The failure to comply with the provisions of the Tax Code of Ukraine regarding submission of VAT tax returns in electronic form itself is not a basis for refusal to accept the tax return
On August 3, 2018, the ruling of the Supreme Court dated July 31, 2018 in the case No. 810/1570/16 was published, where the court expressed the opinion that the tax payer’s failure to comply with the provisions of Clause 49.3 of Article 49 of the Tax Code of Ukraine (hereinafter the “Tax Code”) regarding submission of tax reports on the value-added tax in electronic form and submission thereof in paper form itself is not a basis for refusal to accept the tax return, provided that the submitted documents contain the obligatory details set out in Clauses 48.3 and 48.4 of Article 48 of the Tax Code.
According to Sub-clause 49.10 of Article 49 of the Tax Code refusal of the regulatory authority’s official to accept a tax return for any reason not provided for by this Article, including establishment of any pre-conditions for such acceptance not provided for by this Article (including change of indicators of such tax return, decrease or increase in the negative value of an object of taxation, amounts of budget reimbursements, illegal increase in tax liabilities etc.) is prohibited.
Therefore, the regulatory authority may refuse to accept a tax return solely in case of the tax payer has breached Clauses 48.3 and 48.4 of Article 48 of the Tax Code when filling in the return.
The laws do not provide for submission of copies of documents separately from the explanations to unblock tax invoices
The State Fiscal Service (hereinafter the “SFS”) has furnished its explanations at the Public Information and Reference Resource regarding the way of how a tax payer may submit documents in case of they have not been enclosed to the explanations furnished to confirm the information set out in a tax invoice/adjustment calculation (hereinafter the “TI/AC”), registration of which is suspended.
Namely, the tax authorities have stated that it is prescribed by Clause 16 of the Procedure for Suspending Registration of the TI/AC with the Unified Register of Tax Invoices (hereinafter the “Register”) approved by Resolution of the Cabinet of Ministers of Ukraine No. 117 dated February 21, 2018 (hereinafter the “Procedure”) that written explanations and copies of the documents set out in Clause 14 of the Procedure are submitted by a tax payer to the SFS in electronic form by electronic communication means prescribed by the SFS. According to Clause 21 of the Procedure grounds for the decision of denial of registration of the TI/AC taken by the regulatory authorities’ committees include without limitation the tax payer’s failure to furnish copies of documents in accordance with Sub-clause 4 of Clause 13 of the Procedure.
Therefore, the laws do not provide for submission of copies of documents separately from the explanations submitted to confirm the information set out in the TI/AC, registration of which is suspended.
At the same time, a decision on denial of registration of the TI/AC with the Register may be appealed within administrative or judicial proceedings. In this case, a VAT payer may enclose explanations and copies of the documents confirming the information set out in the TI/AC, registration of which is suspended, to the complaint.
In our opinion, this statement is consistent with the procedural laws and court practice, according to which courts have to take into consideration and assess all the evidence furnished by the tax payer claimant when considering appeals against decisions of tax authorities.
Single tax payers of IVth group have to submit an updated tax return when acquiring rights to new agricultural lands
The Main Department of the SFS in Odesa Region has reminded that the single tax payers of IVth group calculate the amount of the tax on their own as of 1 January and submit a tax return for the present year to the regulatory authority at the tax payer’s location and at the land plot’s location by 20 February of the present year (Sub-clause 295.9.1 of Clause 295.9 of Article 295 of the Tax Code of Ukraine).
In this case, if the title or right of use of agricultural lands and/or water resources in the new administrative territory is acquired during the present year, the tax payer of IVth group shall, within twenty calendar days of the month following the reporting fiscal quarter when such changes took place, submit to the regulatory authority the following:
- at its location – updated general tax return and annex “Data on Land Plots” as well as confirmation documents on the land plots and their regulatory appraised value;
- at the land plot’s location – tax return with the equivalent documents: the “Reporting” one, if the tax return has not been submitted to the regulatory authority, or the “Updated reporting” one, if the “Reporting” tax return has been submitted to the regulatory authority.
An error in the budget account in the bank transfer order is not a basis for fines
In the ruling in the case No. 815/2405/16 the Supreme Court confirmed the existing opinion, according to which payment of the approved tax liability by the tax payer within the term established by the laws, yet with the wrong budget classification code set out in the bank transfer order, is not deemed a breach of the tax payment term.
