( Changed and amended according to Laws of Ukraine
   #1617-VI of July 24, 2009 )

( In the text of the law, the words "entrepreneurial activities", "manufacturing activities", "main activities" (except for the words "main activities" in sub-items 5.2.5, 5.3.1, 5.4.10, and 12.2.3, in items 5.4 and 7.11, and in Article 14) in all cases have been replaced with the words "business activities" in appropriate cases in accordance with the Law No. 639/97-VR of 18 November 1997 )
( The validity of the increased depreciation rates instituted by Law of Ukraine #349-IV of 24 December 2002 for fixed assets of Groups 1, 2, and 3, except for the application of these rates to the depreciation of expenses incurred by a taxpayer after 01 January 2004 in connection with the acquisition (manufacture) of new fixed assets of Groups 1, 2, and 3, which are used in the productive operations of the taxpayer and have not been in operation earlier, as well as the expenses on the improvement of the said newly acquired (manufactured) fixed assets incurred by the taxpayer after 01 January 2004 has been suspended according to Law #1344-IV of November 27, 2003 )
( This Law shall not apply to agricultural producers participating to the fixed tax experiment on the territory of Hlobyno district, Poltava region; Starobeshiv district, Donetsk region; Uzhgorod district, Transcarpathian region in regard to taxation matters according to Law of Ukraine #25/98-VR of January 15, 1998 )
( This Law shall not apply to agricultural producers-payers of the fixed agricultural tax in regard to taxation matters with the exception of Items 7.7, 7.8 and 13.1, 13.2, 13.6, 13.7, 13.8 according to Law of Ukraine #320-XIV of December 17, 1998 )

Article 1. Definitions
Terminology used hereunder shall be interpreted as stated below:
1.1. Tangible assets shall be understood as fixed and circulating assets in any form as distinct from funds, securities, derivatives, and intangible assets.
1.2. Intangible assets shall be understood as objects of intellectual property, including industrial property, and similar rights recognized as the object of the taxpayer's property right in keeping with procedures established by relevant legislation.
1.3. Funds shall be understood as [sums in terms of] the hryvnia and foreign currencies.
1.4. Security shall be understood as a document attesting to the right of ownership or relationships under a loan contract, in keeping with the requirements set forth by the laws on securities.
1.5. Derivative shall be understood as a standard document attesting to the right and/or obligation to purchase or sell, sometime in the future, securities, tangible or intangible assets, and funds on terms and conditions stated therein. A standard form of a derivative and issuance and circulation [turnover] procedures shall be determined by [current] legislation.
Derivatives shall include:
1.5.1. Forward contract meaning a standard document attesting to a person's obligation to purchase (sell) securities, goods or funds at an agreed time in the future and on terms stated therein, with prices fixed on the date of making this forward contract.
Either party to a forward contract shall have the right to refuse to perform it only with the knowledge and consent of the other party - or in cases stipulated by civil law.
Nonfulfillment or mishandling claims shall refer only to the issuer of the forward contract..
The seller under a forward contract shall not assign (sell) any of the liabilities under this contract to any other persons unless so agreed by the seller thereunder.
The buyer under a forward contract shall have the right at his sole discretion to sell this contract to any other person, including the seller thereunder, any time before the expiry (liquidation) of this contract..
1.5.2. Futures contract shall be understood as a standard document attesting to the obligation to purchase (sell) securities, goods or funds sometime in the future, on terms stated therein, with prices fixed on the date of performance by the parties thereto.
Either of the parties to a futures contract shall have the right to refuse to perform it only with the knowledge and consent of the other party - or in cases stipulated by civil law.
The buyer under a futures contract shall have the right to sell it to a third party prior to its expiry without coordinating the terms of sale with the buyer thereunder.
1.5.3. Option shall be understood as a standard document attesting to the right to purchase (sell) securities (goods, funds) on agreed terms and date in the future, with prices fixed on the date of executing this option or on the date of purchase as agreed by the parties to the contract.
The first option writer (the issuer) shall assume full and irrevocable liability on the sale of securities (goods, funds) as per option contract.
Any option buyer shall have the right to refuse to buy such securities (goods, funds) any time.
Nonfulfillment or mishandling claims shall refer only to the option writer.
An option may be sold without limitation to any third party before its expiry.
