LETTER OF THE STATE TAX SERVICE OF UKRAINE

of November 8, 2011 No. 5097/6/15-1415

GNSU considered the letter of combined heat and power plant concerning application of item 154.8 of Art. 154 of the Tax code of Ukraine (further - the Code) and reports.

The law of Ukraine of 07.07.2011 No. 3609-VI "About introduction of amendments to the Tax Code of Ukraine and some other legal acts of Ukraine concerning enhancement of separate regulations of the Tax code of Ukraine" makes changes, in particular, to item 154.8 of Art. 154 of the Code which are applied since 01.08.2011.

According to item 154.8 of Art. 154 of the Code the profit of the companies of energy industry within actual expenses which do not exceed the total annual amount is exempted from the taxation:

- provided by the investing programs approved by body which performs state regulation in the field of power industry and in the natural gas market, on capital investments on construction (to reconstruction, upgrade) interstate, high-level and distribution (local) power networks, power plants, combined heat and power plants, trunk gas pipelines, gas distribution networks, underground gas storages and establishment of counters of gas to the population, including the amounts directed to return of the credits which are utilized for financing of purposes aforesaid;

- provided by projects which financing is performed due to subjects of natural monopolies, producers of electrical and/or heat energy according to solutions of KMU;

- expenses within the investment component approved by body which performs state regulation in the field of power industry and in the natural gas market, necessary for return of the credits, investments, bond redemption (debt securities) issued (received) by the power generation companies, for the purpose of financing of capital investments on construction (to reconstruction, upgrade) the equipment of power plants and combined heat and power plants, according to the construction plan (reconstruction, upgrades) approved by KMU or the body authorized by it.

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