The Law of Ukraine as of 19.09.2019 № 115 “On amendments to the Law of Ukraine “On collection and accounting of the single contribution to obligatory state social insurance” on submission of Unified reporting on the single contribution to obligatory state social insurance and personal income tax” (hereinafter – the Law № 115) and the Law of Ukraine № 116-IX “On amendments to the Tax Code of Ukraine on submission of Unified reporting on the single contribution to obligatory state social insurance and personal income tax” (hereinafter – the Law № 116) changed procedure for submitting reports on accrual of single contribution to obligatory state social insurance (hereinafter – single contribution) and particularly provide for quarterly submission of reports on the accrual of single contribution in amounts specified in the Law № 2464, as part of the personal income tax reporting (single tax) to the tax authority at the main registration place of the single contribution’s payer within the time and in manner prescribed by the Tax Code of Ukraine (hereinafter – the TCU).
Paragraphs 1 and 4 of Part 2 Article 6 of the Law № 2464 stipulate that from the 1st of January 2021, the reporting information on the accrual of single contribution must be an integral part of the relevant tax reporting. Form in which reporting on the accrual of single contribution as part of the personal income tax reporting (single tax) is established by the central executive body that ensures formation and implementation of public financial policy, in agreement with the Pension Fund of Ukraine and obligatory state social insurance funds.
According to requirement of the Law of Ukraine № 115 and № 116 by Order of the Ministry of Finance of Ukraine as of 15.12.2020 № 773 “On amendments to Order of the Ministry of Finance of Ukraine as of 13.01.2015 № 4” approved forms of tax calculation of income accrued (paid) in favor of taxpayers – individuals and amounts of tax withheld from them, as well as amounts of accrued single contribution (hereinafter – calculation) and the Procedure for filling in and submitting tax calculation of income (paid) in favor of taxpayers – individuals and amount of tax withheld from them by tax agents, as well as amount of accrued single contribution (hereinafter – the Procedure).
According to Sub-paragraph “b” of Paragraph 176.2 Article 176 of the TCU, individuals who according to this TCU have the status of tax agents and payers of the single contribution are required to submit within the period established by the Code for the tax quarter, Calculation (broken down by months of the reporting quarter) to the controlling body at the main registration place. Such calculation is submitted only in case of accrual of sums of the specified incomes to the taxpayer – individual by tax agent and payer of single contribution during the reporting period. Introduction of other reporting forms on these issues is not allowed.
A similar rule is interpreted in Paragraph 51.1 Article 51 of the Code.
The deadline for submitting tax declaration with a base (tax) period of a calendar quarter is defined in Paragraph 49.18 Article 49 of the Code, particularly according to Sub-paragraph 49.18.2 such declaration is submitted within 40 calendar days following the last calendar day of the reporting (tax) quarter.
In the view of specified in Paragraph 3 of Order № 773 it is established that Calculation is submitted in the approved by this order form for the first time for the I quarter of 2021.
Regarding mandatory requisites.
Paragraph 48.3 Article 48 of the TCU defines the list of basic mandatory requisites which tax declaration must contain.
In some cases, when it corresponds to the essence of tax or fee and is necessary for its administration, the form of tax declaration may additionally contain mandatory requisites from the list given in Paragraph 48.4 Article 48 of the TCU.
Form of the tax declaration is established by the central body of executive power, which ensures formation and implementation of public financial policy (Paragraph 46.5 Article 46 of the TCU).
Main requisites required to be filled in for all types of Calculation include information contained in lines 01 to 05 (excepting lines 033 - 035, which are filled in only in cases specified in Paragraph 1 Section III of the Procedure), as well as information about appendices and their number specified in line 06 of this Calculation taking into account requirements of the TCU, Procedure and administration peculiarities of the personal income tax, military levy and single contribution. Also on the last page, the submission date of Calculation is indicated by the single contribution’s payer, signatures of officials of the single contribution payer, data on signatories and seal (if any). Relevant mandatory requisites are also required to be filled in if available in the annexes to the Calculation.
Adjustment of mandatory requisites is not provided by the Procedure, therefore, when making adjustments specified in Section V of the Procedure, the taxpayer forms and submits Calculation under the type “Reporting new” or “Adjusting”, which must contain mandatory requisites specified in lines 01 - 05 and in line 031 for single contribution payers, as well as information on the applications in which adjustment will be made and their number, which is defined in line 06 of this Calculation. In this case, appendices for which information is not adjusted are not indicated in line 06 and are not submitted accordingly.
Regarding the “Referential” Calculation.
