TAX DIFFERENCES IN THE NEW TAX CODE OF UKRAINE | UBC

Temporary and permanent tax differences

Under the definition in Section I of the Tax Code of Ukraine, a tax difference arises between the measurement and recognition criteria for income, expenses, assets and liabilities under national accounting provisions or international financial reporting standards, on the one hand, and income and expenses determined under Section III of the Code, on the other.

How to Start Business in Ukraine

The procedure applicable at that time distinguished two types of tax differences:

• temporary difference arises in a reporting period and reverses in later tax periods;
• permanent difference arises in a reporting period and does not reverse later.

Section II of the Code provided that a corporate income taxpayer reported temporary and permanent differences as part of its financial statements in a form established by the Ministry of Finance and filed quarterly or annual financial statements together with the relevant tax return. A separate procedure applied to small enterprises: they filed annual financial statements together with the annual return.

The transitional provisions also contained a special rule: the methodology for accounting for temporary and permanent tax differences was to be approved under the procedure defined by the Law of Ukraine "On Accounting and Financial Reporting in Ukraine". Business entities that were corporate income taxpayers were to file financial statements taking tax differences into account starting from the reporting periods specified in the source.

International Trade and Market Entry

Company Incorporation in Ukraine