The Verkhovna Rada of Ukraine canceled the war tax liability of the transactions on foreign currency purchase and sale by individuals. The mention of such income taxation (i.e. sub-para. 165.1.51 of the TCU) is excluded from sub-paragraph 1.7 of para.161 of subsection 10 of section XX of the Tax Code of Ukraine (hereinafter - TCU). Earlier in the Law of Ukraine “On Amendments to the Tax Code of Ukraine” of 02.03.15, № 211-VIII there were “clarified” what objects exactly were the subject to taxation. The transactions on foreign currency purchase were included in that list (sub-para 165.1.51).
The Cabinet of Ministers of Ukraine by its Resolution of 05.05.15, № 262 made amendments to the procedure for storage of amounts of value added tax by the agricultural enterprises on the special accounts opened in banks and/or authorities responsible for treasury services of budgetary funds, approved by the Cabinet of Ministers of 12.01.11, № 11 (hereinafter - the Procedure № 11).
These amendments are aimed at the reconciliation of the Procedure № 11 with the current version of the Tax Code of Ukraine (hereinafter - TCU) and the standards for the VAT electronic administration.
In particular, the provisions on maintenance of register of issued and received tax invoices by agricultural enterprises would be excluded from the Procedure № 11 (the maintenance of the register is canceled from 01.01.15 for all the VAT payers).
The Cabinet of Ministers also clarified the procedure for transferring VAT amounts to be credited to the special account of the subject of special regimes on the reporting period results (tax liabilities according to his/her special declaration). The Treasury authority transfers such funds from electronic account to a special account of the subject of special regimes on the basis of the registry of the SFS authority. It is provided for, in particular, by para. 2001.5 of the TCU and para.21 of the Procedure of the electronic administration of value added tax, approved by the Resolution of the Cabinet of Ministers of 16.10.14, № 569.
This procedure of funds transfer is already in force since the reporting period - February 2015. Earlier the subject of special regimes independently transferred funds to his/her special account from current account.
The State Fiscal Service of Ukraine in its letter “On taxation of VAT transactions on the services delivery of transportation of cargo by the taxpayer from FEZ “the Crimea” territory on the other territory of Ukraine” of 09.04.15, № 7556/6/99-99-19-03- 02-15 reported that the transactions of taxpayers on the services delivery of transportation of cargo with the road transport from the territory of FEZ “ the Crimea” on the other territory of Ukraine were subject to VAT at the general rate of 20%.
The taxmen explain this by the reason that the temporarily occupied territory of the Crimea is an integral part of the territory of Ukraine, which is the subject to the Constitution and laws of Ukraine. Respectively, according to sub-para.195.1.3 of the TCU to international transport, 0% VAT rate does not apply to such transactions because the transportation from FEZ “the Crimea” on the other territory of Ukraine is considered to be internal.
The State Fiscal Service of Ukraine and the State Treasury Service of Ukraine asked not to arrest electronic accounts of the VAT payers (joint letter “Concerning the electronic administration of value added tax” of 12.03.15, № 5780/5/99-99-23-05-16).
The SFS of Ukraine together with the State Treasury in the mentioned letter applied to the executive service with request not to send the payment requests and resolutions on arrest of funds on electronic accounts of the VAT payers.
This appeal also includes a request to withdraw previously sent documents to the Treasury:
- the payment requests on collecting of funds from the electronic accounts;
- the resolutions on the arrest of funds contained on these accounts.
According to the SFSU, there is a conflict of laws, which requires appropriate amendments in regulations.
The directions of funds transfer from the electronic VAT accounts are provided for by para. 2001.5 of the Tax Code of Ukraine (hereinafter - TCU):
- to the state budget or on special account of agrarian (the subject of special regimes for VAT) - in the amount of tax liability for VAT payable in the reporting period;
- on the current account of VAT payer upon his/her application - in the amount of funds in excess of his/her declared liabilities.
The funds on the electronic account of VAT payer cannot be the source of repayment of the tax debt, excluding such debt on VAT (para. 87.1 of the TCU).
At the same time, part 2 of Art.52 of the Law of Ukraine “On Enforcement Proceedings” of 21.04.99, № 606-XIV provides for the foreclosure on executive documents primarily on the debtor’s funds, other values, including funds on his/her accounts and deposits in banks and other financial institutions.
The State Fiscal Service of Ukraine in its letters “On involvement of means of transport during mobilization” of 27.02.15, № 4223/6/99-99-19-02-01-15 and “On accounting of means of transport transferred to the needs of the Armed Forces of Ukraine” of 24.02.15, № 3821/6/99-99-19-02-02-15 clarified the tax accounting of means of transport of private enterprises transferred to the needs of the AFU.
Thus, according to the tax authorities, it becomes clear that as the means of transport are not used in the business activity of the taxpayer in the process of mobilizing, they are to be considered as nonproductive fixed assets. Therefore, accrued depreciation should be adjusted on them in the tax profit accounting.
In addition, when transferring of means of transport to AFU, there is no passing of ownership on it, and therefore it is not necessary to charge VAT obligation. Also there are no any reasons for the adjustment of the VAT tax credit, according to inspectors.
If the transport is not returned to the company and compensated its value after the mobilization, it is considered to be the payment for such means of transport. In this case, the means of transport are recognized as sold for budgetary funds and on the date of receipt of such funds the VAT liabilities should be recognized.
The State Fiscal Service of Ukraine on its website explained the procedure for filling the tax calculation of income amounts accrued (paid) for the benefit of individuals and the amounts of withheld tax from them (f. № 1DF) in respect of mobilized workers for the II quarter.
Thus, if in the second quarter the employer will receive compensation from the state budget within the average wage of mobilized one for March (January, February) 2015, it should be reflected based on income “128” in f. № 1DF. But everything depends on whether the average wage would be charged further or not for mobilized workers. Therefore:
1. If the mobilized worker would be demobilized in the end of March (i.e., average wage would not be accrued during military service in the II quarter), in section I of f. № 1DF for the second quarter on the mobilized worker based on income “128” it should be reflected:
- in box 3a “The amount of accrued income” - a dash (amount of accrued compensation within the average wage for March was reflected in the I quarter);
- in box 3 “The amount of paid income” - the amount received from the budget and the compensation paid within average wage for March;
- in boxes 4a and 4 – dashes (compensation is not the subject to the income tax).
2. If in the II quarter the compensation would be accrued to the mobilized worker within average wage, in section I of f. № 1DF for the second quarter on the mobilized worker based on income “128” it should be reflected:
- in boxes 3 and 3a - the amount of accrued, received and paid compensation of average wage to mobilized workers for the April - June;
- in boxes 4a and 4 – dashes (compensation is not the subject to the income tax).
The dashes should be put in section II of f. № 1DF for the second quarter in line “The war tax”. Because, the compensation within average wages of mobilized workers is not the subject to the war tax.
