Legislation Overview (September 2016)

Taxes

VAT

The State Fiscal Service of Ukraine in its letter “On the procedure of rounding the indexes in the column “Price of provision of unit of goods/services excluding VAT” of tax invoice” of 10.08.16, № 17270/6/99-99-15-03-02-15 reports that it is not limited the number of characters that indexes of group 6 “Number (volume, amount)” of tax invoice can contain after the decimal point. The necessary number of characters is considered to be that is sufficient for the proper calculation of cost indexes in lines V−IX of tax invoice.

The correct calculation of cost indexes of tax invoice is considered to be when as a result of the product of columns 6 and 7 (quantity and price) is a number of more than two characters after the decimal point and rounding to the second character after decimal point does not raise such a sign to “1” (one).

It should be recalled that all columns of tax invoice that have cost indexes are to be filled in hryvnias with kopecks.

The State Fiscal Service of Ukraine in its letter “On the procedure of formation of the tax credit” of 09.08.16, № 17186/6/99-99-15-03-02-15 explained that VAT payers had the right to form a tax credit under a tax invoice registered in URTI in the form, which became invalid at the date of registration. If the registration of such a tax invoice is not denied for theseller, the old form of tax invoice cannot be the only grounds for non-recognition of tax credit for the buyer under this document.

A new form of tax invoice was approved by the Ministry of Finance of Ukraine “On Approval of tax invoice form and the procedure for filling the tax invoice” of 31.12.15, № 1307 and it was implemented on 1 April 2016.

The State Fiscal Service of Ukraine in its letter “On the application of the cash method of tax accounting of VAT” of 20.07.16, № 15706/6/99-99-15-03-02-15 explained how the parties should determine tax liabilities and tax credit under counter deliveries of coal production. Netting of counter claims is considered to be another kind of compensation for the cost of delivered (or to be delivered) goods, therefore such transactions apply to the cash method of value added tax (hereinafter − VAT).

Thus, the tax liability of the party are accrued when receiving the coal from the contractor, and the right to a tax credit arises on the date of shipment of goods within the netting (in the presence of a registered tax invoice).

It should be recalled that there is introduced the cash method for VAT payers that supply coal and/or the products of its enrichment of commodity items 2701, 2702, 2703 00 00 00, 2704 00 according to UCC FAA, temporarily, from 01.01.16 to 01.07.17.

The State Fiscal Service of Ukraine by its letter “On the application of the normal price in the determination of the VAT base in the course of documentary audits” of 15.08.16,  № 27600/7/99-99-14-02-01-17 explained how to justify the discrepancy between the normal price for manufactured products /provided services and the market price. This allows controllers to use the latter as a minimum basis for the calculation of VAT.

In the scheme of the evidence the important place will take the evidence of the official manufacturer of the possession of information on market prices of products /services and conscious documenting of their sale at significantly reduced prices to fictitious “mediator” for the purpose of tax evasion and taking possession of the funds.

Controllers also will be interested in the legal and factual dependence of parties (individuals relatedness) and the failure of a mediator or other counterparty of a producer (in the chain between the mediator and the manufacturer) of business activity.

The State Fiscal Service of Ukraine in its letter “On procedure for accrual of tax liabilities when free supply of goods/services” of 11.08.16, № 17515/6/99-99-15-03-02-15 supported the trend towards accrual only one VAT − supplying − during the free transfer of goods and services. However, the tax authorities do not allow accruing compensating tax liabilities under sub-para. 198.5 of the Tax Code of Ukraine if free delivery is “within economic activity”. But each taxpayer should determine the identity to economic activity of free supply independently.

The State Fiscal Service of Ukraine in its letter “On peculiarities of preparation, registration of tax invoices in the Unified Registry of tax invoices within the framework of contract agreement” of 30.08.16, № 14970/5/99-99-15-03-02-16 informed: if under the terms of contract agreement, the works are paid by not the customer, but the other person, then none of VAT payers is not entitled to a tax credit.

Tax officers explained that in this case the executor prepares and registers the tax invoice in URTI for the recipient (customer) of works. Since he/she does not pay for work performed, he/she is not entitled to a tax credit.

