Lawyers of LF «Dmitrieva & Partners» have prepared the list of top news in the field of taxation for the last two weeks.

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1 REVIEW OF THE MAIN EVENTS IN THE SPHERE OF TAXATION Lawyers of LF «Dmitrieva & Partners» have prepared the list of top news in the field of taxation for the last two weeks. The amount of daily business trip expenses that is not included in taxable income Public informational resource, subcategory According to subparagraph of the Tax Code of Ukraine (TC) travel expenses, which are not confirmed by documents, for food and financing other personal needs of an individual (daily expenses) incurred in connection with such a business trip within the territory of Ukraine but not more than 0.2 of the amount of minimum wage established by the law as of January 1 of the tax (reporting) year, calculating for each calendar day of such a business trip, and for business trips abroad - not more than 0.75 of the amount of minimum wage prescribed by the law as of January 1 of the tax (reporting) year, calculating for each calendar day of such a trip, are not included in the taxable income. The amounts and composition of the travel expenses of government officials and other persons who are sent on business by enterprises, institutions and organizations, that Attorney-at-Law, Managing Partner Dmitrieva@dmp.com.ua are wholly or partly maintained (financed) on account of budget funds, are determined by the Cabinet of Ministers of Ukraine. The amount of daily allowance for such categories of individuals cannot exceed the amount established by this subparagraph. The amount of daily allowance is determined in case of a business trip: within Ukraine and countries, entering the territory of which by the citizens of Ukraine does not require a visa (entry permit) - according to the order on a business trip and relevant primary documents; to countries the territory of which the citizens of Ukraine enter on the basis of a visa (entry permit) - according to the order on a business trip and checks put by an authorized official of the State Border Guard Service of Ukraine in a foreign passport or document that substitutes it.

2 In the absence of the mentioned relevant supporting documents, order or checks of an authorized official of the State Border Guard Service of Ukraine in a passport or document substituting it the amount of daily allowance is included in the taxable income of a taxpayer. Filling in SSP accounts when the wage is less than a minimum one Letter of the PFU of No 4244/05-10 The Pension Fund of Ukraine explained the peculiarities of filling in table 6 of SSP accounts for January First of all the function "automatic calculation" needs to be disabled in the software by means of which the accounts are formed. If a person worked full month and the salary calculated for them was less than the minimum amount, it should be represented in table 6 of SSP accounts: in detail the day (for January); in detail 17 and 18 - the amount of the salary actually calculated for a month; in detail 19 - the amount of SSP withheld from wages actually calculated. If a person worked partial month and the rest of time they were absent on sick leave, then wages actually calculated for hours worked shall be represented in table 6 of SSP accounts. If wages for hours worked is less than the minimum one, the issue of the necessity of additional accrual of SSP must be considered simultaneously with calculation of a sick leave. Taxes from which entrepreneurs on a simplified system are exempt Under paragraph of the Tax Code of Ukraine (TC) individuals - entrepreneurs - single tax payers are exempt from the duty of calculation, payment and filing tax reports in respect of the following taxes: personal income tax with respect to income (taxation object) that are received as a result of the economic activity of a single tax payer of the first-third groups (individual) and taxed under chapter 1 "The simplified system of taxation, accounting and reporting" of the TC; value added tax with respect to operations of supply of goods, works and services, the place of supply of which is located in the customs territory of Ukraine, except for the value added tax paid by individuals who have chosen the single tax rate specified in subparagraph 1 of paragraph of the TC; property tax (with respect to land tax), except for land tax on plots of land which are not used by single tax payers of the first-third groups for economic activities.

