1

EBS

QUARTERLY

REVIEW

LEGISLATIVE CHANGES

REVIEW

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CONTENTS Accounting and taxation outsourcing

● Google Tax Law, as well as the date of occurrence of tax obligations under an electronic document (read more)

● The Law on the VAT Rate for Supply of Specific Agricultural Products has been adopted (read more)

● The income tax return has been updated (read more)

● Step-by-step algorithm for termination of an individual entrepreneur (read more)

● DSTU on office management: what's new? Is there any reason for an accountant to worry? (read more)

Payroll outsourcing

● Starting from September 4, amendments to the Procedure for Calculating the Average Salary No. 100 are in effect (read more)

● New codes of reasons for disability of e-sick leave – in appendices to applications-calculations (read more)

● New form of personal income tax, military levy and unified social contribution consolidated reporting shall be submitted from Quarter III, 2021 (read more)

● Personal income tax, military levy and unified social contribution consolidated reporting will be submitted on a monthly basis (read more)

HR consulting

● Hiring notification: how not to make a mistake? Liability for failure to submit a notification (read more)

● Since July 16, 2021, standard forms of employment contracts for home-based and remote work are in effect (read more)

● Is it possible to dismiss an employee for refusing vaccination? – Explanation of the Ministry of Economy (read more)

Legal consulting

Beneficiaries: new state registration forms (read more)

● Starting from August 31, the State Financial Monitoring Service will analyze financial transactions under the new procedure (read more)

● Starting from July 21, 2021, the laws on "zero tax return" will come into force (read more)

Transfer pricing

● How to fill out a new report on controlled transactions for 2020 (read more)

Financial audit

● Changes to accounting standards – from August 10, 2021 (read more)

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ACCOUNTING AND TAXATION OUTSOURCING

4

GOOGLE TAX LAW, AS WELL AS THE DATE OF

OCCURRENCE OF TAX OBLIGATIONS UNDER

AN ELECTRONIC DOCUMENT

The Law of Ukraine No. 1525-IX of June 03, 2021 "On Amendments to the Tax Code of Ukraine Regarding Abolition of Taxation of Revenues Received by Non-Residents from Production and/or Distribution of Advertising and Improvement of Value Added Tax Administration Procedures as it Pertains to the Operations on Electronic Services Provision to Individuals by Non-Residents" (Law 1524) establishes VAT rules for operations for the supply of electronic services by non-residents to individuals. It is also called the Google, YouTube, Facebook and other foreign electronic services tax law. Foreign companies that supply electronic services to individuals will be required to register as VAT payers under a simplified procedure through a special electronic service if the total volume of relevant operations exceeds UAH 1 million per year. Non-residents will prepare simplified reports in electronic form in Ukrainian or English. At the same time, operations involving the supply of distance learning services via the Internet are exempt from VAT if this network is used exclusively as a means of communication between the teacher and the student. Also, operations for the supply of educational services through access to public educational, scientific and information resources on the Internet from the branches of knowledge and specialties in which higher education applicants are trained are exempt from VAT if their implementation and provision do not require human participation. Starting from January 1, 2022, VAT will be abolished when Ukrainian companies pay for services related to the production or distribution of advertising abroad. In addition, Law No. 1525 introduced an important clarification to clause 187.1 of the Tax Code of Ukraine (hereinafter – the TCU), which determines the date of occurrence of tax liabilities. It stipulates that for documents drawn up in electronic form, the date of registration of the document certifying the fact of delivery of services by the taxpayer shall be considered the date indicated in the document itself as the date of its compilation, regardless of the date of electronic signature. The Law entered into force on July 2, 2021, except for certain amendments that will come into force from January 1, 2022. The provisions of certain clauses of the Law (Regarding the VAT Administration Procedures as it Pertains to the Operations on Electronic Services Provision to Individuals by Non-Residents) will apply to tax periods starting from January 1, 2022.

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THE LAW ON THE VAT RATE FOR SUPPLY OF

SPECIFIC AGRICULTURAL PRODUCTS HAS

BEEN ADOPTED

Law No. 1600-IX of July 01, 2021 "On Amendments to the Tax Code of Ukraine Regarding the Value-Added Tax Rate for Taxation of Operations for Supply of Specific Agricultural Products" entered into force on August 01, 2021. The Law restored the VAT rate of 20% for taxation of operations for supply of agricultural products in the customs territory of Ukraine and import into the customs territory of Ukraine classified under the following codes according to UCG FEA: 0102 (cattle, live); 0103 (pigs, live), 0104 10 (live sheep), 0401 (in terms of whole milk), 1002 (rye), 1004 (oats), 1204 00 (flax seeds, crushed or not ground), 1207 (seeds and fruits of other oilseeds, crushed or not ground), 1212 91 (sugar beet). Accordingly, we left the VAT rate at 14% for the supply of such products: 1001 (wheat and a mixture of wheat and rye (meslin), 1003 (barley), 1005 (corn), 1201 (soybeans, crushed or not ground), 1205 (rapeseed, crushed or not ground), 1206 00 (sunflower seeds, crushed or not ground). The draft law provided for those products for which the VAT rate of 20% has been restored, the following features: - if the first event in the delivery of these goods occurred before the entry into force of this Law, the VAT rate and tax amount shall not be recalculated as of the date of occurrence of the second event; - if after the entry into force of this Law, there is a refund of the prepayment (advance payment) or such goods delivered, the first event for the delivery of which occurred before the specified date, the adjustment of the amounts of VAT liabilities shall be carried out based on the VAT rate of 14%; - if after the entry into force of this Law, these goods are delivered or funds are transferred due to an increase in the quantity or value of such goods, the first delivery event of which occurred before the specified date, the adjustment of the amounts of VAT liabilities shall be carried out based on the VAT rate of 20%. If a VAT payer performs operations for the delivery of such goods in the customs territory of Ukraine that were purchased before the entry into force of this Law, such taxpayer shall retain a VAT tax credit in the amount that was accrued when purchasing such goods. Thus, the 20% VAT rate will be applied only to the occurrence of tax liabilities for operations after the entry into force of this Law.

