LETTER OF THE STATE TAX SERVICE OF UKRAINE

of February 15, 2013 No. 3826/7/15-3317

GNS of Ukraine provides information concerning procedure for the taxation of the VAT of the subventions received as compensation for expenses on preferential transportation of passengers by road transport of the city and suburban message which is compensated for the account of the local or state budget.

According to the paragraph item 185.1 of Art. 185 of the Tax code of Ukraine of 02.12.2010 No. 2755-VI (further - the Code) the taxation object of the VAT are transactions of taxpayers on delivery of services which place of delivery is located on customs area of Ukraine, according to Art. 186 of this Code.

According to item 188.1 of Art. 188 of the Code the taxation basis of transactions is determined by delivery of goods/services proceeding from their contractual (contractual) cost, but not below the regular prices determined according to Art. 39 of this Code taking into account nation-wide taxes and fees (except the VAT and the excise tax on ethyl alcohol which is used by producers - subjects of managing for production of medicines, including components of blood and the medicines produced from them, except medicines in the form of balms and elixirs, and collection on compulsory national pension insurance on services of cellular mobile communication).

Contractual (contractual) cost any amounts of means, cost of tangible and intangible assets which are transferred to the taxpayer directly by the buyer or through any third party in connection with compensation of cost of goods/services are included.

If delivery of goods/services is performed at regulated prices (rates), the taxation basis is determined proceeding from their contractual (contractual) cost determined by such prices (rates).

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