Rolan Bondarets, Author at Finance Business Service

Changes in transfer pricing

Published: Rolan Bondarets | 21/02/2018 | blog

As we have noted earlier, numerous amendments to the tax legislation have been introduced by the Law of Ukraine No. 2245-VII “On Amendments to the Tax Code of Ukraine and certain legislative acts of Ukraine regarding ensuring the balanced budget income in 2018”. In this article, we want to highlight the changes that transfer pricing has undergone, namely the changes introduced by the above-mentioned Law in article 39 of the Tax Code of Ukraine. The first significant step has been the introduction of changes in the criteria that are applied by the Cabinet of Ministers of Ukraine in determining “low-tax” states (territories). If previously, one of such criteria has been the existence of a profit tax rate in the state (territory), which is 5 and more percentage points lower than in Ukraine (subparagraph 39.2.1.2, paragraph 39.2, article 39 of the TCU), but now, except for the low rate of income tax, those states (territories) “that provide economic entities with preferential taxation regimes or in which the features of calculating the tax base actually allow business entities not to pay corporate income tax (corporate tax) or pay it at the rate, which is 5 percentage...

MFU Has Developed a Draft Resolution for the Operation of VAT Risk System

Published: Rolan Bondarets | 13/02/2018 | news

The Ministry of Finance of Ukraine has developed a draft Resolution on the further operation of the VAT risk system. This mechanism is a necessary measure aimed at the prevention of VAT embezzlement schemes and uninterrupted process of automatic VAT refund. We remind that in December last year, the work of the VAT risk system was suspended in order to develop a coordinated effective solution which would not entail new risks. So, the MFU together with the SFS have developed and agreed upon a decision that was made public on the official website of the Ministry on February 9, for public discussion. Now the draft Resolution is under consideration of people’s deputies of the Tax and Customs Policy Committee. It includes the following changes: In order to reduce the cases of suspension of the registration of tax invoices, a “cutoff criterion” of 3% and a threshold of the volume of supply for the month of 500 thousand UAH are established. Earlier, the coordination of evaluation criteria continued for some time, that allowed some payers to use a fictitious loan. It is proposed the SFS to establish criteria for risk assessment for a prompt response. In order to ensure the...

Offshore Transactions No Longer Subject to Additional Bank Checks

Published: Rolan Bondarets | 01/02/2018 | news

The NBU has forbidden financial institutions to apply the requirements of the Regulation on the procedure of analysis by the banks and verification of documents (information) on financial transactions and their participants (Resolution No.369) to the transactions, one of the parties of which are persons registered in the offshore zones. On January 24, the financial institutions received the corresponding Clarification No.25-0008/4731, signed by the director of the financial monitoring of the National Bank of Ukraine, Igor Beryoza. The document was sent out in the form of an electronic message. The letter states that from January 1, 2018 banks should not define such operations as risky ones, which means they are not required to conduct additional checks and request the documents from the clients. This change is justified by the fact that the order of the Cabinet of Ministers, effective from September 16, 2015, with which the list of offshore countries and territories was enshrined, lapsed at the beginning of this year. At the same time, the updated list, determined by a separate order, was not included in the relevant resolution of the National Bank. In other words, the list of...

New Supreme Court, the first “new” legal positions: What to expect and what to hope for?

Published: Rolan Bondarets | 31/01/2018 | blog

Despite all the advantages and disadvantages of the judicial reform that is taking place in Ukraine, the legal community and business nevertheless have placed certain hopes on the new Supreme Court and its focus on the rule of law, as well as on the fact that when considering cases and forming legal positions, it will take into account the practice of the European Court of Human Rights. Such hopes were not groundless, as Article 6 of the Code of Administrative Procedure of Ukraine indicates that “the Court applies the principle of the rule of law, taking into account the jurisprudence of the European Court of Human Rights” (other procedural codes contain similar provisions). Part 1 of Article 36 of the Law of Ukraine “On judicial system and status of judges” states: “The Supreme Court is the highest court in the judicial system of Ukraine, which ensures the constancy and unity of judicial practice in the order and manner prescribed by the procedural law”. It's no secret that there have been absolutely opposite positions of the courts for many years regarding the application of tax consequences in that case when a court verdict (or only the director’s explanations)...

Unblocking Tax Invoices: Will It Be the Same for Everyone?

Published: Rolan Bondarets | 17/01/2018 | blog

Before New Year, our legislators traditionally adopt and publish numerous changes in the tax legislation. The change from 2017 to 2018 was no exception. Thus, on December 7, 2017, the Law of Ukraine No.2245-VII “On Amending the Tax Code of Ukraine and Certain Legislative Acts of Ukraine on Ensuring the Balance of Budget Revenue in 2018” was adopted and officially published on December 30, 2017 (newspaper “Golos Ukrainy” No.248 (6753) dated December 30, 2017). The Law provides for the numerous changes in the tax legislation. The most expected change for business, perhaps, was the abolition of the “blocking” of tax invoices from January 1, 2018, at least until March 1, 2018. It became possible in connection with the exclusion of clause 74.2, article 74, of the Tax Code of Ukraine, which provided for the continuous automated monitoring of tax invoices and adjustment calculations for compliance with the criteria for the risk assessment sufficient to stop the registration of such tax invoices/adjustment calculations. In addition, paragraph 201.16 Art. 201 of the Tax Code of Ukraine has also been amended, according to which (new edition) “registration of a tax...

