LETTER OF STATE TAX ADMINISTRATION OF UKRAINE

of June 17, 2011 No. 11298/6/15-0318

GNAU considered the letter of the company and reports.

According to subitem 139.1.13 of item 139.1 of Art. 139 of the Tax code of Ukraine (further - the Code) since 01.04.2011 the expenses suffered (added) in the accounting period in connection with acquisition at the nonresident of services (works) on consulting, marketing, advertizing (except expenses, the performed (added) for benefit of permanent missions nonresidents who are subject to the taxation according to item 160.8 of Art. 160 of this Code) in amount which exceeds 4 percent of the income (revenue) from sales of products (goods, works, services) (less the value added tax and the excise tax) in the year preceding reporting are not included in the expenses. At the same time the expenses incurred (added) in the accounting period in connection with acquisition at the nonresident of services (works) on consulting, marketing, advertizing are not included in the expenses in full if person for benefit of whom the corresponding payments are made is nonresident who has the offshore status taking into account provisions of item 161.3 of Art. 161 of this Code.

By Item 161.3 of Art. 161 of the Code the term "nonresidents who have the offshore status" is understood as the nonresidents located in the territory of offshore zones, except for the nonresidents located in the territory of offshore zones which provided to the taxpayer the statement from right constituent documents, legalizirovanny the relevant consular establishment of Ukraine which testifies to the regular (not offshore) status of such nonresident. In case of existence of such agreements the taxpayer shall refer to availability of the specified statement in explanation to the tax declaration.

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