1.5.4. Depending on their type, derivatives shall be grouped as:
(a) Stock derivatives meaning standard documents attesting to the right to sell and/or purchase securities on set terms sometime in the future. The rules of issuance and circulation of stock derivatives shall be established by a government body authorized to regulate the securities market;
(b) Foreign exchange [currency] derivatives meaning standard documents attesting to the right to sell and/or purchase currency values on agreed terms sometime in the future. The rules of issuance and turnover of foreign exchange derivatives shall be set forth by the National Bank of Ukraine [NBU];
(c) Commercial derivatives meaning standard documents attesting to the right to sell and/or purchase exchange goods (except securities) on agreed standard terms sometime in the future. The rules of issuance and turnover of commercial derivatives shall be established by a [government] body authorized to regulate the commodity exchange market.
1.6. Goods shall be understood as tangible and intangible assets, securities, and derivatives used in any operations, except issuance (emission) and redemption transactions.
1.7. Goodwill shall be understood as an intangible asset assessed as the difference between the book cost of assets of the given enterprise and its ordinary cost, and as a whole property complex resulting from top administrative performance, dominant position on the commodity (works, services) market, new [progressive] technologies, etc. The cost of goodwill shall not be subject to amortization, and neither shall it be considered when determining the taxpayer's gross costs.
1.8. Corporate rights shall be understood as the ownership of the authorised fund (capital) of a legal entity or a share in it, including the rights to manage, receive commensurate share of profit of such legal entity, as well as the relevant share of assets in case of the liquidation of such entity according to the current legislation, regardless of whether such legal entity is established in the form of a company, an enterprise set up on the basis of property of a single legal entity or a natural person, or in other organisational/legal forms.
( The Item in the wording of Law of Ukraine #1523-III of March 3, 2000 )
1.9. Dividends shall be understood as a payment made by a legal entity being an issuer of corporate rights or investment certificates to the benefit of the owner of such corporate rights (investment certificates) in connection with the allocation of a part of the profit of such an issuer calculated according to the accounting rules.
A payment made by a state-owned non-corporatised, government-owned or community-owned enterprise to the benefit of the state or a local self-administration body respectively in connection with the allocation of a part of the profit of such an enterprise shall be deemed to be equivalent to dividends, payment made to the holder of the real estate transactions fund as a result of the allocation of the income of the real estate transactions fund. In this case, the availability or lack of the profit calculated according to the tax accounting rules cannot impact the decision-making process in respect of the dividend accrual.
( Paragraph 2 of Item 1.9 of Article 1 changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )

( Item 1.9 changed and amended according to Law of Ukraine 2831-III of November 29, 2001; in the wording of Law of Ukraine #349-IVof December 24, 2002 )
1.10. Interest shall be understood as revenues paid (accrued) by borrowers to creditors as a fee for the usage of loaned funds or property. The notion of interest shall include:
- Payments for use of loaned funds or goods (works, services);
- Payments for use of deposited funds;
- Fee for purchase of goods payable by installment;
( Paragraph 5, Item 1.10 deleted according to Law of Ukraine #977-XIV of July 15, 1999 )
Interest shall be accrued as a percentage of the principal of loan or of fixed sums. If funds are obtained by sales of debentures, treasury bonds or savings (deposit) certificates issued by the borrower, the interest amount shall be determined by accrual on the part value per security, payment of fixed premiums or prize [win], or by determining the difference between the cost of placement and redemption of this security (e.g., sum of discount).
Payments under other civil law agreements [contracts], whether in terms of absolute (fixed) prices or interest on the amount of contract, or otherwise, shall not be qualified as interest.
1.11. Loan1 shall be understood as funds and tangible assets made available [loaned] to residents or nonresidents for a definite period and at an interest. Loans shall be subdivided into financial loans, commodity loans, investment tax credits and loans given against securities as evidence of such loan relationships.
( Item 1.11 changed according to Law of Ukraine #285-XIV of December 1, 1998 )
1.11.1. Financial loan shall be understood as funds loaned to an individual or entity by a certified resident or nonresident bank, acting in keeping with the laws of the country, or by a resident or nonresident existing as a non-banking establishment as per legislation of that country, as well as foreign governments or their official agencies, or international financial institutions and other non-resident creditors for a definite period, designated purpose, and at an interest. Financial loan rules shall be established by NBU (with regard to bank credits), and by the Cabinet of Ministers of Ukraine (with regard to non-banking financial organizations), in keeping with current legislation.
( Item 1.11 changed according to Law of Ukraine #349-IV of December 24, 2002 )
1.11.2. Commodity loan shall be understood as goods assigned by a resident or nonresident to individuals or entities as per contract stipulating deferred final settlement for a definite period and at an interest.
