LETTER OF STATE TAX ADMINISTRATION OF UKRAINE

of September 12, 1998 No. 6330/11/15-2116

About application of the Law of Ukraine "About the taxation of profit of the companies"

According to the Law of Ukraine "About the taxation of profit of the companies", the gross income of taxpayers is total of income of the taxpayer from all types of activity received (added) during the accounting period in cash, material or non-material forms as in the territory of Ukraine, its continental shelf, exclusive (sea) economic zone and beyond their limits (Item 4.1 of Article 4).

By article 29 of the Law of Ukraine "About the Government budget of Ukraine for 1998" which became effective since January 1 of the current year it is determined that rather legislative settlement of payment of collection to the State innovative fund subjects of business activity, irrespective of patterns of ownership, pay to the State innovative fund collection in the amount of 1 percent from products sales amount (works, services) or the gross income in trade, intermediary, supplying and sales, bank and insurance fields of activity reduced by tax amount on value added and the excise duty.

Thus, since January 1, 1998 contributions to the State innovative fund in the amount of 1 percent are obligatory for all subjects of business activity, irrespective of patterns of ownership. According to subitem 5.2.5 of Item 5.2 of article 5 of the Law of Ukraine "About the taxation of profit of the companies" in edition of 22.05.97 such assignments treat with the made changes on gross expenses.

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