LETTER OF THE STATE TAX SERVICE OF UKRAINE

of March 21, 2012 No. 8168/7/15-3417-15

GNSU considered the letter of public joint stock company concerning date of emergence of the tax liabilities and the tax credit on the VAT and in addition to the letter of GNS in Odessa region of 08.02.2012 No. 711/10/15-0217 on similar request reports.

By Item 187.10 of Art. 187 of the Tax code of Ukraine of December 2, 2010 No. 2755-VI (further - the Code) it is determined that taxpayers who deliver heat energy, gas natural (except liquefied) provide services in water supply, drainage system or services which cost is included rent or payment for content of housing, to the physical persons, budgetary institutions which are not registered as taxpayers, and also to housing management offices, room and operational parts, associations of co-owners of apartment houses, other similar taxpayers who perform fund raising from the specified buyers for the purpose of their further transfer to sellers of such goods (predostavitel of services) on account of compensation of their cost (further - ZhEKs) determine date of emergence of the tax liabilities and the tax credit by cash method.

The specified rule of determination of date of emergence of the tax liabilities extends also to transactions on delivery of the specified goods/services for ZhEKs and budgetary institutions which receive such goods / services if they are registered as taxpayers.

According to subitem 14.1.266 of item 14.1 of Art. 14 of the Code cash method for the purposes of the taxation according to the Section V NKU - the tax accounting method by which date of emergence of the tax liabilities is determined as date of transfer (obtaining) of funds for the bank account (in cash desk) the taxpayer or the date of receipt of other types of compensations of cost delivered (or those that are subject to delivery) it goods (services), and date of emergence of the right to the tax credit is determined as date of write-off of funds from the bank account (issue from cash desk) the taxpayer or date of provision of other types of compensations of cost delivered (or those that are subject to delivery) to it goods (services).

Considering that information stated in the letter of public joint stock company is not complete for determination of the right of public joint stock company to application of cash method in case of determination of the tax liability and tax credit, GNSU reports.

If the municipal company, the receiver of heat energy from public joint stock company, belongs to the category of ZhEKs which, in turn, perform delivery of heat   to the categories of consumers listed in item 187.10 of Art. 187 of the Code, that public joint stock company has the right to determine date of emergence of the tax liabilities by such scope of supply and the tax credit on cash method.

If the municipal company, the receiver of heat energy from public joint stock company, does not belong to the category of ZhEKs, that public joint stock company determines date of emergence of obligations and the tax credit by the VAT by delivery of heat energy in general procedure.

As for transactions on electrical supply, item 187.10 of Art. 187 of the Code does not provide determination of date of emergence of the tax liabilities and the tax credit on the VAT on cash method when implementing such deliveries, and therefore the tax liabilities and the tax credit by the VAT when implementing transactions on electrical supply is determined in generally established procedure.

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