Published 22 June 2016. Some rules have changed since; ask us for the current position.
The tax authorities have reminded taxpayers that, under the first paragraph of subparagraph 141.4.7 of the Tax Code of Ukraine, the profits of non-residents operating in Ukraine through a permanent establishment are taxed under the general rules. The permanent establishment is treated as a taxpayer operating independently of the non-resident.
The object of corporate income tax is profit sourced in Ukraine and abroad. It is determined by adjusting the pre-tax financial result, calculated under accounting rules, for the differences arising under Section III of the Tax Code.
If a non-resident operates both in Ukraine and abroad and does not determine the profit from the activities it carries on through its permanent establishment in Ukraine, the profit taxable in Ukraine is determined on the basis of a separate balance sheet of financial and business activity drawn up by the non-resident and agreed with the tax authority where the permanent establishment is located.
If the profit a non-resident earns from Ukrainian sources cannot be determined by direct calculation, the tax authority determines taxable profit as the difference between income and expenses, with expenses calculated by applying a ratio of 0.7 to the income received.
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