The other party, though makes payment for work performed, is not their customer, and so does not get a tax invoice from the executor for the reflection of the tax credit.

The State Fiscal Service of Ukraine in its letter “On the application of the norms of the Tax Code of Ukraine in the implementation of the transactions of supply of goods/services, financed by the international technical assistance” of 30.08.16,  № 18757/6/99-99-15-03-02-15reported that for the domestic supply and imports of goods and services, financed by the international technical assistance provided in accordance with international treaties, it was provided the benefit on the value added tax (hereinafter - VAT) (paragraph 197.11 of the Tax Code of Ukraine; hereinafter - TCU). Controllers explained that it is not necessary for the provider - the side that sells goods to the executor of the project - to accrue a conditional VAT on such goods/services. In this case, para.198.5 of TCU is not applied.

Also, the controllers noted: the price in the contract with the contractor of the project for the supply of goods for international technical assistance should be indicated “Without VAT”.

Corporate Income Tax

The State Fiscal Service of Ukraine in its letter “On crediting of sums of paid advance contributions on dividends in reduction of tax liabilities on income tax” of 30.08.16, № 18734/6/99-99-15-02-02-15 reported: in line 16.3.1 wage applications to the Declaration № 897 (after making the amendments in its form – line 16.4.1 of wage applications) for the first quarter, half-year period, three quarters, a year, should be reflected paid advance payments in these periods when the payment of dividends, which are accounted in for a decrease in the accrued amount of tax for the relevant reporting period (first quarter, half-year period, three quarters, a year).

Thus, the tax authorities are not against the fact that quarterly payers rank paid dividend advances in a certain period of intra-annual on account of income tax accrued during the same period. In this case, this approach can be described as a very loyal, because sub-paras. 57.11.2 of the Tax Code of Ukraine (hereinafter − TCU) note that the crediting occurs only on the amount of income tax declared in the tax return for the reporting (tax) year.

The State Fiscal Service of Ukraine by its letter “On reduction of corporate income tax in the amount of tax on immovable property other than land plot” of 06.06.16, № 19570/7/99-99-15-02-02-17 informed: quarterly income tax payers may take into account in a reduction of income tax for the calendar quarter, half, three-quarters of a year, the amount of tax on immovable property other than land plots, calculated for this period. Annual payers should take into account the accrued amount of property tax in reduction on income tax for the year.

Thus, according to tax authorities if the income tax payer in the reporting period did not receive income or its sum less than the amount of property tax, unaccounted balance of the latter is not transferred to the income tax reduction of next reporting periods.

The State Fiscal Service of Ukraine in its letter “On approval of the form and Procedure for the income tax calculation of non-residents, who engaged in activities in Ukraine through a permanent representation” of 02.09.16, № 29468/7/99-99-15-02-01-17 reported that since declaring for 3 quarters of 2016 permanent representations of non-residents, the income tax calculation should be submitted under the updated form and manner approved by order of the Ministry of Finance of Ukraine of 13.06.16, № 544. Thus, before 09.11.16 inclusively, such business entities that report quarterly should prepare and submit an updated tax and profit reporting.

It should be noted that in the new calculations, in particular, there were the changes in lines: “calculation of advance payment of income tax”, “error correction”, and also there was introduced a new Annex “Information on income (profits) exempted from tax under an international treaty of Ukraine”.

The State Fiscal Service of Ukraine in its letter “On the reflection in tax accounting for income tax of transactions for formation of provisions on the payment of pension obligations on favourable terms for working employees and non working employees who earned favourable length of service at the company until they reached 60 years of age” of 29.08.16, № 18673/6/99-99-15-02-02-15 explained for those who made adjustment under sec. III of TCU, the order of tax and profitable accounting of provisions on the payment of pension obligations on favourable terms for working and non-working employees who earned favourable length of service at the company until they reached 60 years of age, and actual payments at the expense of the previously established provisions for such payments.