In order to prevent violation of rights of insured individuals to timely receive pension and social benefits, the Calculation with “Reporting” type as “Referential” and annexes to it, containing personalized information, with “Reporting” type as “Referential” was introduced.
Calculation with “Reporting” type as “Referential” indicates information on the appointment of pensions to insured individuals or material support, insurance payments (Seventh paragraph of Paragraph 1 Section III of the Procedure).
Therefore, according to norms of Procedure, the Calculation and annexes to it with “Reporting” type as “Referential” are submitted by the single contribution’s payer in case of need to assign pensions or material benefits or insurance benefits to insured individuals out of the reporting period.
In case of submission of the annexes “Information on accrual of wages (income, cash benefits) to insured individuals” (hereinafter – D1) in the Calculation with “Reporting” type as “Referential” for appointment of pensions to insured individuals D1 must contain information for pensions to the insured individual, which are submitted for the period before the formation date of application for a pension.
For material support, insurance benefits – in the case of submission of D1 in the Calculation with “Reporting” type as “Referential” for material security, insurance benefits D1 must contain information for the purpose of other social benefits to the insured individual.
Accordingly, this principle is applied to other annexes of the Calculation with “Reporting” type as “Referential”.
In this case, information on individuals specified in the Calculation with “Reporting” type as “Referential” must also be duplicated in Calculation for relevant reporting period.
Regarding the Procedure for reflecting information on insured individuals by the single contribution’s payers who have separate subdivisions in Calculation and its annexes.
Reflection by taxpayers who have separate subdivisions of the amounts of accrued single contribution and accrued (paid) in favor of taxpayers – individuals and amounts of tax withheld from them in the Calculation and annexes to it is different.
In Paragraph 2 Part 1 of Article 1 of the Law № 2464 it is determined that single contribution is a consolidated insurance contribution, which is collected in the system of obligatory state social insurance on a mandatory and regular basis to ensure protection in cases provided by legislation, as well as rights of insured individuals to receive insurance benefits (services) by current types of obligatory state social insurance.
Single contribution is not included in the taxation system (Part 2 Article 8 of Law № 2464).
Paragraph 2 Section I of the “General Provisions” of the Procedure states that:
tax agent is a tax agent defined by Sub-paragraph 14.1.180 Paragraph 14.1 Article 14 of the TCU;
payer of single contribution is payer of single contribution defined by Sub-paragraph 1 and 16 of Part 1 Article 4 of the Law № 2464;
payer is a tax agent and payer of single contribution.
These definitions are reflected in the Calculation and its annexes and determine, accordingly, the peculiarities of the submission of the Calculation for tax agents and single contribution payers.
Sub-paragraph “b” of Paragraph 176.2 Article 176 of the TCU and the Second paragraph of Paragraph 3 Section II of the Procedure stipulates that if a separate unit of a legal entity is not authorized to accrue, withhold and pay (transfer) tax to the budget, the tax calculation for such unit is submitted by a legal entity to the controlling body at the main registration place.
Accordingly, the calculation contains:
line 032 indicates code of the Codifier at the payer’s location or his / her separate unit, if the calculation is submitted by a tax agent for his / her separate unit.
This line is mandatory for a payer, regardless of whether such payer has separate divisions or does not have them.
line 033 indicates data on the separate subdivision of a legal entity (full name (title) of separate subdivision), if the Calculation is submitted by a tax agent for the separate subdivision.
This line is filled in exclusively by tax agents when submitting the Calculation for a separate unit.
It should be noted that annexes to the Calculation, which contain information on the amounts of accrued single contribution, do not contain lines indicating code of the Codifier at the payer’s location or his / her separate unit, if the Calculation is submitted by a tax agent for his / her separate unit.
This means that when a payer submits the Calculation to the parent company, such Calculation will contain information on the amounts of accrued single contribution for the insured individuals of the parent company and all its structural units.
Therefore, separately Calculations and annexes to them, which only contain information on the amounts of accrued single contribution for insured individuals of separate structural units, are not submitted by the parent company.
This approach is aimed at preventing mistakes in the register of insured individuals of the State Register of Obligatory State Social Insurance, which could occur when submitting the Calculation with “Adjusting” type for separate units, if the parent company submits separate Calculations for each separate unit.
Given the above, a legal entity that has, for example, two separate units, not authorized to accrue, withhold and pay (transfer) tax to the budget, the number of calculation with “Reporting” type for the reporting (tax) period will be “1”, and such Calculation will contain information on the amounts of accrued single contribution for insured individuals of the parent company and all its structural units and on the accrued (paid) in favor of taxpayers – individuals and amounts of tax withheld from them exclusively by the parent company.
