Taxes
Value Added Tax
The Ministry of Revenues and Duties of Ukraine in its letter of 26.05. 2014, № 9358/6/99-99-19-03-02-15 reminded of the procedure of VAT taxation of vouchers for employees and their families sanatorium-and-spa treatment.
The vouchers at the expense of social insurance are not subject to VAT and are not reflected at the company tax accounting at the moment of vouchers receipt as well as at the moment of vouchers issue to the employees.
But the vouchers at the expense of the company are subject to VAT. Thus, the company gets the right to the VAT tax credit entitlement when the voucher is purchased, and when the voucher is delivered to the employee, the tax liability is charged on the bases of voucher agreed cost (p. 188.1, p. 198.3 of the Tax Code of Ukraine – hereinafter TCU).
According to pp.197.1.6 of TCU the VAT exempt vouchers for sanatorium-and-spa treatment within the territory of Ukraine, rest and recreation for children under 18, disabled people, disabled children.
The President of Ukraine signed the Laws, which made amendments to the Customs and the Tax Codes of Ukraine regarding the exemption from import duties and VAT of personal protective equipment and medicines for the ATO needs.
Thus, the subjects, exempted from import duties and VAT and imported in Ukraine are:
- helmets, body armor, manufactured according to military standards or specification requirements and materials (threads, fabrics) required for the medical supplies manufacture;
- medicines and medical supplies, which are intended for health care providers and ATO participants use as well as for medical care to individuals who have been wounded, contused wound or other injury.
The Ministry of Health of Ukraine in its letter “On the application of a reduced rate of value added tax on medical products as well as determining of products belonging to the category of “medical device” of 03.07.14, № 18.02-05/10/1050-14/3755/18333 specified the criteria, which the medical device should meet, to apply 7% VAT rate when it is imported and delivered. The authority emphasized: the medical devices should meet European Union approach, which is reflected in Council Directive 2006/112/ EU On the common system of value added tax. The pharmaceuticals, medical equipment and other devices are included into the medical devices according to the Directive.
Other taxes and duties
The Ministry of Revenues and Duties of Ukraine in its explanation reminded that for recalculation of tax liability due to changes of rates and subject of taxation of April 1, 2014 according to the Law № 1166 the legal entities should submit specifying declarations on real property tax, which are different from the land parcels, till 30 July 2014 (inclusive).
Whereas the experts of the Ministry of Revenue in integrated tax advice № 263 and in other explanations refers to the Order of 05.12.2013, № 766, the new declaration form is approved by this Law (the new declaration form should be applied to the report for 2015 according to p. 46.6 of the Tax Code of Ukraine), it is useful to submit the new form of the specifying declaration for recalculation.
Mobilization and ATO
The Cabinet of Ministers of Ukraine approved the procedure of financial support of the national defense forces needs (Armed Forces) at the expense of charitable donation of individuals and legal entities by the Resolution of 02.07.2014, № 222.
With the purpose of effective use of charitable donations and to enable the public to supervise the donations expenditure according to p.10 of the Order № 222 the Ministry of Defense is required to:
- promulgate the information, within 10 days at the end of each month, on its official website, about the charitable donations volumes, which are received on the own accounts, their use together with an indication of the total charitable received and used donations, the cost of specific procurements, their volumes for each position and the main quality characteristics ;
- promulgate the summary information, quarterly, on its official website, about the charitable donations volumes which are received by the Ministry of Defense, military units, institutions (including in-kind), and to indicate the directions of the charitable donations use
The Ministry of Revenue and Duties of Ukraine in its letter of 01.07.2014, № 15472/7/99-99-25-01-17 reported that the tax liabilities of taxpayers in the antiterrorist operation area might be deferred.
The taxpayers in the antiterrorist operation area should apply to the regulatory authorities for the purpose of deferral or instalment of monetary obligations plan. The documents that should be submitted to the Revenue and Duties authority by the taxpayers at their registration place for this purpose are:
- written application where the amount, terms and charge payment periods are specified and needed to be deferred. Thus, the deferred amounts repayment schedule should be made and submitted;
- economical substantiation, which consists of the list of circumstances, that led to the incurring of tax debt and its accumulation, financial analysis of the company and the taxpayer incomes forecast.
The supervisory authority should decide whether upon to satisfy or reject the deferral (instalment payment) monetary obligations plan of the taxpayer within 30 days of receipt of the application.
It is important that during the whole deferral agreement period, the fines and penalties are not charged to the deferral monetary obligations of the payer.
In addition, the tax debt, incurred due to force majeure, could be written off as a bad debt upon the request of the taxpayer. In this case the bad debt should be documented.