The court stated that an error made when transferring the approved tax liability to the state budget within the term prescribed by Clause 57.1 of Article 57 of the Tax Code of Ukraine shall be qualified as an action, although an erroneous one. Therefore, the actions not bearing the signs of the tax payer’s omission in payment of the approved tax liability may not be the basis for the fines provided for by Clause 126.1 of Article 126 of the Tax Code of Ukraine.
In our opinion, the given statement of the Supreme Code is fully consistent with the laws and may be useful to tax payers taking into account quite regular changes in budget account details.
The new consolidating tax advices on VAT have been adopted
On August 3, 2018, the Ministry of Finance of Ukraine issued Order No. 673 “On Approving the Consolidating Tax Advices on Certain Value-Added Tax Issues” approving four consolidating tax advices (hereinafter the “CTA”):
- Regarding special aspects of payment of the value-added tax on the negative difference between the purchase price (regular price) and selling price of such goods to be exported
It is stated in the advice that in case of goods are exported at the price lower than the purchase price (regular price) of the goods, the zero value-added tax rate is applied to the transaction in general, provided that export of the goods under the respective customs-approved treatment is confirmed with the duly executed customs declaration.
- Regarding documental confirmation of destruction or loss of fixed production or non-production assets
The advice lists the documents necessary to confirm liquidation of fixed production or non-production assets in connection with destruction or loss thereof as a result of circumstances of insuperable force and in other cases of liquidation without the tax payer’s consent, including in case of theft. Provision of the given documents to the regulatory authority will allow not accruing VAT liabilities in connection with liquidation of the fixed assets.
- Regarding payment of the value-added tax on the funding received by the permanent representative office from the non-resident parent company
The advice contains the conclusion that funding of expenses of the permanent representative office of a non-resident entity in Ukraine is not supply of goods/provision of services, and therefore the permanent representative office of the non-resident entity in Ukraine does not determine value-added tax liabilities upon receipt of such funds. Moreover, it is stated in the advice that the representative office does not take the funds received from the parent company into consideration in the total scope of transactions for the purposes of mandatory registration of the permanent representative office as a value-added tax payer.
- Regarding payment of the value-added tax on transactions carried out by banks and other financial institutions for financial leasing of the property acquired by them as a result of foreclosure on such property
- are exempted from payment of the value-added tax on the basis of Paragraph 2 of Clause 197.12 of Article 197 of the Tax Code of Ukraine in terms of the part of the value of the property at which such property has been acquired by settling liabilities under the loan agreement;
- accrue value-added tax liabilities on the basis of the tax assessment base determined in accordance with Clause 189.1 of Article 189 of the Tax Code of Ukraine in case of the amounts of the value-added tax were included into the credit against tax when the bank acquired such property;
- accrue value-added tax liabilities on the basis of the tax assessment base determined as the positive difference between the price of supply and the price of acquisition of such property taking into account the requirements set by Clause 189.15 of Article 189 of the Tax Code of Ukraine.
In general, the approved consolidating tax advices will positively influence the Ukrainian business as it will encourage uniform understanding of the tax laws, which in its turn will decrease the quantity of disputes with tax authorities.
Rounding off sums in receipts: what to do with minimum alcohol prices and maximum tobacco prices?In individual tax advice No. 3395/6/99-99-14-05-01-15/ІПК dated August 2, 2018, on the given issue, the State Fiscal Service recommends that:
- given Resolution of the Board of the National Bank of Ukraine No. 25 dated March 15, 2018 in terms of the mechanism for rounding off general sums, business entities selling alcoholic beverages should take into consideration the requirements to setting minimum wholesale and retail prices of alcoholic beverages not lower than prices approved by the Cabinet of Ministers in Resolution No. 957 dated October 30, 2008 “On Setting the Minimum Wholesale and Retail Prices of Certain Types of Alcoholic Beverages”;
- given Resolution of the Board of the National Bank of Ukraine No. 25 dated March 15, 2018 in terms of the mechanism for rounding off general sums of cash settlements for goods in the receipt, retail business entities selling tobacco products should take into consideration the requirements of Sub-clause 14.1.106 of Clause 14.1 of Article 14, and Clause 221.3 of Article 221 of the Tax Code of Ukraine, namely: excisable goods for which maximum retail prices are established may not be sold by retail business entities at the prices exceeding the maximum retail prices increased by the amount of the excise tax on the retail trade in excisable goods.
The SFS has furnished no new information in its advice, but the tax authority’s opinion is now clear: despite the rounding rules, prices of excisable goods may not be lower than the minimum retail prices and higher than maximum retails prices in any case.