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THE INCOME TAX RETURN HAS

BEEN UPDATED

The Ministry of Finance by Order No. 317 of June 04, 2021 (registered with the Ministry of Justice dated August 04, 2021 under No. 1014/36636) made amendments to the Corporate Income Tax Return Form: a new line 7.1 was added to the tax return, as well as amendments were made to the Appendices Withholding Tax, Differences and Amortization. The updated tax return form came into force on August 17, from the date of publication. The Order was published on August 17, 2021 in Official Gazette No. 63. According to clause 46.6 of the TCU, the updated tax reporting forms must be used for reporting for the period following the period of their official publication. Since the Order was approved and published in August 2021, for the first time, the updated income tax return form will be used to report for Q4 2021. The tax return has been brought into compliance with the current norms of the TCU (taking into account the amendments made by the Laws No.466, No. 786, No. 962, No. 1072 and No. 1117). Namely:

1. A new line 7.1 was added to the tax return regarding the reflection of information when a non-resident carries out activities on the territory of Ukraine through a permanent representative office, taking into account

the amendments adopted by Laws No. 466, No. 786, No. 1117 to subclause 133.2.2 and subclause 141.4.7 of the TCU. The footnote, in particular, clarifies that if a non-resident carries out activities on the territory of Ukraine through a permanent representative office, the USREOU code of such a permanent representative office must be indicated. If a non-resident carries out activities through an uncredited separate subdivision, the ID of the taxable object must be indicated according to the notification of such a taxable object submitted to the supervisory authority following the requirements of clause 63.3 of the TCU. 2. Amendments have been made to the Appendices to the Tax Return: - in the Appendix on Withholding Tax regarding the possibility of reflecting information about a non-resident who is a beneficial (actual) recipient (owner) of income with a source of origin from Ukraine in case of the application according to Article 103 of the TCU of the provision of an international treaty of Ukraine with the country where the corresponding beneficial (actual) recipient (owner) of such income is a resident. Namely, the "Mark on the absence of the status of a legal entity" has been supplemented with a new position. - in the Appendix on Differences – about:

● exclusion of the difference by which the financial result increases before tax – by the amount of expenses incurred by the taxpayer when performing operations with non-residents if such operations do not have a business purpose (revision of subclause 140.5.15 of the TCU was valid until January 01, 2021);

● addition of a new difference to increase the financial result before taxation of the tax (reporting) period by the amount of expenses related to the fulfillment of the terms of the budget grant agreement incurred in the current reporting period at the expense of such grants (but no more than the amount of such grants) and included in the expenses of the current reporting period according to the National Accounting Regulations (Standards) or International Financial Reporting Standards (subclause 140.5.16 of the TCU);

● addition of new differences regarding the reduction of the financial result before taxation of the tax (reporting) period:

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● for the amount of budget grants received by the taxpayer and included in the income of the reporting period according to the National Accounting Regulations (Standards) or International Financial Reporting Standards (subclause 140.4.8 of the TCU);

● for the amount of one-time compensation received to business entities according to the Law of Ukraine "On Social Support for Insured Persons and Business Entities for the Period of Implementation of Restrictive Anti-Epidemic Measures Introduced to Prevent the Spread of Acute Respiratory Disease COVID-19 Caused by Coronavirus SARS-CoV-2 on the Territory of Ukraine" and included in the income of the reporting period according to the National Accounting Regulations (Standards) or International Financial Reporting Standards (clause 54, Subsection 4, Section XX of the TCU);

● for the amount of sanctions and penalties written off according to clause 23 and tax debt written off according to clause 24, Subsection 10, Section XX of the Code and included in the income of the reporting period according to the National Accounting Regulations (Standards) or International Financial Reporting Standards (clause 54, Subsection 4, Section XX of the Code);

- in the Appendix on Amortization, after the line under code A17, it is supplemented with a new line of CI with the following content: "Capitalized interest included in the cost of non-current assets (subclause 138.3.2, clause 138.3, Article 138, Section III of the Tax Code of Ukraine)". For the first time, the updated income tax return form will be used to report for Q4 2021.

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STEP-BY-STEP ALGORITHM FOR TERMINATION OF AN INDIVIDUAL ENTREPRENEUR

How an individual entrepreneur (IE) can stop carrying out their activities — General Rules. Stage 1: Preparing for liquidation Before the individual entrepreneur performs direct actions to terminate business activities, he/she must: 1) if he/she did not work himself/herself, but hired employees to carry out his/her activities, it is necessary

to terminate the employment relations with them – clause 1, Part 1, Article 40 of the Labor Code.

2) terminate all existing contracts (lease, supply, service agreements, etc.). When the individual entrepreneur has accounts receivable or payables, after the liquidation of the individual entrepreneur, the obligations under the concluded contracts will not be terminated, but will remain with him/her as an individual. 3) it is necessary to check whether the correct information is specified in the Unified State Register (hereinafter – the USR) about the individual entrepreneur. If it is incorrect, for example, the data from the USR differs from the passport data of an individual working as an individual entrepreneur, it is necessary to make amendments to the USR and correct the situation. Check on the website of the Ministry of Justice (usr.minjust.gov.ua): in the form that appears in the "Get information about" field, put a mark next to "individual entrepreneur". Check information about the individual entrepreneur. If everything fits together, we move on to the next stage. If there are inaccuracies or even data about you as an individual entrepreneur is not entered in the USR (if the individual entrepreneur was registered before July 01, 2004), you should correct the situation. To do this, you should submit an application to the registrar according to Form 1, approved by Order of the Ministry of Justice No. 3268/5 of November 18, 2016. Stage 2: Exclude the individual entrepreneur from the USR Making an entry in the USR on termination of business activities of individual entrepreneurs – submit an application to the registrar according to Form 1. An application for termination of the individual entrepreneurs in electronic form can be made via the web portal "Diia" (diia.gov.ua). On the day of making an entry in the USR, the Tax Service, State Statistics bodies and the Pension Fund will be notified. Step 3: Deregistration From the date of deregistration of the individual entrepreneurs, the accrual of taxes for the individual entrepreneurs will cease, but an individual who was an entrepreneur will continue to be registered with the Tax Service as an individual taxpayer who received income from business activities (subclause 6, clause 11.18 of Order No. 1588). After the liquidation of the individual entrepreneur, an individual must conduct final calculations for the obligations of the individual entrepreneur. An unscheduled documentary check is also possible (clause 78.1.7 of the TCU). Deregistration from the unified social contribution (hereinafter – the USC) accounting: the final month for which the USC will be accrued will be the month on which the date of its termination falls. After entering data in the USR on the termination of the individual entrepreneur, an individual must submit liquidation reports on USC. Such reports must be submitted as part of the liquidation reports on the unified tax or the liquidation and property status tax return. Stage 4: Closing bank accounts After the termination of business activities and deregistration of the individual entrepreneur, an individual must close current bank accounts opened in financial institutions as an individual entrepreneur. Step 5: Cancellation of the electronic signature After termination of the individual entrepreneur, the individual must cancel the electronic signature (QES) which he/she used to carry out business activities, i.e. to contact the authority that generated this key. This key itself will become invalid after the key certificate expires.

