Law Digest

Tax administration

The Resolution of the Cabinet of Ministers of Ukraine On Сhanges to the Procedure for Electronic Administration of Value Added Tax of 4 February 2015, No.82 introduced new provisions to the Procedure for Electronic Administration of VAT, approved by the Cabinet of Ministers of Ukraine on 16 October 2014, No.569. In particular, it reads that the system of electronic tax administration is being introduced in stages, including: the transition period (till 1 July 2015, or such other date set by a separate decision of the Verkhovna Rada of Ukraine on reduction of the period) — in test mode; and permanently starting from the date above.

The amounts of the tax that taxpayers are entitled to register in their tax invoices and/or adjustments may be increased by the amount of outstanding tax balances they claimed from the budget in the reporting (tax) periods prior to 1 February 2015, and declared by them for compensation from the budget through tax reductions in the consequent periods, and by the negative value of the amount that is calculated in accordance with Paragraph 200.1 of Article 200 of the Tax Code of Ukraine, and by the remainder of the negative value of the previous reporting (tax) periods after compensation from the budget as declared by the taxpayer for the reporting (tax) periods before 1 February 2015.

A taxpayer explains his decision in a statement that is due along with the tax return for the reporting (tax) period after 1 February 2015. After a desk audit of the tax return, the SFS would automatically increase the tax amount, for which the taxpayer is entitled to register tax invoices and/ or adjustments. The amount of such increase is shown by the taxpayer as a part of the tax credit in the tax return for the reporting (tax) period, when it occurred. After the transition period is over: the SFS would automatically increase the tax amount, for which the taxpayer is entitled to register tax invoices and/or adjustments, by an amount of the average monthly tax that the taxpayer declared and paid during the most recent  12 reporting (tax) months / four quarters, and it would electronically notify the taxpayer about the increased amount; the amounts of the tax that taxpayers are entitled to register in their tax invoices and/or adjustments would be automatically increased by the amounts of tax paid erroneously and/or in excess. The increased amount would either reduce the amount declared for payment in the reporting (tax) period, or increase the negative values as declared in the reporting (tax) period; the tax liabilities that are paid in error and/or in excess would be considered canceled. If on the date of the tax return the amount in the taxpayer’s account in the electronic tax administration system exceeds the amount that should be paid to the budget in accordance with the submitted tax return, the taxpayer is entitled to file a statement requesting the refund of such funds to the current account of the taxpayer (specified in the statement) in the amount in excess of the tax liabilities.

Procedure to calculate the unified social tax for obligatory social insurance has been changed

On 2 March 2015 the Act On Changes to Chapter VIII Transitional Provisions of the Act of Ukraine On Collection and Accounting of the Unified Tax for Obligatory State Social Insurance Concerning Reduction of the Payroll  Burden, No.219-VIII was approved. Its aim is to reduce the burden on payroll and to make incentives for income legalization by payers of the unified social tax (hereinafter — Unified Social Tax) by applying a reducing factor that is calculated independently by the taxpayer subject to the conditions established by the Act. Thus, starting from 13 March 2015, employers may apply the reducing factor if they meet the following conditions:

— wages of an employee under an employment agreement (contract) or remuneration under a civil agreement per one insured person in the reporting month have increased by at least 20% compared with 2014;

— after the factor is applied, the average payment per insured person in the reporting month should be not less than the average payment per insured person in 2014;

— the number of insured persons in the reporting month, who are entitled to payments, does not exceed 200% of the average number of insured persons in 2014.

If all these conditions are met, the employer should calculate the monthly factor independently by dividing the average monthly salary in 2014 per insured person by the amount of wages per insured person per month, when the wages are paid in 2015. If this factor is less than 0.4, the employer may use the factor of 0.4. Starting from 1 January 2016, the factor of 0.6 will be applied regardless of the amount of wages (remuneration) charged.

Lower quorum for all joint stock companies

The Act of Ukraine On Changes to the Act on Joint Stock Companies (concerning payment of dividends by joint stock companies) of 2 March 2015, No.2273 was submitted by the Cabinet of Ministers of Ukraine and approved on 19 March.

The Act amends Articles 30, 38, 41, 55 of the On Joint Stock Companies Act with the aim of introducing a uniform approach by lowering the quorum for all joint stock companies, improving the mechanism of election and operation of companies’ governing bodies as well as ensuring an effective mechanism for payment of dividends.