of November 22, 2012 No. 5743/0/61-12/15-1415
About consideration of the letter
The State Tax Service of Ukraine considered the letter concerning the taxation of entertainment expenses and reports.
According to paragraph "and" subitem 138.10.2 of item 138.10 of Art. 138 of the Tax code of Ukraine (further - the Code) other expenses the administrative expenses directed to servicing and enterprise management, namely total corporate expenses, including organizational expenses, expenses on holding annual and other meetings of governing bodies, entertainment expenses are included.
According to item 138.2 of Art. 138 of the Code expenses which are considered for determination of the taxation object are recognized based on source documents which confirm implementation by the taxpayer of expenses, obligation of maintaining and which storages it is provided by rules of conducting financial accounting and other documents established by the Section II NKU.
Determination of entertainment expenses is provided by the order of the Ministry of Finance of Ukraine of 14.09.2010 No. 1026 "About approval of Regulations of funds for representation purposes of budgetary institutions and procedure for their expenditure" (further - the Order No. 1026) according to which item 2 expenses of budgetary institutions on acceptance and servicing of foreign representatives and delegations which arrived by the invitation for negotiation for the purpose of implementation of international backgrounds, installation and maintenance of mutually beneficial cooperation are considered representative.
The expenses connected with holding formal reception (breakfast, lunch, dinner) of representatives, transport service, actions of the cultural program, to still-rooms servicing during negotiations, fee of the translator who is not in staff of organization, payment of rooms in hotels belong to representative. Requirements of the Order No. 1026, that is regulations of funds for representation purposes, are obligatory only for budgetary institutions, other companies can use this document as auxiliary (help).
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