The European Union Intends to Exclude 8 Countries from the “Black List” of Offshore Zones

Published: Rolan Bondarets | 17/01/2018 | news

The European Union is discussing the possible exclusion of eight countries from the “black list” of offshore zones. It is reported by the IA Reuters, referring to the documents at its disposal. According to the agency, Panama, UAE, South Korea, Barbados, Grenada, Macau, Mongolia and Tunisia can be removed from the list. Such a proposal is justified by the fact that these countries have agreed to change their tax policy. In addition, an exclusion from the list of Bahrain was discussed, but in the end, it was decided to leave it on the list. On Tuesday, January 16, the issue was discussed at the ambassadorial level. And next week the proposal will be considered by the EU finance ministers. In early December, the last ones published a “black list” of countries that did not want to cooperate with the EU in the field of tax reporting, as reported by the UNIAN. The list includes 17 countries, namely: American Samoa, Bahrain, Barbados, Grenada, Guam, Macau, Marshall Islands, Mongolia, Namibia, United Arab Emirates, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia and South Korea. Offshore zones are on the territory of the most part of these states. We remind that...

Campaign “Declaration of incomes of citizens – 2018” Has Started

Published: Rolan Bondarets | 11/01/2018 | news

As the main office of the SFS in Kyiv reports, from January 1, 2018, the campaign of declaring incomes of citizens, received during 2017, has started which will last until May 1, 2018. We would like to note that the citizens are obliged to submit an annual Declaration on Property and Income in case if they received in 2017: separate incomes, from which income tax on natural persons was not withheld in the calculation and payment during the year 2017; income from natural persons who do not have the status of tax agents (for example, income from the provision of real estate for rent to a natural person who is not a subject of business activity); foreign incomes; other incomes, which declaration is provided by the current legislation. Such citizens are obliged to deposit the amount of such income in the total annual taxable income and submit before May 1, 2018 the annual tax declaration on the property status and income based on the results of 2017, as well as to calculate and pay a tax on such income at a rate of 18% to the budget until August 1 2018 and military duty at a rate of 1.5%. We also remind that citizens willing to exercise their right to a tax discount...

The Cabinet of Ministers Has Approved a List of States (Territories) Where the Operations with Residents are Recognized as Controlled for the Purposes of TP

Published: Rolan Bondarets | 28/12/2017 | news

On December 27, 2017, the Cabinet of Ministers of Ukraine approved a new list of states (territories) where the operations with residents are recognized as controlled for the purposes of transfer pricing. It was due to the recent changes in the selection criteria. The new list was formed according to the following criteria: state (territories) where the corporate income tax rate is 5 and more percentage points lower than in Ukraine (that is, below 13%); states with which Ukraine has not concluded international agreements containing provisions on the exchange of information; states which competent authorities do not provide timely and complete exchange of tax and financial information for the requests of the SFS. When considering the criterion of the rate of corporate income tax, not only basic but also preferential rates for individual industries, territories, and types of activities were taken into account. Operations with a counterparty registered in the state (in the territory) entered in the approved list are recognized as controlled ones for the purposes of transfer pricing from the 1st of January of the reporting year, following the calendar year in which the...

Single Judicial Information and Telecommunication System (SJITS) within the Framework of the Code of Administrative Court Procedure

Published: Rolan Bondarets | 26/12/2017 | blog

It’s not a secret for anyone that in order to protect your rights and protected interests, in the event of a tax dispute, taxpayers apply to the district administrative courts. Since December 15, 2017, the procedure of appeal and the consideration procedure in the district administrative courts has changed significantly, in connection with the entry into force of the new edition of the Code of Administrative Court Procedure of Ukraine. The number of novels that appeared in the new edition of the Code is quite significant. In this article, I would like to provide an overview of such an innovation in administrative procedure as the Single Judicial Information and Telecommunication System. Article 18 of the Code of Administrative Court Procedure of Ukraine defines the tasks that are imposed on the Single Judicial Information and Telecommunication System (hereinafter - the System): registration of documents entering the court (which may be the subject of litigation); determination of the judge(s) for the consideration of the case; exchange of documents (sending and receiving documents) in electronic form between the courts, between the court and the participants to the...

Procedural Codes will Undergo Another Changes

Published: Rolan Bondarets | 21/12/2017 | news

The Verkhovna Rada of Ukraine has registered changes in the Code of Civil Procedure, the Code of Economic Procedure and the Code of Administrative Court Procedure provided for by three relevant draft laws. We remind that on December 15, the Law which had already been amended by these codes came into effect. However, as it was noted in the explanatory notes to the latest drafts, it was adopted in violation of the regulation. In addition, the Law contains a number of contradictory norms, on the correction of which the proposed changes are aimed. In general, it is proposed to rewrite the editions of the CCP, CEP and CACP, which have just come into effect. During the consideration of the procedural codes in the parliament, none of the amendments proposed by the deputies was adopted, although several thousand amendments were submitted at the stage of their preparation. Instead, before voting for the Law as a whole, only amendments were brought to a vote approved by the profile...

Author: Rolan Bondarets