INCOME UNDER THE NEW TAX CODE. GROSS INCOME | UBC

Recognition of income under the Tax Code rules

The procedure for recognising income was established by Article 137 of the Tax Code of Ukraine. Income from the sale of goods was recognised on the date ownership passed to the buyer.

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For works and services, the date of income recognition was the date on which an acceptance certificate or another duly executed document confirming completion of the works or provision of the services was prepared.

Unlike the former Profit Tax Law, advance or prepayment for goods, works or services was not recognised as income and did not by itself affect the taxpayer's tax liabilities.

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Income taken into account when determining the taxable object was divided into two main groups:

• operating income — revenue from the sale of goods, works performed and services provided, as well as income of banking institutions;
• other income — including dividends from non-residents, interest, royalties, income from holding debt claims, leases and leasing, foreign-currency transactions, trading in securities and derivatives, fines, penalties, late-payment charges, non-repayable financial assistance and goods, works or services received free of charge.

Repayable financial assistance received from a founder of the taxpayer was not included in taxable income provided it was repaid no later than 365 calendar days after receipt.

International Trade and Market Entry

Like the previous Profit Tax Law, the Code contained a list of receipts not taken into account when determining the taxable object. These included direct investment or reinvestment in the taxpayer's corporate rights, compensation for compulsory expropriation of property by the state, share premium, international technical assistance and other receipts specified by law.

At the same time, the Code abandoned the special rule for sales of goods, works and services financed from budget funds, under which income had previously been recognised on the date funds were received in the account or other compensation was received. Such income was to be recognised under the general procedure.