Then such company is obliged to submit Calculations with “Reporting” type for separate units in the part of accrued (paid) in favor of individuals income and accrued (transferred) personal income tax and military levy to the budget and such Calculations will not contain information on the amounts of accrued single contribution, respectively numbers of such Calculations will be “2” and “3”.
Regarding the procedure for correcting mistakes.
Procedure for making adjustments, in particular amounts of the single contribution in Calculation, including for previous periods, is determined by Section V of the Procedure.
Payer of single contribution in the reporting (tax) period may make adjustments and correct a mistake made in previous reporting (tax) periods, make additional accruals or reductions of the single contribution, using the accrual type codes provided for in Paragraph 1 Section IV of this Procedure (Sub-paragraph 8 Paragraph 9 Section V of the Procedure).
Adjusting the total indicators in D1 to the Calculation with “Adjusting” type, the single contribution payer is also entitled to apply types of accruals 2 and 3.
According to Paragraph 6 Section V of the Procedure, the completion of “Reporting new” and “Adjusting” Calculations (in case of adjustment of requisites only) for payers of the single contribution is the same. Calculations “Reporting new” and “Adjusting” (in case of adjustment of requisites only) for single contribution payers are submitted on the basis of information from previously submitted Calculations and contain information only on the lines with requisites and amounts of accrued single contribution, which are specified. Information from reports about mistakes sent by controlling bodies to the taxpayer is also used for completion.
To exclude one erroneous line from the previously submitted (received) information it is necessary to repeat all columns of such line and in the corresponding column of annexes to specify “1” – to exclude a line.
To enter a new or omitted line, it is needed to completely fill in all its columns and specify “0” in the corresponding column of the applications – to enter a line.
To replace one erroneous line with another, it is needed to exclude erroneous information according to the Second paragraph of this Paragraph and enter correct information according to the Third paragraph of this Paragraph, ie completely fill two lines, one of which excludes previously entered information and the other enters correct information. In this case, the first line of the corresponding column indicates “1” – the line for exclusion and the second – “0” – the line for input.
As follows, to replace one erroneous line with another (only to correct the requisites), the one must first fill in the line to be excluded (Symbol – “1”) so that it completely repeats entry from the Calculation in which the mistake occurred, and then fill in the line, which is subject to inclusion (Sign – “0”), in relation to the same insured individual, which will indicate corrected requisites (registration number of the taxpayer’s account card, name, etc.) and the total indicators remain unchanged.
Regarding the peculiarities for submission of the Calculation for “past periods”.
According to Paragraph 1 of Order of the Ministry of Finance of Ukraine as of 28.12.2020 № 814 “On some features of reporting on the single contribution to obligatory state social insurance according to Order of the Ministry of Finance of Ukraine as of 14.04.2015 № 435”, registered at the Ministry of Justice of Ukraine on 10.02.2021 № 174/35796, the reporting on amounts of accrued single contribution according to forms approved by Order of the Ministry of Finance of Ukraine as of 14.04.2015 № 435 ‘On approval of the Procedure for forming and submitting reporting on the amount of accrued single contribution to obligatory state social insurance”, registered at the Ministry of Justice of Ukraine on 23.04. 2015 № 460/26905 (hereinafter – the Procedure № 435) is submitted to the controlling body at the main registration place of the single contribution’s payer to the tax authorities:
until the 1st of April, 2021 – according with Annex 4 to the Procedure № 435 for single contribution payers specified in Paragraphs 1 and 16 of Part 1 Article 4 of the Law of Ukraine “On collection and accounting of single contribution to obligatory state social insurance” (hereinafter – the Law) for reporting periods up to and including 2020 and in the case of termination of state registration until the 28th of February, 2021.
Starting from the 1st of April, 2021 if it is necessary to submit reporting on the single contribution for previous periods, such reporting is submitted as part of the Calculation in the form valid at the time of submission.
This correlates with Sub-paragraph 9 Paragraph 9 Section V of the Procedure, according to which, if the single contribution payer has not submitted Calculation for the previous reporting (tax) period, such taxpayer is obliged to submit Calculation in the current reporting (tax) period in the form valid at the time of submission.
In this case, if the single contribution’s payer is required to submit reporting on the single contribution for previous periods for which the tax calculation of income accrued (paid) in favor of individuals and amount of tax withheld from them, this payer must create “Adjusting” calculation, which contains information exclusively on the forms according to Annex 1, Annex 2, Annex 3, Annex 5, Annex 6 to the Calculation (hereinafter – D1, D2, D3, D5, D6, respectively). In the absence of information to be filled in for such individual annexes for the reporting (tax) period for which the “Adjusting” calculation is submitted, such annexes are not filled in and are not submitted.