3 Subject to paragraph of the TC calculation, payment and filing reports with respect to other taxes and duties than those mentioned in paragraph of the TC are made by single tax payers in the order, amounts and terms established by the TC. When importing goods into the customs territory of Ukraine taxes and duties and customs payments are paid by a single tax payer on general grounds in accordance with the laws. A single tax payer performs functions of a tax agent provided by the TC in case of charge (payment, provision) of income, taxable by personal income tax, in favour of the individual having labor or civil relations with them (p of the TC). If a legal entity - single tax payer of the third and fourth groups calculates the advance payment of income tax when paying dividends Public informational resource, subcategory According to subparagraph of the Tax Code of Ukraine (TC) in the case of decision regarding payment of dividends an income tax payer - emitter of corporate rights, on which dividends are accrued, makes these payments to the owner of such corporate rights regardless of whether there is a taxable profit calculated according to the rules set out in article 137 of the TC. According to subparagraph of the TC, except for cases provided by subparagraph of the TC, the emitter of corporate rights which decides to pay dividends to its shareholders (owners), calculates and makes the advance payment of income tax to the budget. Attorney-at-Law Ignatova@dmp.com.ua The advance payment is calculated on the amount of excess of dividends to be paid over the value of the object of taxation for the relevant tax (reporting) year, on the basis of the results of which the dividends are paid, for which the financial obligation is fulfilled. In the case of the outstanding financial obligation the advance payment is calculated on the total amount of dividends to be paid. The advance payment is calculated at the rate specified in paragraph of the TC. The amount of dividends payable is not reduced by the amount of the advance payment. At the same time in the event that dividends are paid for the incomplete calendar year, then to calculate the amount of this excess the value of the object of taxation, calculated in proportion to the number of months for which the dividends are paid, is used. The said advance payment is made to the budget prior to/or simultaneously with the payment of dividends.

4 The amount of maid advance payments of income tax when paying dividends is subject to entry to deduct the tax obligation in respect of income tax declared in the tax return for the reporting (tax) year. Calculation of income of IE if during the year there are both losses and income Public informational resource, subcategory Taxation of income received by an individual - entrepreneur from business activities except for persons, that have chosen a simplified taxation system, is regulated by article 177 of the Tax Code of Ukraine (TC). According to subparagraph of the TC the total annual taxable income is equal to the sum of total monthly taxable income, foreign income, received during such a reporting tax year, income received by an individual - entrepreneur from business activities in accordance with article 177 of the TC. Income of individuals - entrepreneurs received during the calendar year from economic activities are taxed at the rates specified in subparagraph of the TC. In the case of reducing the amount of income, received during the previous calendar quarter of the current year, by more than 20% compared with the calculated expected amount of income in such a quarter the taxpayer have the right to reduce the amount of the advance payment, payable in the next period, in proportion to the amount of reduction of the amount of the said income. For the purpose of reduction of the amount of the advance payment by an individual - entrepreneur before the deadline for payment of such an advance payment the application in any form that contains calculations of reduction of the amount of the advance payment and a brief explanation of the circumstances that led to the reduction in the amount of received income is submitted to the controlling authority. Under paragraph of the TC individuals - entrepreneurs submit a tax return to the controlling authority at the place of their tax address on the basis of the results of the calendar year in terms established by the TC for an annual tax reporting period, in which the advance payments of income tax are also indicated. Thus, the amount of the average monthly annual taxable income is calculated as the sum of the total monthly taxable income divided by the number of calendar months during which the taxpayer received such an income in the tax (reporting) year for which the declaration is made. According to subparagraph of the TC the final calculation of personal income tax for the reporting tax year is carried out by the taxpayer by themselves according to data

