At the 8th meeting of its Expert Council, the Ministry of Finance adopted the new summarizing tax consultations concerning VAT application for the export of soya beans and seeds of barbarea or rape plants.
Ambiguity in the interpretation of the tax regulations results in tax disputes between taxpayers and tax authorities. To settle them, the Ministry of Finance has implemented a mechanism of tax clarifications known as summarizing tax consultations (STC).
The adoption of the law “On Amendments to the Tax Code for the Improvement of the Investment Climate in Ukraine” in the end of 2016 gave the Ministry of Finance more powers to issue the STCs, since they used to be issued only for tax cases concerning a big number of taxpayers or a substantial tax revenue amount. According to this new law, the Ministry of Finance is free to issue STCs to clarify any disputable issues concerning the interpretation of the tax regulations.
On September 27, 2017, the Ministry of Finance issued a decree setting the procedure for the issue of the STCs. The main innovation of this decree was to establish the Expert Council under the Ministry of Finance serving as an advisory and consulting body. The members of the Expert Council are representatives of the responsible unit of the Ministry of Finance, SFS, Parliament’s committee for finance and banking, business associations, audit firms, banks, Council of the Business-Ombudsman, civil councils at the SFS and the Ministry of Finance. The Expert Council handles tax issues that are subject to summarizing tax consultations.
The important feature of the STCs is that taxpayers acting in accordance with them cannot be made liable for these actions in any way. In addition, clarifications to the Tax Code were adopted stipulating the priority of the STCs over individual tax consultations as well as the mandatory consideration of the respective STCs during tax checks.
In the period from December 2017 until March 2019, the Expert Council had eight meetings. According to its rules of procedure, the Expert Council has its meetings at least every quarter of a year.
So far, the Expert Council has issued 16 summarizing tax consultations on various issues concerning the application of the corporate profit tax, VAT and the land tax.
“We are working to provide explanations on disputable tax issues as soon as possible through summarizing tax consultations. They pose an effective tool to prevent tax disputes; the meetings of the Expert Council make it possible to timely react to relevant problems in taxation thus ensuring a transparent process and a balance of taxpayers’ and state interests,” said Deputy Minister of Finance Serhiy Verlanov.
- Topics that are now under discussion at the Expert Council (different stages):
- Application of the VAT to operations with the free-of-charge provision of goods and services;
- Application of the VAT to international cargo transportation services provided by forwarders;
- Expenses of private entrepreneurs for the lease of state of municipal land plots;
- Application of the regulations on the application of the land tax to forests taking into account amendments to the Tax Code of Ukraine enacted by the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Certain Laws of Ukraine on Incentives for the Creation and Operation of Family Farms”.
- Application of the VAT to the delivery of software (preparation of the draft of the relevant STC);
- Issues concerning the taxation of operations with cryptocurrencies (assessment of the possibility to prepare STCs based on the current legislation or to develop concept for amendments to the tax regulations).
List of the summarizing tax consultations adopted in accordance with the recommendations of the Expert Council
Order of the Ministry of Finance of Ukraine No. 77 of February 01, 2018
2. STC on the application of sub-paragraph 14.1.11 of paragraph 14.1 of article 14 of the Tax Code of Ukraine on the acknowledgement of debts as irrecoverable by
3. STC on the taxation of operations concerning debt relief or debt write-off.
Order of the Ministry of Finance of Ukraine No. 400 of April 03, 2018
4. STC on the mandatory application to the court to have a debt acknowledged as irrecoverable according to sub-paragraph “a” of sub-paragraph 14.1.11 of paragraph 14.1 of article 14 of the Tax Code of Ukraine;
5. STC on the application of paragraph 139.3 of art. 139 of the Tax Code of Ukraine concerning the processing of the reserves exceeding the valid limit;
6. STC on the correction of the financial result
before taxes due to the use of reserves related to debt relief granted by
7. STC on the proper notification of an indebted private person about debt cancellation (debt relief).
Order of the Ministry of Finance of Ukraine No. 602 of July 06, 2018
8. STC on the calculation of the land fee in case of the lease of rooms in a
9. STC on the land tax to be paid by the owner of properties located on the land plot for which this owner has no registered rights;
10. STC on the collection of the land tax from private entrepreneurs registered as payers of the single tax.
Order of the Ministry of Finance of Ukraine No. 637 of August 03, 2018
11. STC on the application of the VAT to the negative difference between the purchase price (regular price) and the export price of
12. STC on the documentary proof of the destruction or
demolition of the fixed production or non-production assets;
13. STC on the application of the VAT to operations concerning funding provided by a non-resident mother company to its
permanent representative office;
14. STC on the application of the VAT to operations by banks or other financial institutions
concerning the financial leasing of assets gained by them through the liability
of third parties.
Order of the Ministry of Finance of Ukraine No. 887 of November 14, 2018
15. STC on the application of sub-paragraphs 140.5.4 and 140.5.6 of paragraph 140.5 of article 140 of the Tax Code of Ukraine concerning the definition of
the tax (reporting) period for the correction of the financial result before
Order of the Ministry of Finance of Ukraine No. 105 of March 11, 2019
16. STC on the application of the VAT for the export of soya beans and seeds of barbarea or rape plants.