LETTER OF STATE TAX ADMINISTRATION OF UKRAINE

of January 5, 2000 No. 34/6/15-1116

About some questions of payment for use of leased property

The State Tax Administration of Ukraine reports about some questions of payment for use of leased property.

1. By subitem 1.18.1 of article 1 of the Law of Ukraine "About the taxation of profit of the companies" it is determined that operational leasing (lease) is the economic activity of physical person or legal entity providing transfer to the lessee of right to use by fixed assets for the term which is not exceeding the term of their complete depreciation with obligatory return of such fixed assets to their owner upon termination of effective period of the leasing (rent) agreement.

The fixed assets transferred to operational leasing remain as a part of fixed assets of the lessor.

The relations of the lessor and the lessee are regulated by Articles 256-277 of the Civil code of the Ukrainian SSR (further - the Code), the Law of Ukraine "About lease of the state-owned and utility property" (further - the Law), other regulatory legal acts.

At the same time according to Item 3 of article 1 of the Law lease of property of other patterns of ownership (collective, private) can be regulated by provisions of this Law if other is not stipulated by the legislation also the lease agreement.

Article 256 of the Code provides that the property is leased for a fee.

Therefore, rent transaction provides right to use transfer by separate inventory objects of fixed assets to other subject (lessee) on paid basis and for certain term.

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