Taxes
Simplified Tax System
The State Tax Service of Ukraine in letter No. 3215/ІПК/99-00-04-03-03-06 dated September 1, 2021 expressed its position on whether the right of a sole proprietor (hereinafter – SP) – a single tax payer enter into a joint venture agreement with another sole proprietor – a single tax payer without creating a legal entity. The STSU does not object to the possibility of such an action.
The tax authorities came to the conclusion that sole proprietors – single tax payers have the right to enter into agreements with other business entities on joint activities without creating a legal entity.
However, such SPs must take into account that the activities under the joint activity agreement must correspond to those activities, the implementation of which gives the right to apply a simplified system of taxation.
If the agreement on joint activity is not registered in the controlling bodies and each participant of such an agreement is registered in the controlling bodies, then such participants of the agreement perform the duties of taxpayers independently.
In this case, the participant of the joint agreement, the sole proprietor – payer of the single tax must take into account the income from activities under the agreement on joint activities in the general order together with the results of activities from conducting their own business.
Other Taxes and Fees
The Cabinet of Ministers of Ukraine has approved the draft Law “On Amendments to the Tax Code of Ukraine on Submission of Unified Reporting on the Single Contribution to the Compulsory State Social Insurance and Personal Income Tax”.
The project was developed by the Pension Fund of Ukraine at its own initiative.
As noted in the explanatory note to the bill, the combination of reporting on personal income tax (hereinafter – PIT), military levy and the single social contribution (hereinafter – SSC) with a quarterly reporting period contains a number of risks, and exactly:
- delay of receipt in the register of insured persons of the State Register of Compulsory State Social Insurance (hereinafter - RCCSSI) information on salaries of employees, payment of a single contribution, pension insurance record of insured persons and timely inclusion of these periods for calculating social insurance benefits in case of temporary disability, unemployment, an accident at work, as well as pensions (which affects, in particular, the definition of the right to a pension);
- loss of information about insured persons, taking into account the methods of their submission and the mechanism of influence on the correction of inaccurate (incomplete, erroneous, incorrect) data, including the submission of a report of the type “Adjusting” (such report data on clarifications, ie indicators can change for any period, many times);
- weakening of payment discipline for the payment of SSC due to the postponement of payment deadlines, which will affect the provision of financial resources for current pension benefits;
- delay in the implementation of enforcement measures to recover overdue debt, as the occurrence of such debt will be reflected in the liabilities contained in the quarterly report;
- determination of indicators of the average salary (income) in Ukraine, from which insurance premiums are paid and which is taken into account for pension calculation (will be carried out for a month on the basis of quarterly reports submitted by payers, ie with a shift of their calculations from one to three months);
- impossibility of timely monthly analysis of key indicators that affect the budget of the Pension Fund and monitoring of information on the RCCSSI to identify signs of use of undocumented workers and violations of labor legislation with the provision of information to the State Labor and loss of relevance.
Therefore, the Pension Fund proposes to amend the Tax Code in terms of changes for the consolidated report of the tax period from quarterly to monthly.
The government predicts that this will have both positive and negative effects on businesses. On the one hand, the need to submit interim reference reports is eliminated, on the other hand, the time spent on submitting monthly reports is increased.
If the Verkhovna Rada supports this bill, it will enter into force on January 1, 2022.
Accounting and Reporting
The State Tax Service of Ukraine in letter No. 21953/7/99-00-21-02-01-07 dated September 27, 2021 provided an official explanation of the updated form of income tax return and when it should be submitted for the first time.
STSU reminds that on August 17, 2021 Order of the Ministry of Finance “On approval of changes to the form of the Tax return on the corporate income tax” No. 317 of June 4, 2021, (further – Order No. 317) which approved changes to the form of the Tax return on corporate income tax (hereinafter – the Return), approved by Order of the Ministry of Finance No. 897 of October 20, 2015, came into force.
Taking into account the provisions of item 46.6 of the Tax Code, the tax authorities stressed that corporate income taxpayers must file a declaration in an updated form starting from January 1, 2022 for the reporting (tax) period of 2021.
Control and Responsibility
The Verkhovna Rada of Ukraine has adopted the draft law “On Virtual Assets”. It will allow launching a legal market for virtual assets in Ukraine.
The Ministry of Digital Transformation will form and ensure the implementation of state policy on the development of the new market, as well as facilitate the adaptation of Ukrainian legislation on the circulation of virtual assets to international standards, protect the rights of market participants.
The adoption of the basic law of the industry is an important part of the legalization of the virtual assets market in Ukraine, as a certain legal status of virtual assets provides legal protection to users and market participants. Businesses will be able to operate officially and protect their own virtual assets from possible abuse. The country will receive additional tax revenues to the budget, which will be paid by crypto companies.