According to the tax authorities, they are classified as payments related to salaries. Therefore, when calculating of the income tax, the financial result before tax is not to be increased according to the para. 139.1.1 of TCU on the amounts of formed provisions on the payment of pension obligations on favourable terms of employees mentioned above and the amount actually paid by the previously established provisions for such payments.

PIT

The State Fiscal Service of Ukraine in its letter “On the exemption from payment to the state budget of a part of the net profit of public enterprises belonging to research institutions” of 05.07.16, № 14558/6/99-99-15-02-02-15 reported: if a trade union organized and paid weekend tours or summer holiday without buying package tours for its members and their families, the cost of such Social bonuses should be considered as an additional benefit for an individual and should be included in the total monthly (annual) taxable income. Therefore, these amounts are the subject to the personal income tax and the war tax on a regular basis.

The tax authorities suggest reflecting such amounts the sign of income “126” in the tax calculation of № 1ДФ form.

It should be reminded that according to sub-para. 165.1.35 of the Tax Code of Ukraine, if a trade union buys a ticket for a vacation or recreation for its member, such amounts are not the subject to the personal income tax.

The State Fiscal Service of Ukraine in its letter “On the taxation of the aid accrued for categories of students, determined by sub-para.1 of para.24 of the Procedure of the appointments and payment of scholarships” of 25.08.16, № 18440/6/99-99-13-02-03-15 noted that the aid paid to certain categories of students (sub-para.1 of para.24 of the Procedure of appointment and payment of scholarships, approved by the Cabinet of Ministers of Ukraine (hereinafter -CMU) of 12.07.04, № 882), should be taxed at the rate of 18% of the income tax and 1.5% of the war tax (sub-para. 164.2.20 of TCU). Such amounts should be reflected in f. № 1DF with the sign of income “127”.

It should be recalled: educational institution can use 10% of the funds provided for scholarships, or the payment of financial assistance for students (para. 7 of the procedure for appointment and payment of scholarships approved by the CMU of 12.07.04, № 882).

The State Fiscal Service of Ukraine in its letter “On taxation by the entrepreneur of funds contributed as top up of telephone bills of individuals” of 15.09.16, № 6052/П/26-15-13-02-15 notes that the top up of telephone bills is an additional benefit for an individual. At the same time, the entrepreneur (or legal entity), which tops up the phone bills of ordinary individuals from his/her funds (to encourage them as clients), has the duty of a tax agent only under the condition that such income is personalized, that is, if it is possible to identify the recipient of income. Therefore, the top up of an account of a specific mobile phone at the expense of the entrepreneur is an additional benefit, and the entrepreneur is a tax agent when the provision of such income. However, the top up of mobile accounts for the indefinite number of persons at the expense of the entrepreneur (legal entity) is not subject to the income tax. In addition, as the tax authorities note, the fact of registration of a mobile phone is not enough to identify the person - recipient of income.

Other Taxes and Fees

The State Fiscal Service of Ukraine in its letter “On provision of tax advice on the administration of excise tax” of 13.09.16, № 19817/6/99-99-12-03-03-15 explained what threatens to the taxpayer for violation of registration deadline of excise tax invoices in the Unified register of excise invoices. In particular, for such a violation, the payer will be imposed a fine of 2.0% to 40.0% of the excise tax from fuel corresponding volumes specified in such excise tax invoices, depending on the number of days of violation of the terms of their registration.

It should be recalled: excise invoices should be registered in the Unified Register of excise invoices within fifteen calendar days following the date of their preparation.

Accounting and Reporting

The State Fiscal Service of Ukraine in its letter “On taxation of a non-resident activity in the customs territory of Ukraine without creating a permanent establishment, tax filing capabilities and responsibility for late payment of tax liabilities” of 11.08.16, № 17492/6/99-99-15-02-02-15 explained, accordingly, the issue of the taxation of a non-resident activity in the customs territory of Ukraine, submission of tax reporting by him/her and responsibility for late payment of taxes.

The tax authorities emphasized that legal entity – non-resident, which conducted business in Ukraine through its separate division for tax purposes should register such a separate unit as a permanent establishment regardless of whether he/she engaged in business activities currently, plans to implement it in the future.