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DSTU ON OFFICE MANAGEMENT: WHAT'S NEW? IS THERE ANY REASON FOR AN ACCOUNTANT TO WORRY?

On September 1, 2021, DSTU 4163:2020 on the Rules for Drawing up Documents came into force.

Just like the previous one DSTU 4163-2003, the new document contains requirements for drawing up

organizational and administrative documents:

- organizational (regulations, charters, job descriptions, staffing tables, etc.);

- administrative documents (resolutions, decisions, orders, decrees);

- information and analytical documents (acts, references, reports and explanatory notes, service letters,

etc.).

The DSTU applies to all state bodies, local self-government bodies, institutions, enterprises,

organizations, and other legal entities regardless of the form of ownership. For individual entrepreneurs,

this standard is recommendatory.

1. Signature. Currently, this detail will look like this:

In other words, full initials or patronymic are not specified. Only the first and last name (without patronymic)

must be written in all other banking details.

2. Date. For digital and verbal-digital designations, the day of the month must always consist of two digits.

We write the date according to the following format: January 01, 2021.

3. Place where the document was compiled. To specify the place where the document was compiled, for

example, the city of Kyiv, you do not need to put the word "city" in front of it. In all other cases, we still use

the words city, village, urban-type settlement, etc.

4. Familiarization with the document. In the list of banking details, the "Mark on familiarization with the

document" detail has appeared (take into account changes in the signature part).

When DSTU is not important

The list of mandatory details of primary documents is provided for in the Law of Ukraine "On Accounting and

Financial Reporting in Ukraine" No. 996-XIV of July 16, 1999 (the Accounting Law) and in Regulations on

Documenting Accounting Records, approved by Order No. 88 of the Ministry of Finance dated May 24, 1995

(Regulations No. 88).

The new DSTU does not affect the recognition of primary documents as valid in accounting. DSTU regulates

only the location and appearance of banking details. If the details are not drawn up in the primary documents

according to the recommendations of the DSTU, they cannot be declared invalid.

In addition, according to the Accounting Law and Regulations No. 88, minor shortcomings in documents

containing information about business transactions are not a reason for the non-recognition of a

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business transaction if this does not interfere with its identification. This position has been repeatedly

confirmed by the Supreme Court of Ukraine.

Regulation of cash and settlement documents shall be carried out by special regulatory legal acts:

— Regulations approved by NBU Board Resolution No. 148 of December 29, 2017, — for cash documents;

— Regulations approved by Order of the Ministry of Finance No. 13 of January 21, 2016, — for settlement

documents.

It is not allowed to recognize cash or settlement documents as invalid due to non-compliance with

the DSTU.

The new DSTU does not apply to agreements, it is not allowed to invalidate the agreement due to non-

compliance with the new DSTU. There are no fines for non-compliance with DSTU in personnel

documents.

When DSTU is important:

Litigation. It is important to adhere to the DSTU during certification of copies of documents attached to

claims, appeals and cassation complaints.

Official documents of government agencies. Non-compliance with the DSTU in the details of documents

issued by government agencies may affect their validity.

Tenders. With documents that do not comply with the DSTU, problems may arise when participating in

tenders since there are quite strict rules for the appearance of documents.

The DSTU did not make amendments to accounting. When processing primary accounting documents,

you must focus on the Accounting Law and Regulations No. 88.

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PAYROLL OUTSOURCING

12

STARTING FROM SEPTEMBER 4, AMENDMENTS

TO THE PROCEDURE FOR CALCULATING THE

AVERAGE SALARY NO. 100 ARE IN EFFECT

Resolution of the Cabinet of Ministers of Ukraine No. 917 of September 01, 2021 amended Order No. 100. Resolution No. 917 is effective from September 4, 2021 (it was published in the Uryadovy Courier on September 4, 2021). We remind you about the amendments that occurred earlier, from December 12, 2020 (Resolution of the Cabinet of Ministers of Ukraine No. 1213 of December 09, 2020) new rules for accounting for bonuses in calculating the average salary were introduced. Before that, the procedure for accounting for bonuses and remuneration was different and depended on the period for which these payments were accrued. Remuneration based on the results of work for the year ("13th salary", as it was often called) was removed from Order No. 100 altogether. Since December 12, 2020, a new approach to accounting for bonuses and other multi-month payments has been noted: bonuses and other payments that are paid for two months or a longer period, when calculating the average salary, will be included by adding to the earnings of each month of the billing period a part corresponding to the number of working days worked in the period (months) for which such bonuses and other payments are accrued. From September 4, 2021 (according to Resolution No. 917), unification of the rules for accounting for bonuses in calculating the average salary: rules for monthly bonuses and several months premiums became the same: bonuses (including for a month) and other incentive payments based on the results of work for a certain period when calculating the average salary are taken into account in the earnings of the period corresponding to the number of months for which they are accrued, starting from the month in which they are accrued. In addition, from September 4, 2021, according to Resolution No. 917, in the calculation of the average salary the following items are not taken into account:

- payments related to holiday dates; - monetary remuneration for dedicated work and exemplary performance of official duties. By letter No. 4711-06/45145-07 dated September 10, 2021, the Ministry of Economy provided an explanation on the application of the Procedure for Calculating the Average Salary, approved by Resolution of the Cabinet of Ministers of Ukraine No. 100 of February 08, 1995 (as amended). Three months will be given for recalculation (from September 04, 2021 to December 03, 2021). The temporary norm in Resolution No. 917: Employees for whom during the period from December 12, 2020 to September 4, 2021 the average salary was calculated according to Order No. 100 without taking into account bonuses accrued in this period and payments based on the results of work for a certain period shall be recalculated within three months of entry into force of Resolution No. 917, taking into account clause 3 of Order No. 100, approved by Resolution No. 917.