The law is based on current standards for regulating transactions with virtual assets of the international anti-money laundering group (Financial Action Task Force, FATF). The adopted norms establish rules for service providers related to the turnover of virtual assets and will contribute to the de-shadowing of this market.
In order to carry out activities related to the turnover of virtual assets, service providers will have to disclose the ownership structure in order to be able to establish the ultimate beneficial owners. Such owners must have an impeccable business reputation and have internal financial monitoring procedures in place to prevent money laundering.
The Law will enter into force on the date of entry into force of the Law of Ukraine on Amendments to the Tax Code of Ukraine on Peculiarities of Taxation of Transactions with Virtual Assets, but not earlier than the day of publication of this Law.
Financial Markets
The National Bank of Ukraine by Board Resolution No. 93 of September 16, 2021 “On the introduction of the international standard ISO 20022 in the payment infrastructure of Ukraine” set the date of transition to a new generation of EPS.
Thus, the new generation of the electronic payment system of the National Bank of Ukraine (hereinafter – EPS) on the basis of the international standard ISO 20022 and around the clock (24/7) will start on August 20, 2022. This will give banks and businesses new opportunities, increase the security of payments. In addition, due to the implementation of the international standard ISO 20022, the payment will be enriched with additional information, and a significant number of processes during the processing of payments can be automated.
Resolution No. 93 applies to EPS participants – banks of Ukraine, the State Treasury Service of Ukraine, the National Depository of Ukraine, etc. In particular, for a coordinated transition to a modernized mode of operation, EPS participants are required to:
- by October 31, 2021 to connect to the test bench (open from April 1, 2021) for comprehensive testing of interaction with the modern generation of EPS;
- by August 20, 2022, make changes to the regulations of their automation systems, the formation of balance sheets for the day and other reporting.
Accordingly, from August 20, 2022, all interbank payment transactions will take place through a new generation of EPS.
Labor and Salaries
The Verkhovna Rada of Ukraine has adopted as a basis the draft law “On Amendments to Certain Legislative Acts of Ukraine Concerning the Regulation of Certain Non-Standard Forms of Employment”.
The purpose of the bill is to regulate the issue of non-standard forms of employment for persons who perform work on a non-permanent basis, to provide flexibility in choosing the organization of labor relations, to strengthen employee mobility in exercising the right to work.
The bill proposes to enshrine in the Labor Code of Ukraine a new form of employment contract – “Employment contract with fixed working hours” as a special type of employment contract, the terms of which do not set a specific time of work, and the employee’s obligation to perform such work, that emerges in the case of providing the owner or authorized body with the work provided for in this employment contract without guaranteeing that such work will be provided permanently.
The draft stipulates that the employer independently determines the need and time of employee involvement in the work, the amount of work and within the employment contract agrees with the employee mode of operation and duration of working time required to perform the work.
The number of concluded employment contracts with non-fixed working hours may not exceed 10% of the total number of employment contracts.
Legal entities and natural persons – entrepreneurs who employ less than 10 employees may enter into no more than one employment contract with non-fixed working hours.
The Other Things
The Cabinet of Ministers of Ukraine has supported the new version of the law “On Consumer Protection”.
The bill is aimed at introducing European standards of consumer protection in Ukraine, creating a level playing field for e-commerce and fair competition, as well as reducing the burden on business by cancelling outdated rules.
Thus, in particular, the document proposes:
- harmonize Ukrainian legislation in the field of consumer protection with EU legislation through the implementation of EU Directives listed in Annex XXXIX to Chapter 20 of the Association Agreement;
- extend the Law of Ukraine “On Consumer Protection” to the field of food products in terms of economic rights of consumers;
- determine the list of information about the product and the seller, which must be provided when conducting e-commerce, as well as the responsibility for the lack of such information;
- exempt the business from the obligation to create an exchange fund of goods and pay a penalty to the consumer for each day of delay in fulfilling the requirement to provide goods of the same brand;
- give the consumer the right to reduce the price or refund if the defect of the goods appears after the repair;
- exempt from all fees in all courts instances of consumers in cases related to the violation of their rights, the State Food and Consumer Service and public associations of consumers in cases of consumer protection;
- give the State Food and Consumer Service the right to apply to the Internet service provider to restrict access to the website (parts of the website, software) of the seller who did not provide reliable information on its website about its name, location, obliging the State Food and Consumer Service to contact such provider to restore such access, when the business entity complies with the requirements of the law.
The bill creates conditions not only for effective protection of consumer rights, but also for doing business on the basis of fair competition between sellers offline and online.
