LETTER OF STATE TAX ADMINISTRATION OF UKRAINE

of March 4, 2011 No. 4545/6/16-1515-26

GNAU considered the letter of the utility company concerning procedure for application of item 187.10 of Art. 187 of the Tax code of Ukraine (further - the Code) and reports.

According to item 187.10 of Art. 187 of the Code if the taxpayers on value added delivering heat energy, gas natural (except liquefied), provide services in water supply, water disposal or services which cost is included rent or payment for content of housing, to the physical persons, budgetary institutions which are not registered as taxpayers, and also to housing management offices, room and operational parts, associations of co-owners of apartment houses to other similar taxpayers who perform fund raising from the specified buyers for the purpose of their further transfer to sellers of such goods (predostavitel of services) on account of compensation of their cost (further - ZhEKs), date of emergence of the tax liabilities is date of transfer of funds for the bank account of the taxpayer, and date of emergence of the right to the tax credit is date of write-off of funds from the bank account in payment of the acquired goods/services.

The specified rule of determination of date of emergence of the tax liabilities extends also to transactions on delivery of the specified goods/services for ZhEKs if they are registered as taxpayers, and budgetary institutions which receive such goods / services.

The specified Item determines the list of goods/services and category of consumers when implementing transactions with which the special procedure for tax accounting is applied (cash method), namely the cash method extends to transactions on:

- to sale of utilities to the physical persons, budgetary institutions which are not registered by payers of this tax;

- to purchase of goods, services which are used for the purpose of delivery of utilities to physical persons, budgetary institutions which are not registered by payers of this tax.

Delivery of the goods (services) specified in this Item to other categories of consumers or delivery of other goods (services) to the categories of consumers determined in this Item are performed in general procedure (by the rule of the first event), namely the cash method does not extend to transactions on:

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