Representation of non-resident can submit statements of income tax and VAT for the periods prior to its registration. At the same time, the declaration of the income tax could be submitted in hard form, but the tax return of VAT − only in soft form.

Representatives of the fiscal authorities note that if the taxpayer submits tax returns with violation of the terms, the postponement for payment of tax liability specified in it is not provided. Thus, such a taxpayer is liable in the form of:

• penal sanctions for violations of reporting deadlines according to paragraph 120.1 of TCU;
• penalty for violation of terms of payment of tax liability according to para. 126.1 of TCU. At the same time on the basis of para. 35 of sub-section 10 of sec. XX of TCU, penalties accrued on the amount of tax liability are to be cancelled. However, only if the taxpayer paid it in due time without appeal against tax notice-decision.

If non-residents carry out economic activities without registration of a permanent establishment by the tax payer, and also do not submit tax reporting for the period of its implementation, the controllers based on the results of the audit independently determine the amount of tax liability and impose a fine on them according to Art. 123 of TCU regardless of whether non-resident paid tax or not.

The tax authorities underline that non-residents can expect a fine for non-recognition (incomplete and/or delayed recognition) in pay desks of cash in the size of 5-fold of non-recognized amount. But only within the period of limitation that in general is 1 095 days (Art. 102 TCU).

The Ministry of Finance of Ukraine by its order “On approval of the Procedure for transfer, return, and destruction (disposal) of samples of goods after the study (examination) by the Specialized laboratory for examination questions and researches by the SFS and forms of acts on the transfer of samples of goods on the return of samples of goods, the destruction (disposal) of samples of goods” of 28.07.16, № 699 approved the procedure for transfer, return, and destruction (disposal) of samples of goods after the study (examination) by the Specialized laboratory for examination questions and researches (hereinafter – SLER) by the SFS when the implementation of the tax and customs control, well as customs clearance. Also, the following is established:

• form of the Act on the transfer of samples of goods;
• form of the Act on the return of samples of goods;
• form of the Act on the destruction (disposal) of samples of goods.

The control samples as well as the remains of the studied sample and samples damaged during the investigations (examinations) should be stored in a specialized laboratory for examination by the SFS (its separate division) within 60 days of receipt.

During the period of storage samples in SLER of SFS, the owner, the declarant, the taxpayer or the person authorized by them are entitled to submit written applications with the requirement of their return.

Labor and Salaries

The Cabinet of Ministers of Ukraine by its Resolution “Certain issues of funds maintenance of obligatory state social insurance” of 23.08.16, № 523 approved the procedure for establishing the treasury services of money of the Social Insurance Fund of Ukraine and the Fund of obligatory state social insurance of Ukraine in case of unemployment.

It should be recalled that the Social Insurance Fund of Ukraine was established by merging the social insurance funds for temporary disability and accidents at work. The Budget Code of Ukraine provides for treasury services of money of the Social Insurance Funds by the procedure determined by the Government.

In accordance with the procedure, the Social Insurance Fund of Ukraine will be able to open accounts in the Treasury and accumulate insurance funds for uninterrupted provision of insurance benefits and social services for insured persons.

The Ministry of Social Policy of Ukraine by its order “On approval of the unified act form prepared on the results of routine (unscheduled) inspection of meeting by business entity of the legislative requirements in the business of mediation in employment abroad” of 09.08.16, № 865approved the form of the act prepared on the results of a routine (unscheduled) inspection of compliance of economic entities with legal requirements in the business of mediation in employment abroad. As it is known, this kind of activity is the subject to licensing.

Consequently, there is a form of the inspection report, where the violation of mediators in employment will be recorded.

The Ministry of Social Policy of Ukraine in its letter “On the activities of the territorial social service centres (provision of social services)” of 07.04.16, № 5118/0/14-16/014 clarified certain nuances of the regional social service centres. In particular, the legislators noted the following.

Firstly, territorial centre is entitled to establish a department of stationary care for permanent or temporary residence of the wards. But since 01.01.17 this department can work for servicing of not less than 10 and not more than 50 lonely people.

