DECISION OF THE CONSTITUTIONAL COURT OF UKRAINE

of February 16, 2010 No. 5-rp/2010

On case on the constitutional appeal of Joint-stock company "Avante insurance company of rather official interpretation of provisions of part two of article 1 of the Law of Ukraine "On system of the taxation", article 15 of the Law of Ukraine "About the taxation of profit of the companies"

Case No. 1-5/2010

NAME OF UKRAINE

Constitutional court of Ukraine consisting of judges:

Strizhak Andrey Andreevich - the chairman,

Baulin Yury Vasilyevich,

Brintsev Vasily Dmitriyevich,

Vdovichenko Sergey Leonidovich,

Golovin Anatoly Sergeyevich,

Dzhunya Vyacheslav Vasilyevich,

Didkovsky Anatoly Aleksandrovich,

Dombrovsky Ivan Petrovich,

Kamp Vladimir Mikhaylovich,

Mikhail Ivanovich's ear,

Lilak Dmitry Dmitriyevich - the speaker,

Markush Maria Andreevna,

Machuzhak Yaroslava Vasilyevna,

Nikitin Yury Ivanovich,

Ovcharenko Vyacheslav Andreevich,

Stetsyuk Pyotr Bogdanovich,

Tkachuk Pavel Nikolaevich,

Shishkin Victor Ivanovich,

considered at plenary meeting case on the constitutional appeal of Joint-stock company "Avante insurance company of rather official interpretation of provisions of part two of article 1 of the Law of Ukraine "On system of the taxation" of June 25, 1991 N 1251-XII (Sheets of the Verkhovna Rada of Ukraine, 1991, N 39, the Art. 51) with subsequent changes and article 15 of the Law of Ukraine "About the taxation of profit of the companies" of December 28, 1994 N 334/94-BP (Sheets of the Verkhovna Rada of Ukraine, 1995, N 4, the Art. 28) with subsequent changes.

Reason for consideration of the case according to Articles 42, 43 Laws of Ukraine "About the Constitutional Court of Ukraine" became the constitutional appeal of Joint-stock company "Avante insurance company.

The basis for consideration of the case according to article 94 of the Law of Ukraine "About the Constitutional Court of Ukraine" is availability of ambiguous application of provisions of part two of article 1 of the Law of Ukraine "About system of the taxation", article 15 of the Law of Ukraine "About the taxation of profit of the companies" courts of law and bodies of the State Tax Service.

Having heard the judge-speaker Lilak D. D. and having researched case papers, the Constitutional Court of Ukraine established:

1. The person of law on the constitutional address - Joint-stock company "Avante insurance company (further - Society) - appealed to the Constitutional Court of Ukraine with the petition to give official interpretation of provisions:

- parts two of article 1 of the Law of Ukraine "About system of the taxation" of June 25, 1991 N 1251-XI with subsequent changes (further - the Law N 1251) according to which the Verkhovna Rada of the Autonomous Republic of Crimea (further - the Verkhovna Rada of the ARC) and village, settlement, city councils (further - councils) can establish additional benefits concerning the taxation in borders of the amounts which arrive in their budgets;

- article 15 of the Law of Ukraine "About the taxation of profit of the companies" of December 28, 1994 N 334/94-BP with subsequent changes (further - the Law N 334) according to which rate of the income tax, privilege concerning tax, the taxation object, procedure for charge of taxable profit, terms and payment procedure and transfers of tax in budgets can be established and change only by introduction of amendments to this Law concerning the right of village council to establish additional benefits on the income tax to the companies of utility pattern of ownership in borders of the amounts which arrive in its budget.

Society specifies that it is the utility company of Cherkassk and Lozovsky village council and according to the Law N 1251 and the Law N 334 - the income tax payer who though is nation-wide tax, but according to Item 15 of Article 69 of the Budget code of Ukraine (further - the Code) treats the income of the local budget. Based on part two of article 1 of the Law N 1251 village councils established to Society privilege concerning this tax in this connection there were disputable legal relationship between it both village council, on the one hand, and the state tax authorities - with another which considers that according to article 15 of the Law N 334 village councils have no right to make decisions on establishment of privileges on the income tax. Owing to judicial reviews of the specified question both in it, and in another similar cases ambiguous application of provisions of part two of article 1 of the Law N 1251, of article 15 of the Law N 334 takes place. As on the proof of the petition provided the author the resolution of March 17, 2009 and determination of March 24, 2004 of the Supreme Court of Ukraine, the resolution of November 6, 2008 and determination of August 21, 2007 of the Supreme administrative court of Ukraine, determination of the Kharkiv Appeal administrative court of June 2, 2008, the decision of Kreminsky district court of the Luhansk region of August 29, 2003, determination of Appeal Court of the Luhansk region of November 19, 2003 which contain opposite conclusions concerning application of the specified Law N provisions 1251, of the Law N 334 refers to the inspection statement of Society concerning observance of requirements of the tax and foreign exchange legislation of Ukraine of Dergachevsky interdistrict state tax authorities of the Kharkiv region of July 18, 2008.

2. The line items concerning subject of the constitutional address stated the Supreme Court of Ukraine, the Supreme administrative court of Ukraine, Committee of the Verkhovna Rada of Ukraine concerning tax and customs policy, the Ministry of Regional Development and Construction of Ukraine, the Ministry of Finance of Ukraine, State Tax Administration of Ukraine, the Luhansk city council, scientists of Institute of the budget and social and economic researches, National university of the State Tax Service of Ukraine, Institute of economical and legal researches NAS of Ukraine, the Ternopil national economic university and Kiev national economic university of Vadim Getman.

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