Regarding accrual and payment of dividends on the state share by economic companies, authorized capital of which includes corporate rights of the state...

Press service of the State Tax Service of Ukraine, published 27 August 2024 at 09:24 Chapter: News

Regarding accrual and payment of dividends on the state share by economic companies, authorized capital of which includes corporate rights of the state, based on results of financial and economic activities in management of assets that were forcibly seized according to the Law of Ukraine № 2116-ХХ as of 03.03.2022 "On the main principles of forced seizure in Ukraine of objects of property rights of the Russian Federation and its residents" (with changes)

State Tax Service of Ukraine for purpose of correct accrual and payment of dividends on the state share by economic companies, authorized capital of which includes shares (parts) directly or indirectly owned by the state, based on results of financial and economic activities in management of assets that were forcibly seized according to the Law of Ukraine № 2116-ХХ as of 03.03.2022 "On the main principles of forced seizure in Ukraine of objects of property rights of the Russian Federation and its residents" (with changes) (hereinafter – Law № 2116) informs the following.

Sub-paragraph 19¹.1.52 Paragraph 19¹.1 Article 19¹ of the Tax Code of Ukraine (hereinafter – Code) stipulates that tax authorities control timeliness, reliability and completeness of accrual and payment to the budget of dividends on the state share by economic companies, authorized capital of which includes corporate rights of the state, as well as economic companies, 50 percent or more of shares (parts, units) of which are in the authorized capitals of business companies in which the state's share is 100 percent.

Legal basis for management of the state-owned objects is determined by the Law of Ukraine № 185-V as of 21.09.2006 "On management of the state-owned objects" (with changes) (hereinafter – Law № 185).

Paragraph 3 of Part 1 Article 52 of the Law № 185 stipulates that central body of executive power, which ensures formation and implementation of state policy in management of the state-owned objects, according to tasks assigned to it in management of the state-owned objects, together with central body of executive power that ensure formation and implementation of the state financial policy, ensure formation and implementation of the state dividend policy according to procedure established by the Cabinet of Ministers of Ukraine.

Procedure for accrual and payment of dividends by economic companies, authorized capital of which includes shares (parts) directly or indirectly owned by the state, is established by Part 5 Article 11 of the Law № 185.

Clause 1 of Part 5 Article 11 of the Law № 185 stipulates that decision on the distribution of profits and losses, amount and procedure for paying dividends of economic companies, authorized capital of which includes shares (parts) directly or indirectly owned by the state, is adopted by the highest management body of such economic companies in manner prescribed by the law.

Clause 2 of Part 5 Article 11 of the Law № 185 stipulates that supervisory boards of economic companies, in the authorized capital of which 50 percent or more of shares (parts) belong to the state, until March 15 of the following reporting year according to the State dividend policy approved by the Cabinet of Ministers of Ukraine provide the shareholder with suggestions for determining amount of the net profit part, which is directed to payment of dividends based on results of the company's financial and economic activity in relevant year.

General meeting of the shareholders (participants) of business company, in the authorized capital of which 50 percent or more of shares (parts) belong to the state, approves amount of the net profit part, which is directed to payment of dividends based on results of financial and economic activity of the company in the relevant year, according to the State dividend policy approved by the Cabinet of Ministers of Ukraine (Clause 3 of Part 5 Article 11 of the Law № 185).

Economic companies, in the authorized capital of which 50 percent or more of the shares (parts) belong to the state, pay dividends to the state budget not later than July 1 of year following the reporting year. Requirement regarding the payment term of dividends does not apply in cases provided for in Clause 5 of Part 5 Article 11 of the Law № 185 and in case that the Cabinet of Ministers of Ukraine adopts decision on the installment payment of dividends to the state budget by economic companies, in the authorized capital of which 50 percent or more of shares (parts) belong to the state (Clause 4 Part 5 Article 11 of the Law № 185).

Herewith, it should be informed that the Law of Ukraine № 3706-IX as of 09.05.2024 "On amendments to the Tax Code of Ukraine and other laws of Ukraine regarding export peculiarities of certain product types during the martial law" added Part 5 Article 11 of the Law № 185 with a new Clause 7, which stipulates that economic companies whose authorized capital includes corporate rights of the state, acquired as a result of forced alienation or confiscation of property under conditions of legal regime of the martial law according to the Law of Ukraine № 4765-VI as of 17.05.2012 "On the transfer, forced alienation or seizure of property in conditions of legal regime of the martial law or state of emergency" (with changes) and the shareholder (participant) of which is economic company, in the authorized capital of which 50 percent or more of shares (parts) belong to the state, dividends are paid directly to the state budget of Ukraine not later than July 1 of year following the reporting year.

Part 1 Article 4 of the Law № 2116 stipulates that according to the Law № 2116, objects of property rights of Russian Federation and its residents (except for funds and corporate rights of the state in the authorized capital of banks that are in the liquidation procedure according to the Law of Ukraine "On system of guaranteeing deposits of individuals) were forcibly seized", as well as government bonds of Ukraine and government derivatives) by decision of the Cabinet of Ministers of Ukraine are transferred to:

1) temporary economic assignment to specialized state enterprises, institutions, organizations and/or economic partnerships, in the authorized capital of which more than 50 percent of the shares (parts) belong to the state;

2) management of economic entities, 50 percent or more of shares (parts) of which belong to the state, by concluding property management agreement in manner determined by the Cabinet of Ministers of Ukraine.

Part 1 Article 2 of the Law of Ukraine № 772-VIII as of 10.11.2015 "On the National agency of Ukraine for identification, search and management of assets obtained from corruption and other crimes" (with changes) (hereinafter – Law № 772) stipulates that National agency of Ukraine for identification, search and management of assets obtained from corruption and other crimes (hereinafter – National agency) is a central body of executive power with a special status that ensures formation and implementation of the state policy in identification and search of assets, which seizure may be imposed in criminal proceedings or in case of recognition of unfounded assets and their collection to the state income, and/or from management of assets that have been seized in criminal proceedings or in case of recognition of unfounded assets and their collection to the state income or which confiscated in criminal proceedings or charged to the state revenue by the court decision as a result of their recognition as unfounded.

National Agency is a legal entity under the public law (Part 7 Article 2 of the Law № 772).

According to asset (property) management contracts concluded between the National agency (Founder of management) and economic entities, 50 percent or more of shares (parts) of which belong to the state (Manager), the National agency transfers to Managers ownership objects of Russian federation and its residents, forcibly removed from Ukraine within the framework of implementation of the Law № 2116.

Taking into account above specified, economic entities, 50 percent or more of shares (parts) of which belong to the state (Manager), to which the National agency has transferred ownership objects of Russian Federation and its residents, are forcibly seized in Ukraine within the framework of implementation of the Law № 2116, are required to pay dividends directly to the State budget of Ukraine not later than July 1 of year following the reporting year.

This position was confirmed by the Ministry of Economy of Ukraine and the Ministry of Finance of Ukraine.