5 from the annual tax return, taking into account personal income tax paid by them during the year on the basis of documentary confirmation of the fact of its payment. The amounts of exchange differences are included in income of a legal person-single tax payer of the third group Public informational resource, subcategory In accordance with subparagraph 2 of paragraph of the Tax Code of Ukraine (TC) income of a single tax payer of the third group for a legal entity is any income, including income of representative offices, subsidiaries, branches of such a legal entity, received during the tax (reporting) period in money (cash and/or non-cash); tangible or intangible form, determined by paragraph of the TC. Legal entities - single tax payers, who meet the criteria set out in subparagraph 3 of paragraph of the TC, keep simplified books of income and expenses for the purpose of calculating the object of taxation under the methodology approved by the central executive body which provides formation and implements the national tax and customs policy (p of the TC). Lawyer Shchukina@dmp.com.ua In accordance with paragraph 10 of section I of the Regulations (Standard) of Accounting 25 "Financial Report of a Small Business", approved by Order of the Ministry of Finance of No 39 (hereinafter - R(S)A 25), for the purpose of formation of financial reporting economic agents that meet the criteria set out in paragraph of the TC and applying the simplified system of taxation, accounting and reporting recognize income and expenses under national regulations (standards) of accounting. In item "Other income" the amounts of other income from operational activity of the enterprise, other than income (proceeds) from sale of products (goods, works, services), namely, income from operational and non-operational exchange differences (subparagraph 2.2 of section III R(S)A 25), are recorded. Determination of exchange rate differences in accounting is conducted according to the Regulations (Standard) of Accounting 21 "The Effect of Changes in Foreign Exchange Rates", approved by Order of the Ministry of Finance of No 193 (hereinafter - R(S)A No 21). The exchange difference is a difference between the valuations of the same number of units of foreign currency at different exchange rates (p. 4 R(S) No 21). Thus, the income from operational and non-operational exchange differences (positive value of exchange differences on conversion of foreign currencies) is included

6 in the income of a legal entity - single tax payer of the third group, negative value of exchange differences does not reduce the base of taxation by a single tax. Obtaining of the certificate of absence of tax debts for exit for permanent residence without presentation of the receipt of payment of PIT Regulation of the CMU of No 36 The Order of obtaining the certificate of payment of personal income tax by a taxpayer resident, who goes abroad for permanent residence, and of absence of tax obligations in respect of such a tax, approved by Regulation of the Cabinet of Ministers of No 1243 has been slightly corrected. In particular, the provision that obliged the above taxpayer to show the document confirming payment of PIT (bank receipt, payment order) to the controlling authority to obtain a relevant certificate has been removed. So the government brought a legal act in accordance with the current laws. After all by order of the Ministry of Revenues and Duties "On Approval of Information Cards of Administrative Services" of No 161 the temporary list of free administrative services provided by the controlling authorities was approved. In particular, the issue of the certificate of payment of PIT by a taxpayer - resident who goes abroad for permanent residence, and of absence of tax obligations in respect of such a tax is referred to such administrative services. The Regulation will enter into force from the date of its official publication. Revised International Accounting Standards have been promulgated International Financial Reporting Standards The Ministry of Finance of Ukraine have published the text of the International Financial Reporting Standards (IFRS), including International Accounting Standards (IAS) and Interpretations (IFRIC, IFRIC) issued by the International Accounting Standards Council amended as of January 1, The draft of the decree of the CMU regarding ensuring implementation of the procedure of making a tax compromise has been promulgated Press Service of the SFS of Ukraine The draft of the decree of the CMU On ensuring implementation of the procedure of making a tax compromise On the official web portal of the State Fiscal Service of Ukraine in the subsection "Drafts of regulatory acts" of section "Regulatory policy" the revised draft of the CMU On ensuring implementation of the procedure of making a tax compromise has been placed.

7 The draft has been drawn up for the purpose of execution by the bodies of the SFS of the Law of Ukraine "On introduction of amendments to the Tax Code of Ukraine regarding peculiarities of revision of tax obligations in respect of corporate income tax and value added tax in the case of application of a tax compromise" of No 63-VIII. The draft provides for statutory regulation of the issue of carrying out by the bodies of the SFS of documentary inspections during implementation of the procedure of making a tax compromise under conditions of the moratorium on carrying out of inspections of taxpayers in in the way of provision by the Cabinet of Ministers of Ukraine of the permission to the bodies of the State Fiscal Service of Ukraine to carry out such inspections. Bills in respect of real estate tax will be sent by July By 1 July the bodies of the State Fiscal Service must send bills with an indication of the amount of the real estate tax to all owners of apartments. The fee will be charged for the previous year. This year the owners of apartments of the total area of over 120 square meters and houses of more than 250 square meters will have to pay for their dwelling. Kyiv City Council has determined that from May 1, 2016 the annual tax on residential property will be 1% of the minimum wage per square meter of living area exceeding 60 square meters in apartments and 120 square meters in houses. The owners of commercial real estate will have to pay this year already. By February 20 the owners of offices, warehouses or commercial real estate are obliged to apply to the fiscal service, register their object and receive the bill. Senior lawyer Tropec@dmp.com.ua In 2015 they have to pay 1% of the minimum wage per square meter per year and in %. The ground for charge of a rent is a leasing contract From the property tax and the single tax are referred to the local taxes. The property tax consists, in particular, of payment for land. According to p of art.12 of the Tax Code country, village and city councils within their authority and taking into account threshold amounts of rates determine by their decisions local taxes and fees that are mandatory for payment in the territory of relevant municipalities. In accordance with subparagraph of paragraph 12.3 of article 12 of this Code the decision on determination of local taxes and duties and in particular payment for land is