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NEW CODES OF REASONS FOR DISABILITY OF

E-SICK LEAVE – IN APPENDICES TO

APPLICATIONS-CALCULATIONS

The Social Insurance Fund informs that when filling out an application-calculation for financing to provide material security to insured persons at the expense of the Fund's money for electronic disability certificates, new codes must be applied to reflect the reasons for disability in the appendices.

Category of medical report Reason for disability

Appendix to the

application-calculation

General illness or injury 1 – Temporary disability due to illness or injury that is not related to an industrial accident

1.1.

General illness or injury with a note about the connection of the case of temporary disability with the patient's professional activity

11 – Temporary disability due to an occupational disease

1.3.

12 – Temporary disability due to an industrial accident

1.3.

Pregnancy and childbirth 2 – Pregnancy and childbirth 1.1.

Caring for a sick child 3 – Caring for a sick child 1.1.

Caring for a sick family member 4 – Caring for a sick family member 1.1.

Child care in case of illness of the person caring for the child

5 – Caring for a child under the age of three or a child with a disability under the age of 18 in case of illness of the mother or other person caring for such a child

1.1.

Quarantine 6 – Quarantine established according to the law

1.1.

Orthopedic prosthetics 7 – Prosthetics with in-patient treatment at a prosthetic and orthopedic hospital

1.1.

Treatment in sanatorium and spa resorts 8 – Treatment in the sanatorium and spa resort

1.1.

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Transfer of a person to an easier job 9 – Temporary transfer of the insured person according to the medical report to a lighter, lower-paid job

1.1.

Transfer of a person to an easier job with a note about the connection of the case of temporary disability with the patient's professional activity

9 – Temporary transfer of the insured person according to the medical report to a lighter, lower-paid job with a note about the connection of the case of temporary disability with the patient's professional activity

1.4.

Observation, self-isolation during the quarantine established by the Cabinet of Ministers of Ukraine to prevent the spread of acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus

10 – Stay in self-isolation, observation during the quarantine established by the Cabinet of Ministers of Ukraine to prevent the spread of acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus

1.1.

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NEW FORM OF PERSONAL INCOME TAX,

MILITARY LEVY AND UNIFIED SOCIAL

CONTRIBUTION CONSOLIDATED REPORTING

SHALL BE SUBMITTED FROM QUARTER III, 2021

The following amendments have been introduced to the Order dd. 13.01.2015 No. 4 by the Order of the Ministry of Finance dd. 19.05.2021 No. 278 “On Amendments to the Order of the Ministry of Finance of Ukraine dd. January 13, 2015 No. 4” (Order No. 278). Tax computation is supplemented by section III “Comprehensive Information on Budgetary Grants” for taxpayers paying such type of income. Such forms of updated reporting are added in pursuance of the Order No. 278:

● F/J 0500107 - Tax computation of income amounts accrued (paid) in favour of individual taxpayers, amounts of tax withheld from them as well as amounts of accrued unified social contribution;

● F/J 0510107 - Information on the accrual of salary (income, monetary allowance) to insured persons; Annex No. 1 to the Tax computation of income amount accrued (paid) in favour of individual taxpayers, amounts of tax withheld from them as well as amounts of accrued unified social contribution (D1) (clause 1 section IV);

● J0510207 - Information on the persons attending to a child up to the age of three years and pursuant to law receiving allowance for attending to a child up to the age of three years and/or at child birth, adoption of a child and persons from among unemployed legally capable parents, adoptive parents, tutors, guardians, foster parents, caring parents who actually attend to a child with disability, child suffering from severe perinatal affection of nervous system, severe congenital disorders, rare orphan disease, oncological, hemato-oncological disease, infantile cerebral paralysis, severe mental disorder, type I diabetes (insulin-dependent), IV stage acute or chronic kidney disease, to a seriously injured child who needs organ transplantation, palliative care and who was not registered as a disabled as well as unemployed legally capable persons attending to I group disabled person or elderly person who, based on the opinion of medical institution, needs constant nursing care or reached the age of 80, if such unemployed legally capable persons receive allowance, premium or compensation pursuant to the applicable laws and accrual of unified social contribution amounts for foster parents, caring parents of family-type orphanage, adoptive parents, if they receive monetary allowance pursuant to the applicable laws; Annex 2 (D2) (clause 2 section IV);

● J0510307 - Information on the persons doing compulsory military service; Annex 3 (D3) (clause 3 section IV);

● F/J 0510407 - Information on the amounts of accrued income, withheld and paid personal income tax and military levy; Annex 4 DF (clause 4 section IV);

● F/J 0510507 - Information on the employment relations of persons and duration of military service; Annex 5 (D5) (clause 5 section IV);

● F/J 0510607 - Information on the reasons for accounting the period of service to certain categories of persons pursuant to the applicable laws; Annex 6 (D6) (clause 6 section IV).

The said reporting according to the new form shall be submitted starting from quarter III, 2021.