Secondly, territorial centres are obliged immediately serve internally displaced persons. The Ministry explained: “immediately” − means the provision of social services to refugees on the day of appeal. For servicing such persons should submit an identification document and a certificate for the registration of internally displaced person.

Thirdly, the basic salary of the head of the newly established department of territorial centre is determined on the basis of number of people in servicing (see. paras. 2.2.4 The conditions of payment of employees of health care institutions and institutions of social protection of the population, approved by joint order of the Ministry of Labour and the Ministry of Health of Ukraine dated 05.10.05, № 308/519).

If the doctor occupies the position of the head of the department, his/her salary should be set taking into account the tariff categories of doctors in related disciplines and qualification categories and increased by 10-25% depending on the volume of work.

The Cabinet of Ministers of Ukraine by its Resolution “Some issues of pension provision of certain categories of persons” of 14.09.16, № 622regulated the appointment of state employees’ pensions, which civil service experience was more than 10 years and who received a pension under Art. 37 of the Law of Ukraine “On State Service” of 16.12.93, № 3723-XII, became invalid.

According to paragraphs 2, 10 and 12 of current Law of Ukraine “On State Service” of 10.12.15, № 889-VIII, the pension for the state employees to be appointed, taking into account all types of remuneration, from which it is paid the unified contribution and within the maximum value of the accrual base of the unified contribution established by the law on the day of pension appointment. The pension will be 60% of wages mentioned above.

The Social Insurance Fund on temporary disability in its letter “On the calculation of the average wage to calculate the payments on obligatory state social insurance” of 20.09.16, № 2.4-46-1616 notes: if when the determination of the average daily earning, a full month is excluded, the amount of wages accrued during this period (financial assistance, bonuses, etc.) should be not taken into account.

It should be reminded those months during which the employee did not work for valid reasons (from first day of the month to the next first) should be excluded from the calculation of the average daily earnings. These reasons are calendar days of sick leave, maternity leave, and leave without pay.

Control and Responsibility

The State Fiscal Service of Ukraine in its letter “On updating of the register of non-profit institutions and organizations” of 25.08.16, № 28602/7/99-99-15-02-01-17 focused attention on important points related to the introduction of new procedure of keeping the Register of non-profit institutions and organizations (hereinafter − Register).

In particular, the tax authorities before 16 September should send to “old” non-profit institutions (which were included in the register as of 13.08.15) written requests for responses regarding the following:

• compliance of non-profit organization with the requirements established by para. 133.4 of TCU, and provision of copies of constituent documents certified by the organization;
• certified by housing associations (hereinafter – HA) copies of documents confirming the date of adoption of the completed construction of a residential building and the fact of the construction or acquisition of such a building by the HA.

The non-profit organizations have to respond the requests within a month. Such requests should not be sent to non-profit organizations, constituent documents of which are published on the portal of electronic services and meet the requirements established by the statutory documents of non-profit organizations by para. 133.4 of TCU.

The registration application in the form № 1-РН should not be submitted by the “old” non-profit organizations. If they meet the requirements of non-profits established by para.133.4 of TCU, they should be included in the new register (para.34 subsection 4 of sec. XX).

The documents provided at the request of non-profit organization should be considered by the tax authorities within a month from the date of receipt. Controllers emphasize that even during their review it is found that they do not meet the “non-profit” requirements (the non-profit organization should be informed about this), so this organization could not be deleted from the registry before 01.01.17.  Non-profit organization before that date should bring its statute into line with the established requirements (the HA − also submits certified copies of the above mentioned documents). Otherwise such non-profit organizations will lose non-profit status from the following year.

The tax authorities in the letter described the differences between the old and the new procedure of keeping the register. In particular, there are amendments in structure of symptom codes of unprofitability, order of submission of documents for inclusion in the register, form registration statement № 1-RN, as well as grounds for exclusion of non-profit organization from the register.

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure for Use of electricity for the population” of 23.08.16, № 591 adjusted the Procedure for Use of electrical energy for the population.

Thus, now domestic customer can submit the package of documents for conclusion of the use contract personally as well as by mail.

