The Cabinet of Ministers of Ukraine by Resolution “On approval of procedures for suspension of registration of tax invoice/adjustment calculations in the Unified Register of Tax Invoices” No. 1165 of December 11, 2019 approved new: Procedure for suspension of TI/AC registration in the Unified register of tax invoices and Procedure for consideration of a complaint regarding the decision on refusal of registration of TI/AC in URTI, as well as a number of annexes thereto concerning the mechanism of blocking TI/AC (Risk criteria: payers and transactions, List of indicators of positive payer history, VAT payer table, etc.).
All this will take effect from February 1, 2020. From the same date, the resolution of the Cabinet of Ministers No. 117 of February 21, 2018 and the old blocking rules shall cease to be valid. However, the Decision-making procedure on registration refusal of registration of TI/AC in URTI (approved by the order of the Ministry of Finance No. 520 of December 12, 2019) will continue to be effective after the CMU Resolution No. 1165 comes into force.
In general, these new “blocking” Procedures and documents are not too different from the old ones, but some points need to be taken into consideration.
1. Signs that screen TI/AC before monitoring:
- a sign of “tax burden” the amount of VAT paid in the last 12 months increased from 400 thousand to 1 million UAH;
- another anti-blocking feature was added – the product/service with TI/AC was specified in the Payer Table. The Table should now be taken into account by fiscal authorities before the monitoring of TI/AC.
2. The criteria for payer riskiness are almost the same and, unfortunately, the criterion of “availability of information” from taxpayers regarding the “riskiness of the transaction” has not disappeared. For “risky” payers the possibility is documented to refute their riskiness and the regional l commission (this is its competence) must respond within 7 days to such documents. In case of delayed decision, the risk should be automatically removed from the payer.
3. The indicators of “positive history” of the payer (they allow to avoid the criteria of risky transactions) were significantly narrowed:
- the volume of deliveries to one buyer is reduced from 150 to 50 thousand UAH, but at the same time the volume of deliveries per month should not exceed 500 thousand UAH, and the manager should not hold more than three positions;
- two delivery volumes were canceled and the delivery rate of one product/service code was changed from 20% to 100%;
- the residual value of fixed assets will now have to exceed UAH 5 million (now – UAH 1 million);
- payment of a single social contribution per worker – exceeding the SSC of the minimum wage by more than 2 times (now – 1.5) and the number should be at least 5 people (new);
- the total amount of taxes last year should exceed UAH 10 million (now – UAH 5 million).
4. Worsened the risk criterion for transactions related to the proportion of “suspicious” goods in the Fiscal List (this List must be approved by a separate STS order and published on its website). Now the list items in the total difference between purchases and sales of goods should be more than 50% (now – more than 75%).
5. All decisions on registration/refusal of registration of TI/AC will be made by regional commissions, the Central Commission will only consider complaints against the decision of regional commissions on refusal of registration of TI/AC.
The State Tax Service of Ukraine through the Office of Large Taxpayers has stated whether the medical establishments with improved service is exempt from VAT payment. Sub-item 197.1.5 of the TCU provides for exemption from VAT of operations on the provision of health services by health institutions licensed to supply such services, as well as the provision of services by rehabilitation institutions for persons with disabilities and children with disabilities that have a license to supply such services in accordance with the law, except for the services specified in subitems (a) to (s) of the subitem 197.1.5 TCU (including subparagraph “l” of medical care of citizens at their request in medical institutions with improved service).
That is, services which are not exempt from VAT, including services for medical care of citizens at their request in medical institutions with improved service.
The very concept of “improved service” is not legally defined. However, this term should only apply to healthcare and outpatient health care facilities where, in addition to medical and essential household equipment, patients' wards are equipped with additional household appliances to increase the comfort of stay, and patients are provided with additional non-medical services that are paid for at the expense of patients. At the same time, medical care in such institutions and wards should be provided at the request of the patient, and not at the appropriate direction of the doctor.