Commodity loan shall envisage the assignment of ownership of goods (results of works or services) on the date of making such contract or when the buyer actually receives said goods (works, services), regardless of the redemption date.
1.11.3. Loans given against securities as evidence of loan relationships shall be understood as:
- Funds obtained by legal entities (debtors) from other entities or individuals as compensation for the cost of bonds or deposit certificates issued by these debtors. The rules of issuance, sales, and redemption of said securities, as well as requirements to be imposed on the issuers shall be established by relevant legislation.
1.11.4 Investment tax credit shall be understood as a deferral of the income tax payment given to a business entity for a certain period of time with the aim of increasing his financial resources to be directed for the implementation of innovative programs, subject to further redemption of the referred sums by means of extra tax allocations due to a general profit growth as a result of the implementation of innovations.
1.12. Trade by installment shall be understood as a business transaction whereby a resident or nonresident sells goods to an individual or entity, with final settlement deferred for a definite period and at an interest.
Trade by installment stipulates transfer of goods to the seller at the time of the first installment (advance), with the right of ownership assigned after final settlement.
The rules of trade by installment with natural persons other than taxpayers shall be determined by the Cabinet of Ministers of Ukraine.
1.13. Deposit (contribution) shall be understood as funds transferred by individuals or entities for management by a resident designated by the [given] financial organization in keeping with Ukraine's legislation, or by a nonresident, for a definite term and at an interest. Deposits may be engaged as issues of savings (deposit) certificates. The rules of deposit operations shall be established by the National Bank in Ukraine, with regard to bank deposit, and by a body of the state determined by the law with regard to deposits at other financial establishments.
Sums advanced as collateral on contractual obligations by either of the parties to the other party shall not be considered deposits.
1.14. Lombard operation [transaction] shall be understood as receipt of funds from an entity duly certified as a financial establishment as per laws of Ukraine against goods or currency [foreign exchange] values. Lombard operations shall be qualified as a type of borrowing against security.
1.15. Residents shall be understood as legal entities and business entities of Ukraine without the status of a legal entity (branches, agencies, etc.) set up and operating in keeping with Ukraine's legislation and located on its territory.
[This notion also includes] diplomatic missions, consular offices, and other official agencies of Ukraine operating abroad with diplomatic privileges and immunities, as well as branches and agencies of Ukraine's nonprofit enterprises operating abroad.
1.16. Nonresidents shall be understood as legal entities and business entities without the status of a legal entity (branches, agencies, etc.) located outside Ukraine, set up and operating in keeping with the laws of other countries.
[This notion also includes] foreign diplomatic missions, consular offices and other official agencies, international organizations and their representatives located and operating in Ukraine with diplomatic privileges and immunities, as well as nonprofit firms operating in keeping with Ukraine's legislation.
1.17. A non-resident's permanent representation in Ukraine (hereinafter referred to as permanent representation) shall be understood as a permanent venue of activity in which this non-resident conducts all or part of his/their business in the territory of Ukraine. In particular, the category of permanent representations shall include local departments, branches, offices, plants, factories, workshops, mines, oil or gas wells, quarries or other sites of prospecting or extraction of mineral wealth. For taxation purposes, residents acting under non-residents' authority resulting in civil law rights and obligations (e.g., in terms of signing contracts on the non-resident's behalf, retain/store goods owned by the non-resident, using them for shipments on the non-resident's behalf; except residents with the customs warehouse status) shall be placed on the same footing as permanent representations. Residents that are set on the same footing as permanent representations shall not be subject to additional registration with tax authorities as taxpayers.
1.18. Leasing operations (rental business) shall be understood as business transactions (except for transactions involving chartering the sea vessels and other transportation vehicles) whereby an individual or entity (lessor) allows fixed assets or a plot of land to be used by another individual or entity (lessee) against the lease payment and for a definite term. Leasing operations (rental business) concerning whole property complexes of state-owned enterprises shall be regulated by relevant legislation.
( Paragraph 1, Item 1.18 changed and amended according to Laws of Ukraine #977-XIV of July 15, 1999; #349-IV of December 24, 2002 )
Leasing operations (rental business) shall be executed in the form of operational leasing (tenancy), reverse lease, lease of land and dwelling quarters.
1.18.1. Operational leasing (lease) shall be understood as a business transaction of an individual or a legal entity, which involves the transfer to the lessee of the property covered by the definition of a fixed asset under Article 8 hereof procured or manufactured by the lessor on other conditions than those envisaged for the purposes of the financial leasing (lease) on the basis of an operational leasing (lease) contract.