Also, the procedure of electrical power outage for non-payment was adjusted for consumers. In particular, it was supplemented: if a consumer submits payment receipt for the consumed electricity to the personnel arrived to disconnect, it will not be disconnected.

In addition, the procedure for taking a meter reading is clarified. It should be done by theelectricity supplier and/or the domestic customer per month in accordance with the terms of the contract. The domestic customer, as a rule, takes readings of the meter as on the first day of the month following the accounting period (month).

The resolution also specified the requirements for payment documents on the basis of which the consumer should pay for the services.

At the same time, the Procedure is added:

• a model contract on purchase and sale of electric energy under “green” tariff to the contract for the use of electric power;
• the form of the establishment or replacement, or technical verification, control inspection, or saving of metering station seals (meters), that is installed on the object of the consumer;
• act of electricity distribution on domestic and nondomestic needs.  

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Regulations on the Procedure of assignment and granting the subsidies for the population for reimbursement of expenses for housing and communal services, he purchase of liquefied natural gas, solid and liquid stove fuel” of 08.09.16, № 635 made amendments to the Regulation on the Procedure of assignment and granting the subsidies for the population for reimbursement of expenses for housing and communal services, he purchase of liquefied natural gas, solid and liquid stove fuel.

Firstly, the aggregate income, when the calculation of subsidies, does not include: the cost of  received free sanatoria and health resorts vouchers, prosthetic and orthopaedic products, means of rehabilitation, the amounts paid as compensation for damage caused to the employee as a result of damage to his/her health, which is connected with the performance of job duties.

Secondly, there was changed the approach to the calculation of total family income in the event when the full legal age member receives a monthly average income below the subsistence minimum, or has no income. Previously in such a case to calculate the subsidies it should be accounted a conditional monthly income of 2 minimum living wages (excluding students and military-conscripts). Now the approach is differentiated. If this family member:

• has average monthly income below the minimum living wage, and if there is no income at all, but he/she studied full-time education in secondary, vocational and higher education institution, to calculate the subsidies, the average monthly income of such a person is determined at the level of a living wage;
• has the average income is less than the minimum living wage, but he/she received at least one of the following types of income: pension, scholarship assistance at birth (adoption) of the child care benefit for children under the age of three, assistance to disabled from childhood and disabled children, assistance for the care of disabled of groups I and II as a result of mental disorder, assistance to persons who are not entitled to a pension, and disabled people, unemployment benefits (or any income received by a person under 18 years of age as of 31 December of the year for which such incomes are taken into account), the calculation of the subsidies should include the actual size of the income of such persons;
• has no incomes, it should be taken the average income at the level of two minimum living wages for the calculation.

For military-conscripts the average total income regardless of the received (not received) incomes should be determined at the level of half of the subsistence level.

For pensioners, who do not work and have no other incomes other than pensions, to the average total income should be taken into account the pension size for the month preceding the month from which appointed the subsidy.

In addition, the statement and declaration of the subsidies purpose can be submitted by e-mail through the official website of the Ministry of the social policy or integrated with it information systems of executive and local authorities confirming the person through BankID. Prior to this declaration could be submitted by e-mail only by people who have the electronic signature.

It was specified the procedure of automatic assignments of the subsidies for citizens for the next period, as well as actions of a person in case of disagreement with the decision of automatic assignments of the subsidy.

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of payment of remuneration for public executives and its size and the size of the basic remuneration of private executive” of 08.09.16, № 643 defined the mechanism payment of remuneration for public executives as well as remuneration sizes of public executives and basic remuneration and private executive.

The public executives are granted the remuneration for the actual execution (complete or partial) of executive documents of property character in the amount:

• 2% of withheld amount or value of the debtor’s property transferred to the plaintiff by the executive documents − public executive, on whose execution was (is) an executive document;
• 0.5% of withheld amount or value of the debtor’s property transferred to the plaintiff by the executive documents – head of state executive service, and his/her deputies, who reports directly to public executives.

If a state executor provided the actual implementation in full of executive documents of non-property, the remuneration will be one minimum wage (if debtors for executive document are the individuals) or two minimum wages (if the debtor is legal entity).

