LETTER OF THE STATE TAX SERVICE OF UKRAINE

of September 26, 2012 No. 2593/0/61-12/15-1415

About consideration of the letter

The State Tax Service of Ukraine considered the letter concerning reflection in tax accounting of expenses on reconstruction and upgrade of the building and reports.

According to subitem 139.1.5 of item 139 of Art. 139 of the Tax code of Ukraine of December 2, 2010 No. 2755-VI (with changes and amendments) (the Code is farther) in the expenses does not include expenses on acquisition, production, the construction, reconstruction, upgrade and other improvement of fixed assets and expenses connected with mining, and also with acquisition (production) of intangible assets which are subject to depreciation according to Art. 144 - 148 NKU taking into account item 146.11 and item 146.12 of Art. 146 and item 148.5 of Art. 148 of the Code.

Expenses on carrying out repair, reconstruction, upgrade and other types of improvement of fixed assets which exceed 10 percent of aggregate book value of all groups of fixed assets, subjects depreciation, for the beginning of accounting year (item 144.1 of Art. 144 of the Code) are subject to depreciation, in particular.

Expense amount which is connected with repair and improvement of the fixed asset objects including leased or received in concession or created (constructed) by the concessionary in the amount of which does not exceed 10 percent of aggregate book value of all groups of fixed assets for the beginning of accounting year, belongs the taxpayer in structure of expenses (item 146.12 of Art. 146 of the Code).

Depreciation of fixed asset object is charged during useful life (operation) of the object established by the taxpayer, but it is at least minimum admissible term established by item 145.1 of Art. 145 of the Code, monthly, since month which comes after month of introduction of fixed asset object in operation and stops for its reconstruction, upgrade, completion, additional equipment, conservation and other types of improvement and preservation (item 146.2 of Art. 146 of the Code).

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