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PERSONAL INCOME TAX, MILITARY LEVY AND UNIFIED

SOCIAL CONTRIBUTION CONSOLIDATED REPORTING

WILL BE SUBMITTED ON A MONTHLY BASIS

On September 29, 2021, the Government adopted the draft Law on Amendments to Tax Code of Ukraine Concerning Submission of Unified Social Contribution and Personal Income Tax Consolidated Reporting (No. 6120 dd. 30.09.2021). It is suggested by the project to introduce amendments to Articles 51, 170, 172-174 and 176 of the Tax Code of Ukraine in terms of changing the tax period from quarterly to monthly for submission by taxpayers, incl. tax agents, unified social contribution payers, controlling authorities of tax computation of income amounts accrued (paid) in favour of individual taxpayers, amounts of tax withheld from them as well as amounts of accrued unified social contribution. In other words, tax agents will be obliged to submit this reporting according to the results of each month. If the law is adopted, it will become effective from January 1, 2022. Thus, one will be requested to submit reporting based on new rules for the first time starting from 2022.

.

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HR CONSULTING

18

HIRING NOTIFICATION: HOW

NOT TO MAKE A MISTAKE?

LIABILITY FOR FAILURE TO

SUBMIT A NOTIFICATION

According to Resolution of the Cabinet of Ministers of Ukraine No. 413 of June 17, 2015 (Resolution No. 413), employers must submit a notice of hiring employees to the Tax Service (hereinafter referred to as the Notification), but its submission raises many questions. The requirement for an employer to notify the tax authority about the employee's employment is established in Part 3, Article 24 of the Labour Code. According to its norms, an employee may not be allowed to work without complying with such specific conditions: — without entering into an employment contract issued by an order (decree) and — without notifying the tax authority about the employee's employment. A Notification must be submitted in the form provided in the Appendix to Resolution No. 413. All employers must report about hiring employees, both legal entities and individuals using hired labour. The Notification must be submitted to territorial bodies of the State Tax Service by place of registration of the employer as a USC payer. It is necessary to notify about the employment of persons with whom we conclude an employment agreement or contract. Regardless of whether the employment contract is concluded verbally or in writing, the employer must issue an order to hire an employee. Notifications must be submitted when applying for a job under an employment contract although: — an employee has been hired full-time or part-time (both external and internal); — what type of employment contract is concluded (indefinite/fixed-term, for performing temporary/seasonal work); — a citizen or foreigner is hired; — an employee is accepted for transfer from another company, for a referral from the Employment Center, etc. There is no need to submit a notification about the hiring of: — director of the company; — members of the executive body of a business entity, information about which is included in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations (hereinafter referred to as the USR). The Tax Service receives information about their employment directly from the USR on the day of registration of changes. Also, it is not necessary to report persons with whom employment relations are not formed: persons who perform work (provide services) under civil contracts and persons who have internships. Deadline for submission. The Notification on the employee's employment must be submitted before the employee starts working under the concluded employment contract. Can I submit a Notification on the day the employee is allowed to work? Yes, if the employee starts working later then the Notification is submitted. For example, if an employee starts working at 4 pm and the Notification is provided at 9 am, the instructions of Article 24 of the Labor Code will not be affected. Submission methods are defined in Resolution No. 413:

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1) by means of electronic communication using a Qualified Electronic Signature (QES); 2) on paper together with a copy in electronic form; 3) on paper, if the Notification contains information about the acceptance of no more than 5 persons. Sending a Notification by mail is not provided in Resolution No. 413. Features of filling in detail 4 "Person category": — "1" — when we hire a full-time employee, including if this is their first place of work and they do not have an employment record book; — "2" — if we enter into an employment contract with a part-time employee, including a separate employment contract for internal part-time work with an employee already working for the employer. Failure to submit a Notification provides for paying a fine in the amount of one minimum wage (UAH 6,000 — and from December 01, 2021, it is UAH 6,500, paragraph nine, Part 2, Article 265 of the Labour Code). If the violation is committed repeatedly within a year, the fine is two minimum wages (paragraph ten, Part 2, Article 265 of the Labour Code).

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SINCE JULY 16, 2021, STANDARD FORMS

OF EMPLOYMENT CONTRACTS FOR

HOME-BASED AND REMOTE WORK ARE

IN EFFECT

On July 16, Order No. 913-21 of the Ministry of Economy dated May 05, 2021 (registered with the Ministry of Justice on July 06, 2021 under No. 886/36508) was published and entered into force, which approved standard forms of employment contracts for home-based and remote work:

● The standard form of an employment contract for home-based work;

● The standard form of an employment contract for remote work.

From February 27 Law No. 1213-IX is in effect regarding the introduction of two independent types (forms) of work – remote and home-based. For this purpose, two new Articles have been introduced in the Labour Code:

● Article 60-1 "Home-based work";

● Article 60-2 "Remote work".

In addition to the procedure for registration of such types of work, they also prescribe standard forms of an employment contract for home-based and remote work and their approval by the Ministry of Economy. Compliance with the written form is mandatory when entering into an employment contract on home-based and remote work.

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IS IT POSSIBLE TO DISMISS AN