The Verkhovna Rada of Ukraine approved the Decree of the President of Ukraine “On the partial mobilization” of 21.07.14, № 4320а.
The mobilization is going to be held in 24 regions of country and in Kyiv during 45 days from the date when the specified Decree of the President of Ukraine enters into force.
The local government through the municipal government and involving the enterprises, institutions and organizations of all forms of ownership organize and provide in the prescribed manner:
1) timely notice and arrival of the citizens (military reservists) who are called up for military service as well as the arrival of military machines at assembly points and military units;
2) temporary allocation of buildings, lands, facilities, equipment, and other resources, provision of services to the Armed Forces of Ukraine, the National Guards of Ukraine, other military units of Ukraine according to the mobilization plans.
The State Fiscal Service of Ukraine in its explanation of 18.07.14 “The single tax payment and the Single Contribution for STS taxpayers under conditions of mobilization” emphasized that in case of the tax debt on the single tax, when the 1 and 2 groups of single tax payers are on military trainings, such dept is considered to be bad debt and is subject to be withdraw according to the Procedure of bad debt tax withdrawing. Of course, it is only possible provided that such taxpayers don’t do business activity and don’t employ the hired labor in the specified period. At the same time the Fiscal Service explains that the Single Tax payers-individuals are exempt from the Single Contribution for themselves exclusively for the period of their military trainings, provided that:
- failure of business activity during this period;
- failure to obtain incomes;
- providing of the supporting documentation from the military enlistment office, where the period of the military trainings of entrepreneurs is specified.
Control and Responsibility
The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On the moratorium on the foreclosure of properties of the citizens of Ukraine, provided as the security for foreign currency credit” of 03.06.2014, № 1304-VII. The Document enacts the moratorium on the compulsory acquisition of movable and real property of the borrowers (debtors) with the debt service obligation under the contracts of consumer’s foreign currency credit before the effective date of the legislation on the terms and procedures of conversion of obligation under the contracts of consumer credit of foreign currency into hryvnia.
The Verkhovna Rada of Ukraine adopted the Law “On Amendments to the Law of Ukraine “On the basic principles of state supervision (control) of economic activity”, the intervention of officials of regulatory authorities in business activity is limited by the Law.
In particular, as it is provided by the Law:
1) it is prohibited for regulatory authorities to carry out a scheduled inspections of one business entity during one calendar year;
2) it is prohibited to carry out the inspection of business entities due to the anonymous statements, other unsubstantiated statements and the legal entities appeals, which often can be used for pressure on the business to get rid of the competitors;
3) it is prohibited to confiscate the original business, accounting and other documents of business entities as well as computers and their parts.
In addition, the list of relations, which are not the subject to this Law, is essentially reduced. This refers to exchange control, customs inspection at the border, the state export control, enforcement of the budget legislation, banking supervisory etc.
Accounting and Reporting
The State Treasury Service of Ukraine in its letter of 28.03.2014, № 17-08/320-7304 explained how to identify the accounts of budgetary accounting using the accounting limit 2500 UAH and depending on the code of economic classification of expenses (hereinafter – CECE):
-to non-current tangible assets of low cost are included the items to the value of no more than 2 500 UAH (VAT excluded), with the term of more than one year use (scenic-stage funds to the value no more than 5 000 UAH per unit ), which are posted to the 11 account “Other non-current tangible assets”, for accounting and generalization of the information on the presence and movement of other intangible assets that are not reflected in the set up of accounting entity in the 10 account “Fixed Assets”;
-if the expenses are carried out by CECE 2200 “Use of goods and services”, so that the purchased supplies and items are not accounted on the 10 account “Fixed Assets”;
- if the expenses are carried out by CECE 3100 “Purchasing of fixed assets”, which provide for the purchase or establishing the assets on its own, which are referred to the fixed assets or other non-current tangible assets according to the legislation, then they are on the 10 account “Fixed assets” and the 11 “Other non-current tangible assets”.
The Ministry of Revenue and Duties of Ukraine approved by the Order of 30.12.2013, № 866 the new report forms of tourist tax and parking lots charges, which entered into force from July 1, 2014. In particular:
- Tax declaration of parking lots charges as well as the procedure of its filling;
- Recalculation of tax liability on parking lots charges. Tax declaration annex of parking lots charges as well as the procedure of its filling;
- Tax declaration of tourist tax as well as the procedure of its filling;
- Recalculation of tax liability on tourist tax. Tax declaration annex of tourist tax as well as the procedure of its filling;
We remind you that it should be reported using the new report forms up tp 11.08.2014.
