LETTER OF STATE TAX ADMINISTRATION OF UKRAINE

of June 17, 2011 No. 11301/6/15-0318

GNAU considered the letter of PRAO of rather some tax matters and reports.

1. Concerning the taxation of the income of the nonresident the income tax

For the purposes of article 13 of the Law from carrying out economic activity it is necessary to understand as income gained by the nonresident with source of their origin from Ukraine, in particular, other income from implementation by the nonresident (permanent mission of this or other nonresident) of economic activity in the territory of Ukraine, except for the income in type of revenue or other types of compensation of cost of goods (works, services) transferred (executed, provided) to resident from such nonresident (permanent mission), including the cost of services in international telecommunication or the international information support (subitem "y" item 13.1 of Art. 13 of the Law).

Since 01.04.2011 the taxation of nonresidents on the stated question is regulated by similar regulations of the Tax code of Ukraine (farther the Code), in particular subitems 14.1.36 and 14.1.54 of Art. 14 and items 160.1 and 160.2 of Art. 160.

Based on stated and considering that the company receives from the nonresident under the external economic contract consulting services which are provided the income of the nonresident (prepares) outside Ukraine, concerning development of the company; both till 01.04.2011, and after this date do not reckon as the income of the nonresident with source of its origin from Ukraine from carrying out economic activity, and the income tax at the rate of 15% is not kept by resident.

2. Concerning the taxation of the services VAT

According to subitem by item 185.1 of Art. 185 of the Code it is determined that the taxation object of the VAT are transactions of the taxpayer on delivery of services which place of delivery is located on customs area of Ukraine, according to the Art. 186 of this Code.

According to subitem 196.1.14 of Art. 196 of the Code

By Item 186.3 of Art. 186 of the Code it is determined that the place in which the receiver of services is registered as the subject of managing or - in case of lack of such place - the place of permanent or its preferential residence is considered the place of delivery of the services specified in this Item. According to subitem "in" this of Item belong to such services, in particular consulting, engineering, engineering services.

Thus, the place of delivery by the nonresident of the services specified in the appeal of the company is the place of registration of resident, and such services are not the taxation object of the VAT.

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