EMPLOYEE FOR REFUSING

VACCINATION? – EXPLANATION

OF THE MINISTRY OF ECONOMY

According to Article 284 of the Civil Code of Ukraine, the provision of medical care to an individual who has reached the age of fourteen shall be carried out with his/her consent. An adult able-bodied individual who is aware of the significance of their actions and can direct them shall have the right to refuse treatment. Article 43 of the Fundamentals of the Legislation on Healthcare of Ukraine stipulates that the application of diagnostic, prevention and treatment methods requires the consent of a patient informed according to Article 39 of these Fundamentals. Part Six of Article 12 of the Law of Ukraine "On Protection of the Population from Infectious Diseases" also provides that adult able-bodied citizens shall be given preventive vaccinations with their consent after providing objective information about vaccinations, the consequences of refusing them and possible post-vaccination complications. In addition, in clause 3 of its Resolution 2361 (2021), the Parliamentary Assembly of the Council of Europe calls for and recommends informing citizens that vaccination is not mandatory and that no one can be subjected to political, social or other pressure to get vaccinated, and ensuring that no one is discriminated against for not getting vaccinated. According to Article 2-1 of the Labour Code of Ukraine (hereinafter referred to as the Labour Code), any discrimination in the sphere of work, direct or indirect restriction of employees' rights depending, in particular, on the state of health, is not allowed. It should be noted that Article 43 of the Constitution of Ukraine also guarantees the right of everyone to work, which includes the opportunity to earn a living by work that they freely choose or agree to. Citizens are guaranteed protection from illegal dismissal. At the initiative of the owner or the body authorized by him/her, the employment contract may be terminated, in particular, in the event of a revealed discrepancy between the employee's position or work performed due to a state of health that prevents the continuation of this work (clause 2, Part One, Article 40 of the Labour Code). At the same time, such dismissal can be carried out only based on the factual data confirming that due to the state of health (persistent decrease in working capacity), an employee cannot properly perform the labour duties assigned to him/her or their performance is contraindicated for health reasons (clause 21 of the Resolution of the Plenum of the Supreme Court of Ukraine "On the Practice of Consideration of Labour Disputes by Courts" No. 9 of November 06, 1992). Note that the dismissal of an employee on this basis is not a disciplinary measure. According to Article 147 of the Labour Code, one of the following penalties may be applied to an employee for violating labour discipline: 1) reprimand; 2) dismissal. At the same time, clause 24 of the Standard Rules of Internal Labour Regulations for Workers and Employees of Enterprises, Institutions, Organizations, approved by the Resolution of the State Labour Committee of the USSR in coordination with the All-Union Central Council of Trade Unions No. 213 of July 20, 1984 (which have retained their force in terms that do not contradict the legislation of Ukraine), defines that violation of labour discipline is non-performance or improper performance due to the fault of the employee of the labour duties assigned to him/her. Therefore, an employee's refusal to vaccinate cannot be considered a violation of labour discipline.

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In addition, the Roadmap for the introduction of a vaccine against acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus and mass vaccination in response to the COVID-19 pandemic in Ukraine in 2021-2022, approved by the Order of the Ministry of Health No. 3018 of December 24, 2020 (as amended by Order of the Ministry of Health of Ukraine No. 213 of February 09, 2021), established that vaccination against the coronavirus disease COVID-19 in Ukraine will be voluntary for all population groups and professional groups. Taking into account the above, there is no legal basis for the employer to force employees to be vaccinated against the coronavirus disease COVID-19 and/or bring them to disciplinary responsibility for refusing to be vaccinated against this disease. Reference: Ministry of Economy

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FINANCIAL STATEMENTS

LEGAL CONSULTING

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BENEFICIARIES: NEW STATE

REGISTRATION FORMS

Order of the Ministry of Justice "On Amendments to Order of the Ministry of Justice of Ukraine No. 3268/5 of November 18, 2016" dated June 29, 2021. No. 2320/5 entered into force on July 11, 2021. Following the approval by Order of the Ministry of Finance No. 163 of the forms and content of the ownership structure, the Ministry of Justice corrected the commented document and registration forms for legal entities. Starting from July 11, 2021, it is necessary to submit forms in the new version to the state registrar:

● 2 "Application for state registration of a legal entity (except for public formations and authorities)";

● 4 "Application for state registration of a legal entity — a public formation";

● 6 "Application for confirmation of information about the ultimate beneficial owner of a legal entity". The main changes include the following:

● from Forms 2 and 4 the page with additional information about the ultimate beneficiary of the founder was removed.

Now in these registration forms, you will only need to specify the ultimate beneficial owner of the entity itself. After all, at this time, all "intermediate" beneficiaries (that is, the beneficiaries directly of the entity and its founders) are disclosed in the ownership structure. And it is from this document that it will be necessary to determine the "ultimate" beneficial owner, information about which we submit to the state registrar. Another important point: as follows from the notes in the forms themselves, you will only need to fill out full information about the beneficiary (page 2) in case of updates. Therefore, if the forms are marked "up-to-date" at the time of submission, you do not need to fill out the main part. All legal entities engaged in financial transactions must disclose their ultimate beneficiaries. It is in order to update the relevant information in the Unified State Register together with supporting documents that the state registrar must submit:

● application for state registration of a legal entity (except for public formations and authorities) (Form 2) or an application for state registration of a legal entity — a public formation (Form 4);

● ownership structure by form and content according to Order No. 163;

In general, this must be done before October 11, 2021, followed by annual confirmation. After all, this is one of the key requirements of financial monitoring legislation (first of all, Law No. 361), and for its non-fulfillment, a fine is provided in the amount of UAH 17,000 to 51,000 (Article 16611 of the Code of Ukraine on Administrative Offences).

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STARTING FROM AUGUST 31, THE STATE

FINANCIAL MONITORING SERVICE WILL

ANALYZE FINANCIAL TRANSACTIONS UNDER

THE NEW PROCEDURE

The Ministry of Finance, by Order No. 440 of August 02, 2021 (registered with the Ministry of Justice on August 18, 2021 under No. 1087/36709), approved new Principles for processing information received from primary financial monitoring entities about financial transactions subject to financial monitoring, and criteria for analyzing such transactions. These Principles describe:

● principles of processing information received from the reporting entity;

● criteria for analyzing information received from the reporting entity.

This Order is valid from August 31, 2021 (published in the Official Gazette No. 67 of August 31, 2021). Accordingly, on August 31, the Order of the Ministry of Finance No. 306 of March 10, 2015 became invalid, which approved the old Principles of processing information received from primary financial monitoring entities about financial transactions subject to financial monitoring and criteria for analyzing such transactions. Principles of processing information received from the reporting entity The processing of information received from the reporting entity is based, as before, on the following eight basic principles: 1) completeness of information processing; 2) sequence of information processing; 3) information security and protection; 4) control over the processing of information by employees of the State Financial Monitoring Service; 5) timeliness and objectivity of information processing; 6) independence and non-interference in the activities of the reporting entity by employees of the State Financial Monitoring Service during their processing of information; 7) prioritization and categorical information processing, taking into account the risk-based approach; 8) comprehensive use of information from the Unified State Information System in the field of preventing and countering the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction, automated, information and reference systems, registers and data banks of state authorities and other information resources provided for by law. In other words, the basic principles have not changed. Criteria for analyzing information received from the reporting entity During the processing of information received from the reporting entity, employees of the State Financial Monitoring Service will conduct operational and strategic analysis. This has never happened before. Accordingly, the criteria for analyzing the information received from the reporting entity will differ.

