LETTER OF THE MINISTRY OF THE INCOME AND CHARGES OF UKRAINE

of June 17, 2013 No. 4986/6/99-99-18-05-01-15

About registration

The ministry of the income and charges of Ukraine reviewed your request <...> about registration as taxpayers of representative offices which are separate divisions, and reports the following.

By subitem 14.1.30 of Item 14.1 of article 14 of the Tax Code of Ukraine (further - the Code) it is determined that the concept "separate divisions" is used in the value determined by the Civil code of Ukraine. For the Section IV of the Code - in determination of the Economic code of Ukraine.

In Article 95 of the Civil code it is specified that representation is the separate division of the legal entity located out of its location and performing representation and protection of interests of the legal entity. Data on branches and representations of the legal entity join in the unified state register.

According to article 63 of the Code the taxpayer registration is kept for the purpose of creation of conditions for implementation by monitoring bodies of control of correctness of calculation, timeliness and completeness of tax payment, the added financial sanctions, observance of tax and other legislation, control of which observance is imposed on bodies of the State Tax Service.

All taxpayers are subject to registration or registration in bodies of the State Tax Service.

Taxpayers are subject to registration or registration in bodies of the State Tax Service for the location of legal entities, separate divisions of legal entities, residence of person (the main place of accounting), and also for the location (registration) of their divisions, personal and real estate, the taxation objects or objects connected with the taxation or through which activities (the nonbasic place of accounting) are performed, - Item 63.3 of article 63 of the Code.

Capture on accounting in bodies of the State Tax Service of legal entities, their separate divisions, and also separate categories of taxpayers is performed irrespective of obligation availability on payment of these or those taxes and fees.

Taxpayers, according to Item 15.1 of Article 15 of the Section I of the Code, physical persons (residents and nonresidents) are recognized, legal entities (residents and nonresidents) and their separate divisions which have receive (give) the taxation objects or perform activities (transactions), is the taxation object according to this Code or the tax laws and to whom the obligation on tax payment and charges according to the Code is assigned.

Features of the taxpayer registration on separate taxes, and also separate categories of taxpayers are established by appropriate sections of the Code.

According to subitem 133.1.5 of item 133.1 of Art. 133 of the Section III "The income tax of the companies" of the Code separate divisions of taxpayers - the legal entities performing economic activity both in the territory of Ukraine, and beyond its limits, determined according to river of the I Code, except for representations are income tax payers from among residents, in particular, (the separate divisions of the legal entity located out of the place of its stay and the performing representation and protection of interests of the legal entity financed by such legal entity and do not gain other income, except passive incomes).

The procedure for charge of tax in case of availability of separate divisions as a part of the taxpayer - the legal entity is provided by item 152.4 of Art. 152 of the Code.

The taxpayer who incorporates the separate divisions located in the territory of another than such taxpayer, territorial community can make the decision on payment of the consolidated tax and pay tax on the location of such separate divisions, and also on the location, determined according to regulations of this Section and reduced by tax amount, paid on the location of separate divisions.

In case of the consolidated tax discharge on profit responsibility for timely and complete entering of tax amounts into the budget for the location of separate divisions is born by the taxpayer as a part of whom there are such separate divisions.

Proceeding from the above, representations of the legal resident persons performing the representation and protection of interests of the legal entity financed by such legal entity do not gain other income, except passive incomes, and meet the requirements of subitem 133.1.5 of item 133.1 of Art. 133 of the Code, are not income tax payers and do not submit the reporting under this tax.

At the same time they are not exempted from payment of other taxes and fees, in particular income tax.

About payment procedure (transfer) of tax in the budget, according to article 168 of the Code the tax withheld from the income of residents is subject to transfer in the budget according to regulations of the Budget code of Ukraine of 08.07.2010 No. 2456-VI (further - the Budget code).

According to Article 64 of the Budget code the income tax which is paid by the tax agent - the legal entity (its branch, department, other separate division) or representation of the nonresident - the legal entity, is enlisted in the corresponding local budget on its location (arrangement) in amounts of the tax accrued on the income paid to physical person.

According to subitem 168.4.3 of Item 168.4 of article 168 of the Code of tax amount on the income added by separate division for benefit of physical persons for the accounting period are transferred into the local budget on the location of such separate division.

If the separate division is not authorized to charge (to pay) income tax, for such separate division all obligations of the tax agent are carried out by the legal entity. The tax on the income accrued to employees of separate division is transferred into the local budget on the location of such separate division.

At the same time we note that responsibility for timely and complete transfer of tax amounts brings the legal entity or his separate division which charges to the relevant budget (pays) the taxable income (subitem 168.4.7 of Item 168.4 of article 168 of the Code).

Control of correctness and timeliness of the tax discharge performs body of the State Tax Service for the location of the legal entity or his separate division.

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