The Ministry of Finance of Ukraine in its letter of 17.12.2013, № 31-08410-07-10/36519 answered the question if Ukrainian company, which reports under IFRS, could prepare financial statements in the currency that was not Ukrainian currency unit.
The reason for this question is that the business entities could prepare financial statements in multiple currencies and this is indicated in IAS 21. At the same time, it is clearly determined by the Accounting Law (hereinafter - the Law) that the companies maintain the accounting records and prepare financial statements in the currency unit of Ukraine.
Department experts reported that the Accounting Law applies to all legal entities, corporatized according to the Law of Ukraine, regardless of their business legal structure and patterns of ownership, who were obliged to maintain accounting records and file financial statements in accordance with the Law.
According to the Law, IFRS are applied for the preparation of financial statements if they are compatible with it and promulgated officially on the website of the Ministry of Finance of Ukraine.
In accordance with Article 5 of the Law, the companies maintain the accounting records and prepare financial statements in the currency unit of Ukraine.
According to Article 99 of the Constitution of Ukraine, the currency unit of Ukraine is hryvnia.
Thus, the companies, which apply IFRS, maintain the accounting records in hryvnias as it is provided for by the Law.
The National Securities and Stock Market Commission in its letter of 17.03.2014, № 12/04/4650/НК considered when the submitting of the consolidated financial statements is not necessary.
According to the Accounting Regulations 2, the consolidated financial statements should not be submitted by the subsidiary if there are all following conditions:
1) if it is another company subsidiary (wholly or partly belongs to the another company);
2) owners of uncontrolled interests are informed about it and are content with it;
3) if it is not issuer of the securities;
4) the subsidiary company prepare the consolidated financial statements, which is available for public.
If the subsidiary company intends to take advantage of an exception from the requirements for the preparation of the consolidated financial statements, it should obtain in advance the written consent of all owners of uncontrolled interest. That is, the owners of uncontrolled interest should be informed in written form that the consolidated financial statements would not be prepared by the subsidiary company, and they should provide in its turn the written consent to apply an exception by the subsidiary company.
The State Statistics Service of Ukraine approved the new state statistical monitoring forms on agricultural statistics by the Order of 02.07.2014, № 206, viz.:
- annual:
№ 21-заг “Implementation of agricultural products” and № 50-сг “Leading economic indicators of work of agricultural companies”, № 10-мех “Availability of agricultural equipment in agricultural companies”, which are implemented from the report of 2014;
№ 4-сг “Planted areas of agricultural plant for yield”, № 4-сільрада council “Planted areas of agricultural plant in the households of village council area for yield 20_” - report on the crops for yield of 2015;
- periodical:
№ 21-заг (monthly) “Implementation of agricultural production in January - ____20__”, № 11- заг (quarterly) “Supply of livestock and poultry for processing companies in January - ___ 20__” - report for January 2015;
- sampling observation of population agricultural activities in rural localities:
№ 01-СГН “Questionnaire basic interview” and № 02- СГН “Questionnaire monthly interview” – from May 1, 2015.
Labour and Salaries
The Social Insurance Fund on temporary disability, by the Resolution of 30.05.2014, № 18 made the amendments in the Procedure of receiving of sanatorium-and-spa treatment by the insured persons and members of their families, this treatment is paid at the expense of the Fund.
The following norms garner the attention among the innovations. If the employee was given a voucher at work with the partial pay of the cost (one part was paid by The Social Insurance Fund, the another part was paid by the employee), and the employee did not use it, so his part should be returned to such employee. If the employee used the voucher partial, so the money should be returned in proportion to unused part of voucher.
The Cabinet of Ministers of Ukraine adopted the Resolution “On approval of the pension payments scheme and social services to the citizens of Ukraine who live in AR Crimea and Sevastopol city” of 07.02.14, № 234. Officials reported how to receive the pensions and social services to Ukrainian citizens who lived in the Crimea and did not receive pensions and social services from the relevant pension authorities of the Russian Federation.
In particular, you should apply to one of the territorial administrations of the Pension Fund of Ukraine (hereinafter - territorial administration) with an application for a pension according to the legislation of Ukraine indicating the place of residence (registration) and the passport of the citizen of Ukraine (Ukrainian foreign passport).
The documents transfer by the representative, who should submit his identifying document and confirming his appointment document (notarized copy), is permitted. The authenticity of signature on the application must be notarized.
Further the territorial administration demands the pension case from the Russian Federation, and after the receipt of the case the territorial administration starts pension payments (social service) from the date of pension payment stop at the previous residence.
Pension payments and social service are carried out monthly by the postal transfers including international, according to place person residence in the Crimea. The payment could be made through the banking accounts of entities-receivers by their request.