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During operational analysis, employees of the State Financial Monitoring Service analyze information according to the following criteria, in particular:

● economic rationale and purpose of financial transactions (activities);

● type of asset or settlement form used in conducting a financial transaction (activity) and the amount of the financial transaction (activity);

● compliance of the financial transaction (activity) with the declared income, nature and content of the transaction participant's activities;

● location, place of residence or place of residence of participants in financial transactions conducting a financial transaction (activity), or ultimate beneficial owners, their scope and period of activity;

● connections of participants in a financial transaction (activity) with politically significant persons, their family members and/or persons associated with politically significant persons (this is a new criterion);

● the subject of the agreement between the participants of the financial transaction (activity), as well as financial instruments used during the financial transaction (activity);

● comments and other available additional information received from the reporting entity and available to the State Financial Monitoring Service (this is a new criterion).

When conducting strategic analysis information is analyzed, in particular, according to the following criteria:

● trends in the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;

● typologies for the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;

● repeatability of processes related to the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;

● area of influence or location of the phenomenon of legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction, related threats and vulnerabilities;

● regarding the movement of assets involved in the legalization (laundering) of proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;

● type of operations (activities) used by participants involved in schemes for legalizing (laundering) proceeds from crime, terrorist financing and financing proliferation of weapons of mass destruction;

● activities of related participants in financial transactions using professional money laundering networks.

The list of additional data for processing information received from the reporting entity has been expanded. If earlier there were only three of them, according to the new Order, they are eight. In particular, employees of the State Financial Monitoring Service will now take into account:

● additional information from the reporting entity, state, law enforcement and intelligence agencies, financial intelligence units on suspicion of legalizing (laundering) proceeds from crime, or terrorist financing or financing proliferation of weapons of mass destruction, or committing an act defined by the Criminal Code of Ukraine as a criminal offense, which does not concern legalizing (laundering) proceeds from crime or terrorist financing;

● availability of data indicating the involvement of a financial transaction or a set of related financial transactions in the legalization (laundering) of proceeds from crime, terrorist financing or financing proliferation of weapons of mass destruction;

● availability of data indicating the involvement of a financial transaction or participants in a financial transaction (activity) in a criminal offense that does not relate to the legalization (laundering) of proceeds from crime or terrorist financing;

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● availability of data on the application of special economic and other restrictive measures (sanctions) according to Article 5 of the Law of Ukraine "On Sanctions" against participants in a financial transaction (activity) (ultimate beneficial owners);

● availability of data on the application of international sanctions against participants in a financial transaction (activity) or their assets;

● information received from the reporting entity about discrepancies between information about the ultimate beneficial owners of the client, which are contained in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations, and information about the ultimate beneficial owners obtained by the reporting entity as a result of proper verification of the client;

● information received from the reporting entity regarding the refusal to establish (maintain) business relations, conduct a financial transaction.

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STARTING FROM JULY 21, 2021, THE LAWS ON "ZERO TAX RETURN" WILL COME INTO FORCE

Law of Ukraine No. 1539-IX of June 15, 2021 "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Stimulating the De-Shadowing of Incomes and Enhancing Citizens' Tax Culture by Introducing the One-Time (Special) Voluntary Declaration of Assets Belonging to Individuals and Payment of the One-Time Levies to the Budget", entered into force on July 21, 2021 (published in the Holos Ukrainy No. 134 of July 20, 2021). Law No. 1539-IX creates incentives for removing income hidden from taxation from the shadows and will help attract additional resources to the Ukrainian economy. The Law defines the specifics of conducting a one-time (special) voluntary declaration of assets of individuals, which will take place from September 1, 2021 to September 1, 2022. Citizens of Ukraine have the right to submit a one-time voluntary declaration indicating the assets owned by them and from which taxes and fees have not been paid before January 1, 2021. At the same time, the voluntary declaration will not need to indicate information about the sources of origin of the declared assets. The declarant may indicate among the assets currency values (except for cash), securities, movable and immovable property, in particular, objects under construction, shares in the property of legal entities located in Ukraine or abroad. From the declared assets, the citizen will have to pay a fee, in particular, 5% for currency values on bank accounts in Ukraine, as well as other assets located (registered) in Ukraine; 9% for currency values on accounts in foreign financial institutions, as well as for other assets located abroad; 2.5% for the nominal value of government bonds of Ukraine purchased by the declarant in the period from September 1, 2021 to August 31, 2022. If a citizen pays all the necessary fees, the state guarantees him/her exemption from liability for violation of tax and currency legislation. It also guarantees non-disclosure by state bodies and their officials of information contained in one-time voluntary tax returns, without a corresponding court decision. In addition, the Law of Ukraine "On Amendments to the Code of Ukraine on Administrative Offences, the Criminal Code of Ukraine and the Criminal Procedure Code of Ukraine in Connection with the Introduction of Amendments to the Tax Code of Ukraine on Stimulating the De-Shadowing of Incomes and Enhancing Citizens' Tax Culture by Introducing the One-Time (Special) Voluntary Declaration of Assets Belonging to Individuals and Payment of the One-Time Levies to the Budget" No. 1542-IX of June 15, 2021. This Law is systematically linked to the previous one (No. 1539-IX) and proposes not to consider deliberate evasion of taxes and fees if such acts are related to the acquisition of objects that the citizen indicated in a one-time voluntary tax return and paid the agreed amount of the tax return fee if such acts were committed before 2021. It is also established that the above data cannot be used to confirm the guilt of a suspect accused of committing criminal offenses regarding tax and fee evasion (provided for in Articles 212, 212-1 of the Criminal Code of Ukraine).

Laws No. 1539 and No. 1542 are published in the Holos Ukrainy No. 134 of July 20, 2021.

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Law No. 1539 comes into force on the day following the day of its publication, except for certain clauses that will come into force on January 1, 2022:

● subclause 3, clause 2, Section I of this Law (concerning amendments to subclause 1.7, clause 16-1, Subsection 10, Section XX "Transitional Provisions");

● subclause 4, clause 2, Section II of this Law (concerning amendments to subclause 5, clause 98, Section I of Law No. 1266).

