Changes to the form of the Corporate income tax declaration, approved by Order of the Ministry of Finance of Ukraine as of 10.02.2022 № 58

State Tax Service of Ukraine informs that Order of the Ministry of Finance of Ukraine as of 10.02.2022 № 58 “On approval of changes to the form of the Corporate income tax declaration and repeal of certain orders”, registered in the Ministry of Justice of Ukraine on 28.02.2022 under № 265/37601 (hereinafter – Order № 58) came into force on 15.03.2022.

This Order was issued to implement provisions of the Law of Ukraine as of 30.11.2021 № 1914-IX “On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine to ensure balance of budget revenues” (hereinafter – Law № 1914) and entered into force on 01.01.2022.

What changes are provided by Order № 58?

1.Form of the Corporate income tax declaration (hereinafter – Declaration), which was approved by Order of the Ministry of Finance of Ukraine as of 20.10.2015 № 897, is amended with a new line 06.2 MTL “Income tax in the form of minimum tax liability” and, accordingly, a new annex to the MTL, in which taxpayers - owners, tenants, land users on other conditions classified as agricultural land, will carry out calculation of total minimum tax liability according to Paragraph 141.9 Article 141 of the Tax Code of Ukraine (hereinafter – Code) and difference between amount of such liability and the total amount of taxes, levies, charges and expenses for the land lease. Title of Declaration also provides for a separate special mark – “taxpayer who determines income tax in the form of minimum tax liability”.

Please note that calculation of the total minimum tax liability and filling in annex to the MTL must be carried out for the first time based on the results of reporting year 2022.

Reference: According to amendments to the Law of Ukraine “On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine on the application of norms for the martial law period”, in particular, Paragraph 69.15 Sub-section 10 Section XX of the Code postponed tax (reporting) years of accrual and payment of tax liability (for 2022 and 2023) for land located in territories where the hostilities are (were) or in territories temporarily occupied by the armed forces of the Russian Federation, and / or for land designated by the regional military administrations as littered with explosives and / or fortifications on the list of areas determined by the Government.

2. Declaration clarifies wording of lines 35-37 amending them with reference to Paragraph 57 Sub-section 4 Section XX of the Code, which according to the Law № 1914 introduced a temporary, until 01.01.2027 exemption from income taxation of agricultural producers involved in breeding and cultivation of poultry (excepting chickens), quails and ostriches, production of poultry meat and sale of actually produced (grown) such products (excepting chicken meat) subject to the targeted use of released funds.

In case of violation of directions of the targeted use, the order of use of released funds, the taxpayer is obliged to accrue tax liability from corporate income tax on the amount of misused funds, financial sanctions and penalties according to the Code.

Such tax liabilities, financial sanctions and penalties are accrued from the first day of a month when such violation was committed and are reflected in relevant lines 35-37 of the Declaration.

3. Annex RI to the Declaration is amended with new lines 4.1.22, 4.1.23, 4.2.24 and 4.2.25, according to which the electricity producers at “green” tariff will be able to reflect relevant differences in increasing and decreasing pre-tax financial result on the value of delivered electricity for which such electricity producers did not receive payment at the end of reporting period (apply the “cash method” of determining tax liabilities) n accordance with Paragraph 58 Sub-section 4 Section XX of the Code. These differences are applied temporarily, in a period from 01.01.2022 to 01.01.2024.

Given that the changes introduced by Order № 58 will be applied for the first time submitting the Declaration for the reporting period - half of 2022, the taxpayer submitting the Declaration for the reporting period - first quarter of 2022 will be able to reflect these new differences defined by Paragraph 58 Sub-section 4 Section XX of the Code, in any lines of Sub-section “Differences under Sub-section 4 Section XX of the Tax Code of Ukraine” of Section 4 “Other differences” of Annex RI to the Declaration, which provide, respectively, a reduction and increase in the pre-tax financial result and which are not used by the taxpayer for reflection of other differences.

It will also be necessary to mark (x) in a special field of the Declaration (column “Availability of amendments”) and indicate codes of lines of Annex RI to the Declaration and references to relevant provisions of the Code – “Paragraph 58 Sub-section 4 Section XX of the Tax Code of Ukraine” in column “Content of amendments”. It is not necessary to submit other amendments to the Declaration on this basis.

4. Annex RI to the Declaration is also amended by a new line 3.1.10.1, which provides for increasing the pre-tax financial result of the tax (reporting) period according to Sub-paragraph 140.5.10 of Paragraph 140.5 Article 140 Section III of the Code (for non-refundable financial assistance, works, services) to related parties who were unprofitable in the past year.

Payers who provided such non- refundable financial assistance in the first quarter of 2022 submitting the Declaration for such reporting (tax) period reflect these amounts in any line of Section 3 "Differences arising from financial operations (Article 140 Section III of the Tax Code of Ukraine ) of Annex RI to the Declaration, which is not used by the payer for reflection of other differences and put a mark (x) in a special field of the Declaration (column “Availability of amendments”) indicating the code of the line used in Annex RI to the Declaration and reference to relevant provision of the Code – “first clause of Sub-paragraph 140.5.10 of Paragraph 140.5 Article 140 Section III of the Tax Code of Ukraine” in the column “Content of amendments”. It is not necessary to submit other amendments to the Declaration on this basis.

5. Order № 58 declared invalid:

Decree of the State Tax Administration of Ukraine as of 29.03.1999 № 155 “On approval of Procedure for accounting and submission of tax reporting on the use of funds for financing expenditures related to preparation for commissioning and decommissioning of Chornobyl Nuclear Power Plant on the operation and transformation of the Shelter into an environmentally safe system”, registered in the Ministry of Justice of Ukraine on 25.05.1999 under № 327/3620;

Order of the Ministry of Finance of Ukraine as of 21.12.2011 № 1685 “On approval of form of the Report on the use of released funds by corporate income taxpayers”, registered in the Ministry of Justice of Ukraine on 27.12.2011 № 1529/20267;

Order of the Ministry of Finance of Ukraine as of 26.09.2012 № 1032 “On amendments to Order of the Ministry of Finance of Ukraine as of 21.122011 № 1685 and form of the Report on the use of released funds by the corporate income taxpayers”, registered in the Ministry of Justice of Ukraine on 16.1.2012 under № 1741/22053.

Starting from which reporting period is it necessary to submit the Declaration in an updated form (taking into account changes made by Order № 58)?

Paragraph 46.6 Article 46 of the Code tinplates that in order to determine new forms of declarations (calculations), which come into force for the reporting for tax period following the tax period in which they were published, there are valid forms of declarations (calculations) valid until such definition.

As follows, the taxpayers must submit Declaration in an updated form (taking into account changes introduced by Order № 58) starting from the reporting period – half of 2022.