The state executor should submit an application to get the remuneration.

The state executor is not entitled to remuneration if he/she was brought to disciplinary liability in connection with the enforcement proceedings by which it was submitted an application for payment of remuneration or actions (decisions) or inactions are considered as unlawful.

The amount of remuneration of the private executive is completely different. For full or partial execution of executive documents of property - basic compensation is 10% of withheld amount or value of the property that is the subject to the transfer under executive document.

For actual implementation in full of executive documents of non-property character under which the debtor is an individual, private executor receives basic reward of two minimum living wages. If the debtor is a legal entity here - four minimum living wages.

The Ministry of Internal Affairs of Ukraine by its Order “On Approval of the Procedure for the production of applications for registration of documents for leaving of Ukrainian citizens abroad for permanent residence” of 16.08.16, № 816 determined the procedure of the reception of applications and the review process of the preparation of documents for the departure of Ukrainian citizens abroad for permanent residence. In particular, now such an application could be submitted both in paper and in electronic form. In the latter case, it should be filled in by an employee of the territorial division of the State Migration Service of Ukraine.

In addition, a clear list of documents, which should be submitted together with the application, is prescribed in the order.

If the applicant within six months from the date of the decision on the process of documents for leaving abroad for permanent residence does not apply to the territorial authority of the State Migration Service for registration of these documents, the decision is null and void.

Transfer Pricing

The Cabinet of Ministers of Ukraine by its Resolution “On approval of the list of goods with the exchangequotation, and the world’s commodity exchanges to verify the conformity of conditions of controlled transactions with the principle of “arm’s length” of 08.09.16 г. № 616 in order to control the transfer pricing determined the list of goods with the exchange quotation (according to the code of UCC FAA) and the world’s commodity exchanges for each product group. It included the following groups of commodities:

• live animals (cattle, pigs);
• cereal crops;
• oil and products of its distillation;
• black metals;
• articles made of ferrous metals.

Henceforth business entities engaged in controlled transactions of exports and imports of such goods for the purpose of taxation should be guided by the range of prices prevailing on commodity exchanges, defined by the Government (Chicago Mercantile Exchange, New York Mercantile Exchange, Multi-mercantile Exchange of India, etc.).

Mobilization and ATO

The Cabinet of Ministers of Ukraine by its Resolution “On Amendments to the Procedure of granting the war participant status to persons who defended the independence, sovereignty and territorial integrity of Ukraine and took part in anti-terrorist operations, ensuring its implementation” of 08.09.16, № 602 determined that to be granted the status could be only persons who were involved in ATO conduction for a period of not less than 30 days, including on accumulation of days in areas of its implementation.

This restriction does not apply to persons, who perform service tasks in terms of direct contact with the enemy, conducted reconnaissance and received the injuries, contusion, mutilation that made it impossible to further implement the relevant tasks (except for cases of careless handling with weapons and self-mutilation or simulation of illness).

In addition, the Resolution clarifies the list of documents that are the basis for the granting the war participant status.

The President of Ukraine signed an executive order “On transfer to the reserve of servicemen of compulsory military service during mobilization, for a special period, called during the third stage of the partial mobilization in accordance with the Decree of the President of Ukraine dated January 14, 2015 № 15” of 26.09.16, № 411/2016, having declared thereby the demobilization of soldiers, called up in 2015 during the sixth wave of partial mobilization. After the entry into force of this document - from the date of its official publication – the defenders of the Motherland will be returned to their families (it is planned to be done during September - October). The Decree provides for the exemption the military personnel in the reserve, except for those who have expressed a desire to continue their service.

Demobilized should be provided with a set of Army Combat Uniform of season and food during their journey home.

The government is instructed to ensure financing and take another action within the powers related to the dismissal of military personnel in the reserve, in particular, their transportation to the place of residence.

Financial Market

The National Bank of Ukraine by its Resolution “On the regulation of the situation in the monetary andforeign exchange markets of Ukraine” of 14.09.16, № 386 continued to simplify the restrictions in the monetary and foreign exchange markets.