If the single contribution’s payer is required to submit reporting on the single contribution for previous periods for which the tax calculation of amounts of income accrued (paid) in favor of individuals and amounts of tax withheld from them, this payer must create the “Reporting” calculation.
This reporting procedure for previous periods also applies to Annex 4DF to the Calculation.
How is the Calculation submitted if the payer during the reporting quarter paid income that is not a basis for accrual of single contribution?
According to Paragraph 1 Section III of the Procedure, the title part of Calculation contains information on annexes, including Annex 4DF, which is an integral part of Calculation.
In case of accrual (payment) of income in favor of individual and / or individual – entrepreneur that must be reflected in Annex 4DF, the payer must also submit Calculation with the relevant data or with dashes in the absence of indicators to fill in this calculation.
Regarding the peculiarities for submission of the Calculation by private notaries.
What is the procedure for submitting the Calculation if a private notary does not have the same place of registration and workplace? Does the private notary provide information on the issuance of inheritance certificate and certificate of gift agreements at the workplace?
Taking into account the provisions of Paragraph 172.4 Article 172 of the TCU, in case of information on the issuance of inheritance certificate and certification of gift agreements, the notary submits Calculation (with dashes in this case) and Annex 4DF indicating the relevant data on such operations to the controlling body at his / her workplace.
In the absence of grounds when operations on the issuance of inheritance certificate and / or certification of gift agreements were not carried out in the reporting period (quarter), the Calculation and Annex 4DF is not filled in and not submitted.
In this case, if in one month in the quarter a notary conducted operations on the issuance of inheritance certificate and / or certification of gift agreements and in the other two such operations are absent, the Calculation of indicators is crossed out, while in Annex 4DF in one month when the relevant operations were carried out, such information is reflected in the annexes for the other two months a dash is affixed.
Regarding the reflection of income provided in the non-monetary form.
According to Paragraph 161 Subsection 10 Section XX of the TCU, temporarily, until the entry into force of Decision of the Verkhovna Rada of Ukraine on the completion of reform of the Armed Forces of Ukraine, a military levy is established.
According to Paragraph 164.5 Article 164 of Section IV of the TCU, when accruing (providing) income in any non-monetary form, the tax base is the value of such income, calculated at normal prices, rules for determining which are set according to the TCU, multiplied by a factor.
Provisions of Paragraph 164.5 Article 164 of Section IV of the TCU are applied for calculating income in any non-monetary form to determine the personal income tax base.
At the same time, Paragraph 161 Subsection 10 Section XX of the TCU does not provide for the application for military levy’s collection of the coefficient specified in Paragraph 164.5 Article 164 of Section IV of the TCU.
Columns 3a, 3, 4a, 4, 5a and 5 of Section I Annex 4DF to the Calculation are filled in according to Sub- paragraph 4.2 Paragraph 4 Section IV of the Procedure, namely:
in column 3a “Amount of accrued income” reflects (for the reporting period month) income that is accrued to individual according to income characteristics, in the case of accrual of income its reflection in column 3a is mandatory regardless of its payment;
column 3 “Amount of paid income” shows amount of income actually paid to taxpayer by the tax agent;
column 4a “Amount of accrued tax” reflects amount of tax accrued and deducted from income accrued to the taxpayer according to current legislation for the reporting period;
column 4 “Amount of transferred tax” reflects actual amount of transferred tax to the budget in the reporting period;
column 5a “Amount of accrued military levy” reflects amount of tax accrued and deducted from income accrued to the taxpayer according to current legislation;
column 5 “Amount of transferred military levy” reflects actual amount of transferred levy to the budget.
I n case of payment of income in the non-monetary form, columns 3a and 3 of Annex 4DF to the Calculation are filled in using the coefficient. Correctness of accrual and withholding personal income tax and military levy, as well as correctness of reflection of these indicators in such cases, is established during the audit by controlling body.
Regarding reporting under the agreement on joint activities.
According to Paragraph 1 Article 1130 of the Civil Code of Ukraine, under the parties’ agreements on joint activities (participants) undertake to act jointly without creating a legal entity to achieve a specific goal that does not contradict the law.
According to Paragraph 3.5 of the Procedure for taxpayer’s registration, approved by Order of the Ministry of Finance as of 09.12.2011 № 1588 (hereinafter – the Procedure № 1588), the basis for registration of agreements on joint activities is a decision of the controlling body to register as a VAT payer.
