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Our legislature does not allow the taxpayers to "relax" by affecting them again and again with the depth and scope of its "brilliant" ideas. This time it happened with the adoption of the Tax Code of Ukraine, in particular its chapter relating to duty for special use of water.
Whereas in the past pursuant to the Regulation on Procedure of Calculation of Duty for Special Use of Water* (para 4.8) business entities and individual entrepreneurs using water only for drinking and sanitation needs were exempt from duty for special use of water, there is no such exception for the present (para 324.4 of the Tax Code of Ukraine). To put it differently, an undertaking that does not carry out industrial activities associated with the use of water resources, and engaged in, say, the provision of financial, accounting or legal services still needs to pay duty for special use of water - just for the fact that there is cold/hot water available at its office and its employees use it.
The State Tax Service of Ukraine (the "STS of Ukraine") spelled out that duty for special use of water is not payable when the taxpayer buys drinking water in bulk water packs or when it leases its offices from the lesser (the Integral Base of Tax Knowledge published on the STS’s official website, index 270.01). However, in the latter case, the burden to pay duty for special use of water still lies with the tenant if he rather than the lesser has directly entered into a contract for water supply.
Bank Forum tried to challenge in court the individual tax advice of the STS of Ukraine outlining the necessity to pay duty for special use of water in the situation under consideration (http://reyestr.court.gov.ua/Review/17074439). Expectantly, the result is negative. As noted above, the Tax Code of Ukraine does not provide exemption from the duty for special use of water for those using it only for drinking and sanitation needs. Hence, releasing the “non-manufacturers" from the duty for special use of water requires the respective amendments to be made to the Tax Code of Ukraine.
Another gift of fate for business has turned out to be ecological tax to the extent it concerns the taxation of waste disposal.
The stance of the tax authorities here is that ecological tax is payable by business entities even when they have entered into a contract for waste (trash) removal with the enterprises licensed to collect and stock waste as secondary raw materials (the Integral Base of Tax Knowledge, index 300.01). The reasoning of the tax officers appears to be genius: before the transfer of waste (trash) to the aforesaid licensed enterprises the business entity has been keeping it for some time on its own territory. As a result, the exemption from the ecological tax (s. 242.1.3 of the Tax Code of Ukraine) covering the cases where waste is placed on the areas belonging to the enterprises licensed to collect and stock it as secondary raw materials does not apply.
Fortunately, there has been already a successful example of combating such "anti-waste" tax initiatives. Trading house “Amstor "(large supermarket chain mainly located in Donetsk and Zaporizhia regions) proved the wrongness of the position of the tax authorities before the Donetsk District Administrative Court (http://reyestr.court.gov.ua/Review/18677631). The court reversed the individual tax advice of the local tax office and found that the operation is not subject to the ecological tax if the taxpayer had entered into a contract for waste removal with enterprises holding the respective license.
Let us hope that in future the state will gift taxpayers with fewer such "ecological surprises”.
On 16 December 2011 under No 258 the STS of Ukraine issued its general tax consultation by which the approach to the taxation of waste disposal was changed.
ReplyDeleteFortunately, the tax authorities eventually agreed that business entities that temporary stock waste (trash) on their territories (before it is removed by licensed enterprises) are not subject to ecological tax.