of September 4, 1996 No. 14-311/10-5888
About the taxation of profit on implementation of transactions with bonds of internal state and local loans
The main state tax authorities of Ukraine in connection with numerous requests of the state tax authorities and taxpayers concerning taxation of profit on implementation of transactions with bonds of internal state and local loans explain the following.
The taxation of profit on implementation of transactions with domestic government bonds (further - government bonds) and bonds of internal local loan (further - local bonds) is performed according to the Law of Ukraine of December 28, 1994 "About the taxation of profit of the companies" (further - the Law).
This Law, in particular, determines the taxation of profit (loss) from the securities trading, including trade in debt requirements and obligations, and also profits on ownership (management) of debt requirements.
The bond of the state and local loans (further - bonds) debt obligations of the Government and local councils of People's Deputies concerning compensation to bondholders of nominal cost of these securities in the provided time with payment of the fixed percent (if another is not provided by release conditions).
For this time in Ukraine interest (coupon) and interest-free (discount) government and local bonds are in circulation.
Interest (coupon) bearing bonds - debt obligations about compensation to bondholders of nominal cost of these securities in the time provided in them with payment of the fixed percent.
Interest-free (discount) bonds - debt obligations about compensation to bondholders of nominal cost of these securities in the time provided in them. Bonds are implemented to physical persons and legal entities on a voluntary basis at the price which is lower than their nominal cost. The difference between the price of acquisition and nominal bond value which is compensated to the owner during repayment constitutes the income from the bond.
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