurance transaction is not the subject to taxation of the value added tax (hereinafter - VAT). Thus, the insured does not accrue the tax liabilities on VAT and therefore the insured people do not have tax credit on VAT when the payment of insurance payments.