8 promulgated by July 15 of the year preceding the fiscal period in which it is planned to use local taxes and duties. By December 25 of the year preceding the reporting one local governments must submit decisions on land tax rates and conferred benefits with respect to payments of land tax to the controlling authorities (p art. 284 of the said Code). Due to the fact that the above provision came into force on and relevant decisions were not passed by local councils, in 2015 land tax payers calculate the amounts of tax liabilities as of January 1 and not later February 20 they submit tax returns as regards payment for land using the rates that have been valid till (subparagraph of paragraph 12.3 of art. 12 of the Tax Code). In 2015 tax liabilities in respect of payment for land are determined according to the form approved by order No 865. At the same time in 2015 the State Agency for Land Resources of Ukraine for the purpose of indexing of the normative monetary value of land of settlements, other nonagricultural land and agricultural land the coefficient is determined. Since for the purpose of determination of the amount of payment for land the normative monetary value of plots of land is used, land users (land owners) need to apply to the local authorities of the State Agency for Land Resources of Ukraine at the place of location of plots of land and receive information of the normative monetary value of plots of land. In addition, for certain categories of land users the Tax Code sets out the conditions under which they may be payers of the land tax. In particular, on transfer of the right of ownership of buildings (and others) the land tax on plots of land on which such buildings are located is paid on general grounds from the date of state registration of the right of ownership of the plot of land (up to from the date of registration of the right of ownership of real estate). The wording of the first part of paragraph of article 288 of the Tax Code has been amended by Law No 71. The ground for charge of a rent for the plot of land as it was earlier is the contract of lease of such a plot of land, but executed and registered in accordance with the law. It should be reminded that the standard form of the contract of lease of the plot of land is approved by the decree No 220. In view of the above, land users should apply to the executive authorities and local self-government (under the authority specified by art. 122 of the Land Code) and register the right of ownership or use during It should be noted that for certain categories of land users the privileges in respect of payment of the land tax have been cancelled by law No 71, that is why they have a duty to calculate and pay the tax on general grounds.

9 At the meeting of the Government the decree "On introduction of amendments to the Order of granting permission to use taxation privileges for enterprises and nongovernmental organizations of disabled people" has been adopted. In particular, the changes provide for application of the criteria set out in subparagraph 3 of paragraph 2 of the Order (the sum of costs of an enterprise, organization of processing of raw materials, components, parts, other purchased goods (services) used for production of goods (rendering services) directly by enterprises, organizations, is not less than 8 per cent of the price for the supply of such produced goods (rendered services)) only in case of considering the issue of granting permission for exemption from value added tax. The above criterion does not apply when considering the issue of granting privileges on payment of income tax and payments for land. Permission for the right of use of taxation privileges for enterprises and nongovernmental organizations of disabled people will be executed by the decision of the head of the local state administration in the form of an order. In addition, the deadline of consideration of documents of the enterprise, organization by regional and Kyiv City state administrations and making by them of a decision (order) on expediency of granting to the enterprise, organization the permission for the right of use of taxation privileges for subsequent sending to the Ministry of Social Policy and making a decision by it has been determined. The set of documents will need to be submitted to the Ministry not less than 15 working days before the beginning of the quarter from which the enterprise, organization are planning to get the permission.