Taras Rozputenko: STSU’s explanation of Tax Code regulations run counter to those regulations
Kyiv. April 6, 2011
On April 1,
2011 Tax Code regulations came into force, among others, those
regulating application of profit tax relief. The State Tax Service of
Ukraine (STSU) explained them. But the explanations contradict to the
Tax Code regulations, believes Taras Rozputenko, an attorney at law with Volkov and Partners Law Firm.
abovementioned was his comment to the Interfax-Ukraine Agency
concerning the regulations coming into force, as well as the STSU’s
letter No. 6286/7/16-1517 dated March 4, 2011. Under the letter tax/duty
exemption benefit should be applied not to separate taxpayers but to
certain transactions, determined in Article 197 of Section V and
separate clauses of subsection 2 of Section ХХ of the Tax Code.
the STSU’s letter presents interesting and illogical conclusion: the
taxpayer can either wave a tax relief or stop applying it for one or
several tax periods only in case if such tax relief is applied directly
to the taxpayer, but it cannot if the tax relief applies to certain
goods and services delivery transactions. And it cannot wave lower tax
rate as well,” explained Taras Rozputenko.
At the same time, Mr.
Rozputenko made an admission that Tax Code reads nothing of conditions
making the wave of tax relief impossible. Moreover, a benefit is in
essence an advantage, which must be granted to the subjects set out in
In addition, Mr. Rozputenko considers, the ambiguous
approach of the STSU’s letter can be applied to the profit taxation
matters and other issues regarding tax and duties, confusing business
representatives still further.
The lawyer also explained that the
STSU’s letters are not binding and likely to be of recommendative or
informative nature, aiming to outline the STSU agency’s legal views on a
certain issue. “But that is not to say such legal views are necessarily
true. One should first carefully read the provisions of laws and bylaws
and, afterwards, pay regard to opinions of certain public agencies,”
emphasizes Mr. Rozputenko.
The expert, thus, points out that the Tax Code stipulates a tax relief may be used, waived, or suspended.
the Tax Service concludes in writing to apply the Tax Code’s provisions
in a different way, such conclusion may be surely claimed in the
superior tax body or in the court to protect taxpayer’s interests,”
summed up Mr. Rozputenko.
Pursuant to clause 30.1 of Article 30 of
the Code a tax relief is taxpayer’s immunity from accrual and payment of
tax and charges, which is provided by the tax and customs legislation;
payment of tax and charges at lower rate provided there arise grounds
set out in the Tax Code.
Simultaneously, clause 30.4 of Article 30 of
the Code entitles a taxpayer to waive a tax relief or suspend it for
one or several periods, unless otherwise prescribed in the Tax Code.
since April 1, 2011 certain provisions of the Tax Code lowering income
tax from 25 percent to 23 percent, introducing tax relieves for certain
industries and “tax holidays” for enterprises with annual income below
UAH 3 mln have become effective. In addition, the whole part ІІІ
regulating taxation of corporate profit has come into force as well.