Documents submitted for registration of agreement on joint activities are returned by the controlling body to the authorized individual, if the application form № 1-ОPP the registration application of the VAT payer is not added or following the consideration results of registration application of the VAT payer the controlling body refuses registration as the VAT payer (Paragraph 4.11 of the Procedure № 1588).
In addition, according to the TCU, in terms of the corporate income tax starting from the 1st of January, 2015, the TCU does not establish a special procedure for taxation of joint activities in Ukraine without creation of a legal entity.
Also, according to Paragraph 1 Article 1130 of the Civil Code of Ukraine, under agreements on joint activities, the parties (participants) undertake to act jointly without creating a legal entity to achieve a certain goal that does not contradict the law.
Profit received by the parties to a simple partnership agreement as a result of their joint activities shall be distributed in proportion to the value of participants’ contributions to the joint property, unless otherwise provided by the simple partnership agreement or other agreement of participants.
The TCU does not provide for a special taxation procedure of joint activities on the territory of Ukraine without creation of a legal entity on the basis of agreement on joint activities.
According to Sub-paragraph 14.1.180 Paragraph 14.1 Article 14 of the TCU, a tax agent regarding personal income tax – legal entity (its branch, office, other separate unit), self-employed individual, representative office of a non-resident – legal entity, investor (operator) under a production sharing agreement, which regardless of organizational and legal status and taxation method with other taxes and / or forms of accrual (payment, provision) of income (in cash or in kind) are obliged to keep tax records, submit tax declarations to controlling bodies and be liable for violations of its rules in the manner prescribed in Article 18 and Section IV of this Code.
At the same time, according to Paragraph 51.1 Article 51 of the TCU, the taxpayers, including tax agents, are required to submit tax calculation of income accrued (paid) in favor of taxpayers to controlling bodies within the time limits set by this Code for the tax quarter.
In addition, according to Sub-paragraph 162.1.3 Paragraph 162.1 Article 162 of the TCU, it is determined that the tax agent is a personal income tax payer.
At the same time, the TCU for personal income tax and reporting does not determine that participants in joint venture agreements are tax agents.
Accounting of the common property of participants may be entrusted by them to one of the participants.
Since Section IV of the TCU does not contain provisions on separate accounting of joint activities results without creation of a legal entity and does not specify that such category is a tax agent, all functions related to the personal income tax and reporting are performed by an authorized individual, one of participants in such an agreement.
Regarding the peculiarities of filling in line 032 of the title part of Calculation and Annex 4DF.
According to Sub-paragraph 1 Section III of the Procedure for filling in and submitting Tax calculation of amounts of income accrued (paid) in favor of taxpayers – individuals by tax agents and amounts of tax withheld from them, as well as amounts of accrued single contribution, if the Calculation is submitted by a tax agent, the line 032 of the title part of Calculation indicates code of the Codifier of administrative-territorial units and territories of territorial communities (hereinafter – the Codifier) at the location of taxpayer’s separate unit.
At the same time, line 032 of Annex 4 “Information on the amounts of accrued income, withheld and paid personal income tax and military levy” to the Calculation submitted by tax agent for its separate unit, the Codifier code at the location of such separate unit (Sub-paragraph 1 Paragraph 4 Section IV of the Procedure).
According to Order of the Ministry for Communities and Territories Development of Ukraine as of 26.11.2020 № 290 “On approval of the Codifier of administrative-territorial units and territorial communities” (with amendments by Order of the Ministry for Communities and Territories Development of Ukraine as of 12.01.2021 № 3), the Codifier consists of codes and object names (titles) divided into five levels.
“First level” – the Autonomous Republic of Crimea, regions, cities with special status;
“Second level” – districts in regions and the Autonomous Republic of Crimea;
“Third level” – territories of territorial communities in regions, territorial communities of the Autonomous Republic of Crimea;
“Fourth level” – cities, towns, villages, settlements;
“Additional level” – areas in cities (including cities with special status);
“Object category”, where:
“O” – the Autonomous Republic of Crimea, region;
“K” – cities with special status;
“R” – districts in regions and the Autonomous Republic of Crimea;
“N” – territories of territorial communities (names of territorial communities) in oblregionsasts, territorial communities of the Autonomous Republic of Crimea;
“M” – cities;
“T” – urban-type settlements;
“C” – villages;
“X” – settlements;
“B” – areas in cities.
To fill in line 032 of Annex 4DF, the number of Codifier of administrative-territorial units and territories of territorial communities is found in the Codifier (for example, Kovel), than determine category of object “M” (city) which corresponds to the fourth level, namely UA07060190010068509.