( Sub-item 1.18.1.in the wording of Law of Ukraine #349-IV of December 24, 2002 )
1.18.2. Financial leasing (lease) shall be understood as a business transaction of an individual or a legal entity, which involves the transfer to the lessee of the property covered by the definition of a fixed asset under Article 8 hereof procured or manufactured by the lessor on the basis of a financial leasing (lease) contract together with all risks and benefits related to the right to utilise and possess the object of leasing.
The leasing (lease) shall be deemed to be financial, if the leasing (lease) contract contains one of the following conditions:
- the leasing object is transferred for a period, during which at least 75 per cent of its acquisition cost will depreciate according to depreciation norms specified by Article 8 hereof, and the lessee is obliged to acquire the title to the leasing object during the validity period of the leasing contract or at the time of the expiry thereof at a price specified in such a leasing contract;
- the sum of leasing (rental) payments since the commencement of the lease term equals or exceeds the acquisition cost of the leasing object;
- if the leasing transaction involves transferring an object that has been a part of fixed assets of the lessor during the period of the first 50 per cent of the depreciation of its acquisition cost, the total amount of leasing payments should equal or exceed 90 per cent of the normal price for such a leasing object valid as of the commencement of the leasing contract validity period increased by the interest calculated on the basis of the discount rate of the National Bank of Ukraine specified as of the leasing contract commencement date for the whole duration thereof;
- the property granted on a financial leasing basis has been manufactured to an order of the lessee and cannot be used by entities other than the lessee upon the expiry of the leasing contract because of its process and quality features.
For the purposes of this sub-item, the term 'financial leasing period' shall be understood as the period from the date of the property transfer to the lessee till the date of the acquisition of the title to such property or the date of the last leasing payment by the lessee, whichever event occurs earlier.
Regardless of the fact, whether a leasing transaction is a financial leasing transaction under provisions of this sub-item, the parties to the contract may identify such a transaction as operational leasing at the time of entering into the contract without the right to modify the status of such a transaction subsequently till the expiry of the contract in question.
( Sub-item 1.18.2 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )( Sub-item 1.18.2 changed and amended according to Law of Ukraine #639/97-VR of November 18, 1997; in the wording of Law of Ukraine #349-IV of December 24, 2002 )
1.18.3. Reverse lease shall be understood as a business transaction whereby an individual or entity sells fixed assets to a financial organization, and simultaneously receives them for operational or financial leasing.
1.18.4. Lease of land shall be understood as a business transaction whereby the lessor allows a plot of land to be used by an entity or individual for an agreed term and for a designated purpose, in return for the payment of cost determined rent. Land lease procedures shall be determined by relevant legislation.
1.18.5. Lease of living space shall be understood as a business transaction whereby the owner of a house or apartment allows it to be used by another individual or entity for an agreed term or, for a designated purpose and in return for the payment of cost determined rent.
( Paragraph 1 of Sub-item 1.18.5 of Item 1.18 of Article 1 changed and amended according to Law of Ukraine #997-V of April 27, 2007 )
Maximum rent paid by an individual tenant as a permanent resident shall be regulated in keeping with procedures established by the Cabinet of Ministers of Ukraine.
Rent paid by individuals using leased quarters for purposes other than permanent residence, as well as such rent paid by entities shall be subject to no regulation.
Procedures of lease of living space shall be adopted by the Cabinet of Ministers of Ukraine in accordance with the Housing Code of Ukraine.
Lease of other buildings and premises shall be effected on the terms and conditions stated in lease contract [as the case may be].
1.19. Barter (exchange of commodities) shall be understood as a business transaction whereby payments for goods (works, services) are made in any form other than the pecuniary, including any types of offset and mutual redemption, when no money is remitted to the buyer's account as compensation of the cost of such goods (works, services).
1.20. Usual Price
1.20.1. Unless this item provides otherwise, the price for goods (work, services) determined by parties to a contract shall be deemed usual. It shall be deemed that such a usual price complies with the level of fair market prices, unless it is proven to be the opposite.
'Fair market price' shall be understood as a price, at which goods (work, services) are transferred to another owner on condition that the seller is willing to transfer such goods (work, services) and the buyer is willing to accept the same without any compulsion, that both parties are mutually independent both de jure and de facto, they possess sufficient information about such goods (work, services), as well as the prices prevailing on the market of identical (or similar, pending the identical) goods (work, services).
