LETTER OF THE STATE TAX SERVICE OF UKRAINE

of December 23, 2011 No. 10104/7/15-1217

GNSU considered the letter of GNA in Poltava region of 28.09.2011 No. 6985/8/15-129 concerning application of privileges on the income tax of the companies and reports.

By Item 154.8 of article 154 of the Tax Code of Ukraine (further - NKU) it is determined that the profit, in particular, of the companies of energy industry within actual expenses which do not exceed the total annual amount 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 to establishment of counters of gas to the population, including the amounts directed to returns of the credits which are utilized for financing of purposes aforesaid is exempted from the taxation.

The procedure for forming of investing programs of gas supplying, gas-distributing and gas transmission companies is approved by the resolution of the National commission of regulation of power industry of 17.03.2011 No. 358 (further - the Procedure).

Action of the Procedure extends on business entities which obtained the license of the National commission of regulation of power industry of Ukraine for the right of implementation of business activity on supply of natural gas on regulated rate, distribution of natural gas and/or transportation of natural gas by bulk distribution lines (Procedure Item 1.1).

By Item 1.3 of the Procedure it is determined that:

investing program - the plan of use of means for increase in level of reliability and profitability of work of fixed assets which contains complex of obligations of the licensee for its accomplishment concerning development of the company, improvement of indicators of quality of the consumer service delivery with the corresponding calculations and reasons which confirm feasibility of implementation of investing activities, sources of its financing and graphics of accomplishment;

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