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STAU taken artful attempt to introduce the use of conventional prices. The effectiveness of tricks will be determined in the courts of …

last week reported on finalizing a number of ministries and departments on behalf of the Cabinet's draft law On Amending the Law of Ukraine About the enterprise income tax, which provides, among other changes the bill on the practical application of the normal price for determining the tax base .

At the same time, we assumed that while maintaining incapacity of Parliament Cabinet may go repeatedly tested in the current year through the correct procedures and administration of income tax to its decision. However, the situation was somewhat different development.

September 30 Tax Administration sent the letter to the regional GAW № 21255/7/15-0217 On the application of the normal price, which describes the tentative application of the normal price under the existing legislation and to justify itself.
   

Recall: the right of the tax authority to apply the usual price for determining the tax base in the cases determined in accordance with pp.1.20.10 Law of Ukraine On taxation of income of enterprises. The letter writers were reminded of these provisions of the Act and at the same time time framework for the use of conventional prices (in particular, the form and details of the decision on the application of the normal value) and a reflection of this factin the act of verification. In particular, in an act calculated using the normal value of the amount of understated tax liabilities, according to the explanations should be allocated to the relevant sections and applications.

The same test results calculated using the normal value tax liability (including penalties) should be reflected in a separate decision, the form and the others (except the amount calculated) details of which correspond to the form and requisites of the decision on the application of conventional prices. However such a decision would be the basis for preparing and filing a claim in court.
    

According to the authors explain, to audit the tax authority shall:

- based pp.4.3.5 Law On procedure of payment … to file a claim for payment of the assessed conventional prices amounts of taxes (including penalties) to the administrative court in the manner provided p.4.st. 17 of the Code of Administrative Procedure;

- in the manner and within the time frame established by law, the tax payer to send a notification, the decision on determining the amounts of tax liabilities (including penalties) without taking into account assessed using conventional prices.
   

Actually, before the latest guidance statement indicative of the order was carried out smoothly and was unlikely to cause serious objections (relevant rules contained in the Act) then, referring to a link to pp.4.3.5 Law On procedure of payment …, the authors could not stumble. The fact that pp.1.20.10 Law on taxation of income determines that the crediting additional amounts of tax liabilities with the use of conventional prices carried out by the procedure established for the assessment of tax liabilities for indirect methods. And pp.4.3.5 Law On procedure of payment … says the decision on the payment of tax liabilities, additionally accrued using indirect methods, was adopted by the court on the proposal of the head of the tax authority. It is as if everything converges. But there is pp.4.3.3 Law On procedure of payment …, according to which the method of determining the amounts of tax liabilities for indirect methods established by law, which still does not.
    

As a result, the argument of supporters and opponents of the normal value under the existing legislation is to ascertain whether the application of the normal price by one of the indirect methods of determining the tax liabilities? In pp.1.20.10 Law on taxation of income refers to the need for action under the procedures provided for indirect methods, but did not indicate that the use of conventional prices is one of the options for the use of indirect methods. Accordingly, the proponents of conventional prices think a reference to the procedure established for the calculation of tax liabilities for indirect methods, refers only to the order of their alignment and recovery (about this and said the reference to pp.4.3.5 in the letter). Opponents argue that under the procedure, the legislator had in mind the method, which is said in pp.4.3.3 Law On procedure of payment ….

most curious that the unambiguous position on this from experts (even if the exclusion of recent tax specialists, as interested parties) offspring was not!

argument supporters and opponents of the normal value under the existing legislation is to ascertain whether the application of the normal price by one of the indirect methods of determining the tax liabilities
First

credit additionally tax liabilities through the normal price could not be reduced. Primarily due to the fact that the implementation of such additional accruals they tried to use very much dubolomny approach - the usual tax write-notification solutions. What pp.1.20.10 directly contradicts the Law on the taxation of profits and thus leaves the court in the side of the dispute is whether the use of conventional prices indirect method. As a result of this approach tax were only negative practice of court cases in this category, what's legal department informed the State Tax Administration deputy chairman of the department Nicholas Romaniv two years ago in a memo number 10-3018/3033 dated 22.08.07, and since then the situation has not changed.
   

Novopridumannaya procedure for the above reasons, one hundred percent guarantee of any of the parties (to be reduced or the taxpayers) victory in the legal dispute is unlikely to be. But at the same time and obviously illegal, as the former, it is not. Apparently, she be or not to be solved in the courts. Moreover, the pilot described the procedure to deal with extra charges of tax liabilities with the usual price of a domestic GOKs are being considered in court and have already reached the court of cassation.
    

Returning to the explanation, it is also worth noting his penultimate paragraph. It literally says that the specified procedure does not apply to reduce the negative value of the object of taxation on profits, reducing (denial of) budgetary compensation for the VAT and the reduction of the negative value of the difference between the amounts of tax liability and the tax credit on VAT (except when carried extra charges).

Why specified procedure does not apply, of course: pp.1.20.10 Act provides for the taxation of income that the court decision on the payment of tax liabilities, as described above do not include such cases.
    

But the question that the authors mean by the words specified procedure, answered by a serious debate among experts. Some insisted that it was the application of conventional prices in general. Others are inclined to believe that what is meant exactly for judicial review of the results of conventional prices. In our opinion, the first option is not very logical. The point is that tax will be taken into account the reduction in damages (and other negative values) based on the use of conventional prices, but the court will, therefore, when these results will lead to the emergence of new tax liabilities. And if the taxpayer does not agree with the results, and do not reflect them in their reporting, then sooner or later it will happen.
 
 

The tax collector - the differences

Zavgorodniy Valentine, Deputy Director of Administration of income tax and other taxes and duties (mandatory payments) Tax Administration:

  

- This letter was first officially held the distinction between normal prices and indirect methods. This set quite hard for tax authorities, but entirely legitimate procedure for the application first. To prove the validity of extra charges, the tax inspector will have the court make certain efforts. Using conventional prices would delete the barrier in the way of taxpayers using the so-called pricing scheme to minimize.

I think that the difference between application procedure (meaning the order of implementation, enforcement or registration of any action) and method of determining (management techniques and methods of calculation) is obvious. There is no need for the use of conventional prices expected enactment of the method of determining the amounts of tax liabilities by indirect methods. As for the letter of non-prescribed procedure, for example, to reduce losses, due to the fact that in this case, no extra charges for the court will be absent for consideration. However, this does not mean that the tax inspector has the right to apply the usual price.

MP - on fiscal measures

Vitaly Khomutynnik, chairman of the subcommittee on monitoring and legislative support to the activities of tax authorities Verkhovna Rada Committee on matters of tax and customs policy:

    

- Unfortunately, STAU nevertheless decided independently to interpret ambiguous provisions of legislation, rather than to align their legislation. The reasons for choosing such a solution to the problem, I think, is clear: the budget revenues are collected from all the great creaking and Cabinet demands from regulatory authorities to take immediate fiscal measures. A publication of explanation, of course, a quicker way than the changes in the law. The question is: how effective this way. I do not want to evaluate an explanation in terms of its legality. Competing in the law is clear. Interpretation of the same laws under the Constitution we do something to deal with the Constitutional Court.

But since the State Tax Administration and the Cabinet to the Constitutional Court on this issue is not addressed, I think that the use of clarification will lead to proceedings in administrative courts. Predict what will end these proceedings, it is difficult. But, in my opinion, this is not the most civilized way of solving the problem.

Expert - jurisprudence