The market of goods (work, services) and the circulation sphere of goods (work, services), which is determined on the basis of the buyer's (seller's) ability to purchase (sell) the goods (work, services) realistically and without substantial additional expenses on the nearest territory in respect of any party to the contract.
'Identical goods (work, services)' shall be understood as goods (work, services) with the same principal features characteristic for them. For instance, the physical characteristics, which do not affect the quality and have no substantial impact for determining the features of the goods, the quality and the market reputation, the country of origin and the manufacturer shall be taken into account, while determining, whether the goods are identical. Inconsiderable differences in the appearance thereof may be disregarded.
'Similar goods (work, services)' shall be understood as goods (work, services), which are not identical but have similar characteristics and consist of similar components enabling them to perform identical functions and/or be interchangeable. For instance, the quality of goods (work, services), the availability of a trademark, the market reputation, the country of origin and the manufacturer must be taken into account for the purposes of determining the similarity of goods (work, services)
1.20.2. The information about contracts involving the identical (similar) goods (work, services) under comparable conditions concluded at the moment of the sale of the goods (work, services) in question shall be used to determine the usual price for the goods (work, services). For instance, the following contractual terms and conditions shall be taken into account: the volume of goods (for example, the volume of a shipment of goods), the time frames of the discharge of undertakings, the payment conditions usual for a transaction in question, as well as other objective conditions, which can affect the price. In this case, the terms and conditions of contracts on the market of identical (or similar, lacking the identical) goods (work, services) shall be deemed to be comparable, if the difference between such conditions does not affect the price considerably or can be justified economically. In this case, the price supplements or discounts usually applicable in case of the contract conclusion among unrelated parties shall be taken into account. This includes but is not limited to the discounts related to the seasonal and other fluctuations of the consumer demand for goods (work, services), the loss of the quality or other features by the goods; the expiry (the approaching expiry) of the storage (suitability, sale) period; the sale of illiquid or hardly liquid goods, the marketing policy, for instance, in the case of the promotion of goods (work, services) to markets; the provision of trial models and samples of goods for the familiarisation of consumers with them.
If the goods (work, services) that are identical (or lacking them, similar) to the goods (work, services), for which the usual price is being determined, are publicly offered for sale or have prices set on the organised securities market, or have exchange prices (exchange quotations), these factors shall be taken into account for the purposes of determining the usual price according to the procedure specified in paragraph one of this sub-item.
1.20.3. In case of goods (work, services) sold by way of the public offering of the terms and conditions of the sale thereof, the price contained in such a public offering shall be acknowledged to be usual.
1.20.4. If goods (work, services) are sold on a tender, auction, exchange offering or organised securities market offering basis, or if the sale (alienation) of goods is undertaken on a compulsory basis according to the legislation, the price achieved in case of such sale shall be deemed to be usual.
1.20.5. If the prices for goods (work, services) are subject to the state regulation by law, the price specified according to principles of such regulation shall be deemed usual. This rule shall not apply to setting the minimum sale price - in this case, the fair market price shall be deemed usual.
1.20.5-1. If the usual price cannot be determined using the provisions of preceding sub-items of this item, then the rules prescribed by the national accounting provisions (standards), as well as the national property and property rights valuation standards shall be used to justify its level. For the taxation purposes, the terms "fair value", "market value" and "net sales value", which are used in the national accounting provisions (standards) and national property and property rights valuation standards, shall be equivalent to the term "usual price" as defined by this Law.
( Sub-item 1.20.5-1 added to Item 1.20 according to Law of Ukraine #1957-IV of July 01, 2004 )
1.20.5-2. The central executive agency for the financial service markets regulation shall specify the methodology of determining the usual price of the insurance tariff rate.
( Sub-item 1.20.5-2 added to Item 1.20 according to Law of Ukraine #1957-IV of July 01, 2004 )
1.20.6. The price of the contract shall be deemed to be the usual price, if no transactions are undertaken on the relevant market of goods (work, services) with the identical (or lacking them, similar) goods (work, services) or if it is impossible to determine the price therefor because of the lack or unavailability of the relevant information.
1.20.7. 'Usual deposit interest rate' shall be understood as the interest rate set depending on the term and size of a deposit by decision of the tax payer, which must be made public and establish equivalent rules in respect of the deposit contract conclusion with any categories of entities taking into account the restrictions imposed by law. The procedure of the publication of the information about the terms and conditions of entering into a deposit contract shall be prescribed for banking institutions by the National Bank of Ukraine, for non-bank financial institutions - by the state agency specified by law. The binding downpayments made to secure the contractual undertakings of a party to a contract to another party to the contract shall not be treated as deposits.