The territorial administration takes upon itself the pension delivery charges (social services).
The pension transfer to the persons is held in the case of annual submission of the document, which certifies the fact that the person is alive, or the passport of the citizen of Ukraine (Ukrainian foreign passport) to the territorial administration till 31 December.
Financial Services Market
The National Bank of Ukraine updated the Regulation on electronic money by the Order of 19.06.2014, № 378.
In particular, the bank has the right to provide to its clients such financial services as:
- electronic money transmission;
- implementation of exchange transaction of electronic money;
- provision of recharged funds by electronic money of electronic devises;
- acceptance of electronic money in exchange for cash / non-cash funds.
In addition, the users have the right to use electronic money for payments settlement with the help of electronic device, which is charged and held by the user, in the amount up to UAH 35000 during the calendar year. The electronic money, which is repaid at the user’s request during a calendar year, is not included into the calculation of this amount.
Users-individuals have the right to use electronic money for goods payment as well as electronic money transfer to other users-individuals. Users-individuals have the right to transfer electronic money to other users-individuals using prepaid cards in the amount up to UAH 500 per day and not more than 4000 hryvnias during one month.
Users - business entities are entitled to receive electronic money only in exchange for non-cash funds. Users − business entities are entitled to use electronic money only for goods payment.
The National Bank of Ukraine made the amendments to the Rules of implementation of transfers of business entities payments outside Ukraine and in Ukraine for current non-commercial transactions and their payments in Ukraine (Resolution of 29.12.07, № 496). Thus, the requirement concerning the mandatory sale of foreign exchange earnings from the outside of Ukraine for individuals on interbank market is cancelled. Therefore, the requirement is cancelled.
According to this requirement the banks carried out the mandatory sale of foreign exchange that arrived to the individuals (residents and non-residents) in the amount equal or exceeded the equivalent of UAH 150 thousand per month. However, the conditions for opening a bank account in excess of the transferred amount to the equivalent of UAH 150 thousand are remained.
The National bank made the amendments to the Decree “On the terms changes of exportimport goods operation settlements and implementing of mandatory sale of foreign exchange” of 12.05.14, № 270 to improve the transactions way from the mandatory sale of foreign exchange earnings in favour of the legal entities. Thus, the norm is set, it is regarding the release of the mandatory sale of incomes in foreign exchange to the correspondent accounts of non-resident banks opened with the authorized banks, and the incomes on the transaction of deposits placement by the non-resident banks on the accounts of the authorized banks.
The National Commission for the State Regulation of Financial Services Markets with the Ministry of Agrarian policy of Ukraine (the Decree of the National Commission for the State Regulation of Financial Services Markets of 21.05.14, № 1501, the order of the Ministry of Agrarian Policy and Food of Ukraine of 21.05.14, № 184) approved the terms of corps insurance and further yield of autumn sown cereal with the government support from the agricultural risks for the entire period of cultivation.
Along with these conditions are approved also:
- standard insurance rates;
- a standard form contract of crops insurance and further yield of autumn sown cereal with the government support from the agricultural risks for the entire period of cultivation;
- inspection certificate form of crops;
- instruction on filling the inspection certificate of crops etc.
Securities
The Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Law of Ukraine “On State Budget of Ukraine for 2014” of 17.06.2014, № 1333-VII.
Thus, the Law on State Budget for 2014 is supplemented by the norm, the Cabinet is entitled by this norm to implement the domestic government bonds issue in excess of previously established volumes with the bond swapping ability for the finance bills, which are issued by the Depositors Insurance Fund with corresponding adjustment of the government debt limit.
In this case the financing corresponding figures of the State budget in excess of the previously established volumes are increased on the volume of domestic government issued bonds by the Ministry of Finance.
The National Bank of Ukraine in its letter of 27.01.2014, № 28-310/3299 provided the explanation of necessity to obtain the individual licenses in some cases.
1. Foreign bills of exchange
The NBU explained that the transfer of foreign exchanges by the residents for the benefit of the non-residents to purchase the bills of exchange is not related to the investment activity, therefore it is required to obtain the individual licenses of NBU according to the active currency legislation.
2. Ukrainian securities for hryvnias
The reverse situation is developed concerning the account dealing (except bills) for hryvnias. The individual license of the National Bank is not required for such transactions using the investments accounts in UAH.
However, the general license for foreign-exchange transactions is required when the dealers in securities carry out the broker activity, provided that the title transfer of securities (including bills) from the resident to the non-resident or vice versa.