Thus, henceforth the banks’ customers can getforeign currency in cash or precious metals from their current and deposit accounts through cash departments and ATMs within UAH 250 000 per day in hryvnia equivalent per client. Previously this restriction was UAH 100 000.

In addition, Ukrainian companies that received credit or loans from non-residents can buy foreign currency for the repayment of a debt, even in the presence of their currency accounts in excess of USD 25 thousand. However, only on the condition that for such purposes they will use purchased currency accounts as well as available. 

As before, the calculations on export-import transactions should be carried out up to 120 calendar days, and receipts in foreign currency are the subject to mandatory sale in an amount of 65%. The Resolution is effective from 15.09.2016 till 15.12.2016 inclusive.

The Other Things

The Ministry of Finance of Ukraine on its official website informed on the presentation of working version of the package of tax amendments of the Committee of the Verkhovna Rada.

Key amendments provide for, in particular, the introduction of tax holidays for 5 years for newly established small businesses, transparent VAT refunds through the unified register and transfer databases from the State Fiscal Service to the Ministry of Finance. Liquidation of the tax police is offered in a separate draft law, which is agreed with the concerned authorities now.

The President of Ukraine signed the Law of Ukraine “On Amendments to Article 28 of the Law of Ukraine “On Television and Radio Broadcasting” on the definition of programs of European production” of 17.05.16, № 1364-VIII.

According to the norms of the law, the program of European production is to be considered the program made by one or more legal entities − residents of states that have ratified the European Convention on Transfrontier Television.

If the program is made to order or with the participation of one or more legal entities - residents of the state recognized by the Parliament of Ukraine as the aggressor-country and/or occupant country, it cannot be considered as the program of European or Ukrainian production.

It should be recalled that the licensees (except satellite broadcasting) at the time of 07 a.m. and 11 p.m. should follow the proportions between Ukrainian and foreign programs:

• programs of European production as well as the United States and Canada should be at least 70% of the total volume of weekly broadcasting, including at least 50% of the weekly volume of broadcasting - the programs of Ukrainian production;
• musical works of Ukrainian authors and performers should be at least 50% of the total volume of weekly broadcasting in radio programs.

The Ministry of Justice of Ukraine in its letter “On certain issues of the Law of Ukraine “On the condemnation of Communist and National Socialist (Nazi) totalitarian regimes in Ukraine and the prohibition of their propaganda symbols” of 21.06.16, № 21413/677-0-2-16/8 reports that there is no need to amend the State Register of real rights on real property in connection with renaming of registration addresses of immovable property. The Law of Ukraine “On State Registration of rights on immovable property and their encumbrances” of 01.07.04, № 1952-IV does not contain mandatory rules that would require making such amendments.

Thus, the indication in the constitutive documents of addresses of immovable property, which existed before the renaming of names of streets and places and other objects of toponymy of settlements, does not affect the content of ownership and validity of these documents.

The Cabinet of Ministers of Ukraine adopted a resolution “On the implementation of the pilot project on the temporary restriction of the use of the Resolution of the Cabinet of Ministers of Ukraine dated  December 25, 1996 № 1548 and the Resolution of the Cabinet of Ministers of Ukraine dated October 17, 2007 № 1222” of 22 09.16, № 656, which started a pilot project aiming at the cancelling of the price regulation on food products from October 1, 2016 for a period of three months.

There will be carried out a careful monitoring of the prices during this period, following which the further destiny of the price regulation on food will be decided. If it is determined that the state regulation only makes worse the price movements and increases the cost of products, the restriction will be cancelled.

In particular, the pilot project provides for the cancellation of the declaration of change of wholesale selling prices of wheat flour of the highest quality, first quality and second,  rye flour, buckwheat groats, beef, pork, poultry, sausages boiled, cow’s milk for drinking (pasteurized, packed), cheese, sour cream, butter, eggs, sugar and sunflower oil.

Additional costs for the administration of this “regulation” are included in the cost of sales by business, and as a result the prices of the relevant products are growing faster than the consumer basket as a whole. It is expected that the cancellation of the fictitious price regulation gives a boost to the development of farming, food production and, as a consequence, an increase in the number of jobs.