That is, the use of any medical equipment or methods of providing medical care cannot be considered as improved service.
At the same time, equipment for lounges and other common areas with refrigerators, televisions, upholstered furniture, blankets, etc., both in ambulatory and in-patient care establishments and departments, cannot be treated as improved service.
Therefore, health care services for citizens at their request in health care facilities with improved service are not exempt from VAT.
The State Tax Service of Ukraine through the Office of Large Taxpayers has reminded that the Ministry of Finance of Ukraine by the Order “On Approving Changes to Some Methodological Recommendations on Accounting” No. 6 of January 14, 2020, approved the changes to some methodological recommendations on accounting. The main purpose of the amendments is to align the provisions of the Method Recommendations with the provisions of the applicable law.
The tax officials briefly commented on the essence of the changes:
Recommendation method for fixed assets accounting for No. 561:
- the rule that the primary (overestimated) value of an fixed asset object can be increased by the amount of indexation is excluded from the tax legislation;
- it is defined that the liquidation value will be determined by the commission, created by the order of the head of the enterprise, when the object is put into operation;
- it is specified that when creating a trust fund for the restoration of the fixed assets the balance of unused trust fund to be returned to the lessor, is reflected in the debit account 48 “Target financing and receipts” and credit subaccount 685 “Settlements with other creditors”.
Inventory Method 2 does not include:
- the requirement to indicate the place of drafting in the procurement act;
- the request for the procedure for displaying the amount of VAT, which is calculated when the stocks are received and disposed of;
- the accounting entry under the operation “Write-off of inventory losses incurred as a result of an emergency” is excluded from Annex 3.
Methods of intangible assets accounting No. 1327 are not applied by banks.
Methods of financial expenses accounting No. 1300 do not apply to micro-enterprises, small enterprises, non-business societies, enterprises that maintain a simplified accounting of income and expenses in accordance with tax legislation, as well as to representations of foreign entities.
Methods of accounting of joint activities without the creation of a legal entity No. 1873 are not applied by budgetary institutions, banks, and entities that, in accordance with the law, prepare financial statements under IFRS.
Method of recommendation concerning accounting policy No. 635
Class 9 Accounts “Activity expenses” are mandatory for all businesses with the ability to open Class 8 Accounts “Expenses by elements”.
The State Labor Service of Ukraine explained peculiarities of payment of severance pay.
According to Art. 44 of the Labor Code in the event of termination of the employment contract on the grounds specified in item 6 of Art. 36 and item 1, 2 Art. 40 of the Labor Code, the employee is paid a severance pay of not less than the average monthly salary.
According to paragraph 1 of Art. 40 of the Labor Code, an employment contract concluded for an indefinite period, as well as a fixed-term employment contract before the expiration of its term may be terminated by the owner or authorized body in case of changes in the organization of production and labor, including liquidation, reorganization, bankruptcy or re-profiling of the enterprise, institution , organization, downsizing or staff reduction.
According to Art. 116 of the Labor Code during the dismissal of the employee payment of all amounts belonging to the enterprise, institution, organization, is made on the day of dismissal. If the employee did not work on the day of dismissal, such amounts should be paid no later than the next day after the dismissed employee submits the calculation requirements. The owner or authorized body must notify the employee in writing of the amounts due to the employee at the time of dismissal prior to the payment of such amounts.
Labor disputes on the statements of employees regarding the application of labor law, which in accordance with the current legislation were previously resolved by the owner or authorized body and the elected body of the primary trade union of the enterprise, institution, organization within the limits of the rights granted to them (paragraph 5, part 1 of Art. 232 of the Labor Code) are considered directly in the courts.
After all, according to Art. 124 of the Constitution of Ukraine justice in Ukraine is conducted exclusively by the courts. The delegation of the function of the courts, as well as the assignment of these functions to other bodies or officials is not allowed. The jurisdiction of the courts extends to all legal relationships that arise in the state. Court decisions are made by courts in the name of Ukraine and are binding throughout Ukraine.