International economic activity
The Ministry of Revenues and Duties of Ukraine in its clarification answered the question if the conclusion of agreements between the business entities, registered in Ukraine and Autonomous Republic of Crimea, was considered to be the foreign economic policy.
The resolution of the Verkhovna Rada of Autonomous Republic of Crimea “On holding of general Crimean referendum” of 06.03.2014, № 1702-6/14 is ruled unconstitutional according to the judgement of the Constitutional Court of Ukraine of 14.03.2014 г. № 2-рп/2014.
The resolution № 1702-6/14 is ruled unconstitutional and ceased to be in force from the day of the Constitutional Court of Ukraine judgement № 2-рп/2014.
Thus, the state registration of business entities, which are registered according to the Law on state registration of legal entities and individuals - entrepreneurs and registered in the Crimea, is valid.
Therefore the conclusion of agreements between the business entities, registered in Ukraine and Autonomous Republic of Crimea, is not considered to be the foreign economic policy.
The Ministry of Economic Development of Ukraine by the Order of 06.06.2014, № 668 amended the procedure of document and issue of import licenses, export of ethyl, brandy and fruit alcohol, concentrated grape ethyl alcohol, concentrated fruit ethyl alcohol, alcoholic beverages and tobacco products.
The list of documents for the receipt of import and export alcohol licences is reduced by the Order.
The business entity should file only two documents to obtain import and export alcohol licenses:
- application for obtaining of import licences, export of ethyl, brandy and fruit alcohol, concentrated grape ethyl alcohol, concentrated fruit ethyl alcohol, alcoholic beverages and tobacco products;
- remittance advice copy (marked by the bank for payment) on the transfer of annual payment for the licence into the local budget.
Other things
The Cabinet of Ministers of Ukraine approved the Regulations on the State Fiscal Service (hereinafter – SFSU) by the Resolution of 21.05.2014, № 236.
SFSU reports directly to the Cabinet of Ministers of Ukraine.
The parts of the State Fiscal Service are: taxation authorities and customs services, also SFSU carries out the state policy of unified social tax managing.
The new State Fiscal Service will not execute the standard-setting function in contrast with the Ministry of Revenues and Duties. Only the orders drafting of the Ministry of Finance regarding to the sphere of SFSU activities as well as the forms drafting of the tax declarations (calculations), reporting and other documents will be within the competence of SFSU.
The Cabinet of Ministers of Ukraine founded the State regulatory service of Ukraine. The corresponding Resolution 'On State Regulatory Service of Ukraine' of 30.04.2014, № 252 entered into force on 16 of this July.
The State regulatory service has emerged as the central executive authority in Ukraine since July 16, which activity is directed and coordinated by the Cabinet of Ministers of Ukraine according to the document. The State Committee on business has been liquidated.
Authority and responsibilities of the former department are divided now between the newly formed State Regulatory Service and The Ministry of Economic Development.
Thus, the State Regulatory Service of Ukraine is responsible for implementation of the state regulatory policy, the state policy on licensing, the regulatory approval system and the supervision (control) in the sphere of business activity, but the authority and responsibilities regarding the issues of development of small and medium enterprise are vested in The Ministry of Economic Development.
The Ministry of Revenue and Duties of Ukraine in its letter № 16051/7/99-99-18-02-01-17 reminded that the Law of Ukraine “On Amendments into Certain Legislative Acts of Ukraine on simplification of the procedure of state registration of the business activity termination of self-employed individual by the declarative principle” of 13.05.2014, № 1258-VII entered into force from 08.07.2014, the procedure of state registration of the business activity termination of self-employed individual by the declarative principle is simplified by this Law.
In particular, state registration of the business activity termination of self-employed individual is conducted by the state registrar not later than the next business day of the date of receipt of the entrepreneur’s registration form for the state registration of the business activity termination or the judgement on the business activity termination of self-employed individual without the Tax Clearance Certificates of Revenues and Duties authority and the certificate of no arrears payment of the unified social tax for compulsory state-sponsored social insurance.
The Ministry of Justice of Ukraine established by its Order “On Amendments to the Requirements for writing the name of a legal entity or his separate division” of 07.07.14, № 1067/5 that henceforth the education establishment should have a unique name, the name must contain its type (kindergarten, school, gymnasium, lyceum, collegium, college, institute, conservatory, academy, university, etc.) and business legal structure.
The personal name of a public association can contain the word “association”.
The name of a sports federation should contain a word defining the kind of sport it develops.
The name of the disabled sportsmen federation should contain a word indicating a type of disability.
The word “lottery” and collocations “government lottery”, “national lottery”, “Ukrainian lottery” in any case or context is not permitted in the name of the legal entity that has not a status of operator/distributor of the national lottery.
