LETTER OF THE STATE TAX SERVICE OF UKRAINE

of November 7, 2011 No. 5424/7/15-1217

About consideration of the letter

The State Tax Service of Ukraine considered the letter of State Tax Administration of 11.10.2011 No. 3632/8/31-604 of rather some questions of application of item 160.7 of Art. 160 of the Tax code of Ukraine and reports.

According to item 160.7 of Art. 160 of the Code it is provided that residents which perform payments to nonresidents for production and/or distribution of advertizing about such resident during such payment pay tax at the rate of 20 percent of the amount of such payments on own account.

Application of this regulation requires accomplishment at the same time of two conditions: payment from resident shall be performed directly to the nonresident and this payment shall be for production and/or distribution of advertizing about such resident.

Thus, if the income tax payer - the resident performs in Ukraine payment to resident (in this case to advertizing agency) services for production and/or distribution of advertizing about the activities outside Ukraine, then will not be applied to such payments of the taxpayer of regulation of item 160.7 of Art. 160 of the Code.

If the resident - advertizing agency which performs production and/or distribution of advertizing about other taxpayer - the resident attracts nonresidents to production and/or distribution of advertizing outside the territory about other taxpayer based on the signed external economic contracts with such nonresident, then the regulation of item 160.7 of Art. 160 of the Code does not extend.

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