Analytics

Due to the ambiguous position of the tax authority regarding the applicability of the coefficient to the Military Tax when making payments in kind, which has been caused by introducing changes to the Tax Code of Ukraine, it is now being questioned whether such a coefficient should be applied.

Based on the analysis of the changes to the provisions of the Tax Code regulating the procedure for taxation of income with Military Tax, it seems that such changes have not established any new special rules for determining the tax base for the Military Tax. In fact, the procedure for accrual, withholding, and payment of the Military Tax to the State Budget remains the same as before the introduction of the changes.

At the same time, the tax authority points out in some of its clarifications that due to changes to the tax legislation, a coefficient should be applied to determine the tax base for Military Tax, while in other clarifications it states that the law does not require the coefficient to be applied to Military Tax. Therefore, currently, there is no clear understanding of whether it is required to apply a coefficient for the purposes of determining the tax base for the Military Tax in case of payment of income in kind or not. This is a matter to be resolved at the level of the Ministry of Finance of Ukraine.

Considering the unclear regulation of this issue and given the principle of presumption of legitimacy of the taxpayer's decision, it is believed that if a taxpayer does not apply the coefficient when paying income in kind, the taxpayer cannot be held liable for that, and in case of a dispute with the tax authorities, the decision should be made in favor of the taxpayer.

The full version of the article is available in Ukrainian by the link.

Full text is open only for the subscribers.

Leave a comment