Law No. 1542 comes into force on the day following the day of its publication, but no earlier than the day of entry into force of Law No. 1539.

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TRANSFER PRICING

31

HOW TO FILL OUT A NEW REPORT ON CONTROLLED TRANSACTIONS FOR 2020

On March 19, 2021, Order of the Ministry of Finance No. 841 of December 31, 2020 "On Amendments to the Form and Procedure for Drawing Up a Report on Controlled Transactions" (hereinafter referred to as Order No. 841) came into force, which amended Order of the Ministry of Finance No. 8 of January 18, 2016 "On Approval of the Form and Procedure for Drawing Up a Report on Controlled Transactions" (hereinafter referred to as the Report and Procedure). Order No. 841 amended the Report and Appendices to the Report:

● in the Report form, the table "General information about controlled transactions" is supplemented with a new column 4 "Digital country code", which indicates the digital code of the country of registration of a non-resident party to the controlled transaction.

● in the new version, the table of the Appendix to the Report "Information on Controlled Transactions" is supplemented with the column "Source(s) of information used by the taxpayer to establish compliance with the conditions of a controlled transaction with the "arm's length" principle, which consists of column 26 "Code(s) of the source type" and column 27 "Name(s) of the source(s) of information".

Information about the relation of persons is supplemented with the relation code "523", which indicates the relation attribute according to paragraph "c", subclause 14.1.159 of the TCU at the time of performing the controlled transaction. Amendments have also been made to the Procedure and Appendices to the Procedure: "Digital country code" must be filled in according to the List of World Country Codes for Statistical Purposes, approved by Order No. 32 of the State Statistics Service of Ukraine dated January 08, 2020; Clause 25 on filling in column 21 has been supplemented with new paragraphs: "In column 21, the code "307" is used only if the taxpayer establishes compliance with the conditions of controlled transactions with raw materials (from the list approved by the Cabinet of Ministers of Ukraine) with the "arm's length" principle, which is carried out by taxpayers taking into account the requirements of the relevant procedures approved by the Order of the Ministry of Finance of Ukraine according to paragraph 39.3.3.4, subclause 39.3.3, clause 39.3, Article 39, Section I of the Code. If a combination of multiple methods is used, the codes of multiple methods can be separated by commas and spaces (", ")". Amendments in Appendices to the Procedure for Drawing Up a Report on Controlled Transactions: Appendix 2 "Relation Attribute Code of Persons" to the Procedure is set out in a new version and supplemented with new attributes: 1) for individuals: an individual who is a related person according to paragraph "c", subclause 14.1.159 of the TCU at the time of performing the controlled transaction – Appendix 2 is assigned the attribute code 523; 2) for entities without the status of a legal entity: recognized as a related person according to passage nine, paragraph "c", subclause 14.1.159 of the TCU at the time of performing the controlled transaction – attribute code 524". New items are added to Appendices 4 and 6 to the Procedure, in particular: code of the transaction subject type (Appendix 4) – a new line under code 209 "Raw materials according to

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the List of Raw Materials", approved by Resolution of the Cabinet of Ministers of Ukraine No. 1221 of December 09, 2020"; code of the method for establishing compliance of the conditions of a controlled transaction with the "arm's length" principle (Appendix B) – a new line according to code 307 "Comparative uncontrolled price method according to paragraph 39.3.3.4, subclause 39.3.3, clause 39.3, Article 39, Section I of the Tax Code of Ukraine". The code "307" in column 21 must be indicated if the taxpayer uses the relevant procedures approved by the Ministry of Finance of Ukraine according to paragraph 39.3.3.4, subclause 39.3.3, clause 39.3, Article 39, Section I of the Tax Code of Ukraine. If the taxpayer uses the comparative uncontrolled price method for transactions with commodities without taking into account the specified procedures, code "301" must be used. In addition, the Procedure for Drawing Up a Report on Controlled Transactions is supplemented by Appendix 8 "Information Source Codes", which defines the codes and types of information sources. The Report on Controlled Transactions performed by taxpayers during the 2020 reporting year must be filled in and submitted according to the updated form and following the procedure approved by Order No. 841.

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FINANCIAL AUDIT

34

CHANGES TO ACCOUNTING STANDARDS –

FROM AUGUST 10, 2021

By Order No. 385 of July 09, 2021, the Ministry of Finance approved changes to the Regulations on Primary Documents and Certain National Accounting Standards (NAR(S)). Order No. 385 entered into force from the date of its official publication – from August 10, 2021 (published in the Official Gazette No. 61 dated August 10, 2021). 1) Changes to the details "unit of measurement of a business transaction" of primary documents: in

the primary document, the details "unit of measurement of a business transaction" indicate in monetary

terms and if possible in natural meters.

At first glance, nothing seems to change. However, this is not the case: - before changes, the natural and value expressions of the unit of measurement have equal rights, and

it is not necessary to indicate them in double form (both in monetary units and in natural ones); - after changes, the value (monetary) expression takes priority. And the natural expression becomes

optional and will be marked if possible. However, if there is such a possibility, it turns out that you need to specify both expressions.

2) Change of COATSU codes in the balance form and clarification for Form 2-мс. From August 10, 2021, Form 2-мс, Balance Sheet and Consolidated Balance Sheet are updated due to the following minor clarifications:

● we changed the name of the column relative to the COATSU codes to CATUTTC and made a note about this column. Now it is the Codifier of Administrative-Territorial Units and Territories of Territorial Communities.

● in Form No. 2-мс, the position "Total expenses (2050 + 2165)" is set out in a new version. This Form also changed the name of the column relative to the COATSU codes to CATUTTC. The same column has been changed in the Form Balance Sheet and the Consolidated Balance Sheet in the Appendices to NAR(S) 1.

3) Replacement of the term "integral property complex" in NAR(S). The term "integral property complex" has been replaced by "single property complex". Such a replacement took place, in particular, in the NAR(S)6, 14, 32 in Form No. 6 "Notes to the Annual Financial Statements" and Instructions No. 291. 4) Name of subaccount 715 "Fines". Other changes include renaming subaccount 715 "Received fines" to "Fines". Income is generated not only when fines are received, but also when they are accrued.

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