1.20.8. The burden of proving that the contract price does not meet the usual price level in cases specified hereby shall be vested in the tax authority according to the procedure specified by law. While auditing a taxpayer, the tax authority shall have the right to submit an inquiry, and the taxpayer must justify the level of contractual prices or refer to provisions of paragraph one of sub-item 1.20.1 of the present item.
1.20.9. In addition to rules of determining the usual prices specified in this item, the Cabinet of Ministers of Ukraine shall have the right to specify the methodology of determining the usual price for goods (work, services) sold (provided) by taxpayers acknowledged to be the natural monopolists according to the law on the basis of the following rules:
a) if it is impossible to determine the price for goods (work, services) because of the lack or unavailability of the relevant information, the method of the re-sale (subsequent sale) price for such goods (work, services) shall be used for determining the usual price. In this case, the price for goods (work, services) sold by the taxpayer shall be determined to be at the level of the price, at which such goods (work, services) are re-sold by the buyer thereof in case of the subsequent sale, taking into account the actual expenses incurred by such buyer during the sale and promotion of such goods (work, services) to the market determined by way of the application of usual prices, as well as the profit of the buyer usual for the business in question (disregarding the price, at which the buyer purchased the goods from the seller);
b) if it is impossible to use the method of the goods (work, services) re-sale price, the 'expense plus' method shall be used, under which the price for goods (work, services) sold by the taxpayer shall be determined as the sum of the actual (incurred) expenses and the profit usual for the business in question. In this case, the expenses for the manufacture (purchase) and/or sale of goods, the transportation, storage, and insurance thereof, or other similar expenses determined using the usual prices shall be taken into account.
1.20.10. The additional tax liability shall be charged by the tax authority on the taxpayer as a result of determining the usual prices according to the procedure prescribed by the law for charging the tax liabilities using indirect methods or, in case of taxpayers acknowledged to be natural monopolists by law, according to the price regulation principles specified by such law.
A tax agency shall have the right to apply usual prices for determining the taxation base in cases covered by the law regardless of the type of the business transaction engage into by the payer of this tax or the tax status of the other party to such a transaction.
( Paragraph 2  of Sub-item  1.20.10 in  the  wording of Law of Ukraine#1957-IV of July 01, 2004 )
( Item 1.20. changed and amended according to Law of Ukraine #639/97-VR of November 18, 1997; in the wording of Law of Ukraine #349-IV of December 24, 2002 )
1.21. Revenues originating from Ukraine shall be understood as any revenues received by residents and nonresidents from any type of business conducted in Ukraine, including interest, dividends, royalties and all passive incomes paid by residents of Ukraine, proceeds from property in Ukraine leased out to residents or nonresidents, including vehicles, vessels registered at [sea] ports in Ukraine, from sales of immovables located in Ukraine, incomes in the form of contributions and premiums under risk insurance and reinsurance policies on Ukraine's territory, revenues of resident insurers from insuring risks of residents outside Ukraine, other incomes from business ventures on the customs territory of Ukraine and those controlled by Ukraine's customs authorities (in customs area, at special licensed and bonded warehouses, etc.).
1.22. Financial aid - non-repayable financial aid or repayable financial aid.
1.22.1. The non-repayable financial aid shall be understood as:
- the amount of funds handed over to the taxpayer under donation and other similar contracts, which do not provide for the appropriate compensation for, or the repayment of, such funds (except for the budget grants and subsidies), or without the conclusion of such contracts;
- the amount of the bad debt repaid to the creditor by the borrower after the write-off, if such bad debt was earlier included into the creditor's gross expenses;
- the amount of the taxpayer's debt to another legal entity or individual, which remained uncollected after the expiry of the limitation period;
- the principal of a loan or deposit granted to the taxpayer without specifying the term of the repayment of such a principal, less the interest, granted again termless bonds and demand deposits with banks, as well as the amount of the interest accrued on such a principal but not paid (written off);
- the amount of the interest notionally accrued on the amount of the repayable financial aid, which remains non-repaid as of the end of the reporting period at the discount rate of the National Bank of Ukraine charged for each day of the actual utilisation of such repayable financial aid.<0}
1.22.2. Repayable financial aid shall be understood as a sum provided to a taxpayer for the utilisation during a certain period under contracts, which do not provide for the interest accrual or other forms of the compensation as the payment for the utilisation of such funds.
( Item 1.22. in the wording of Law of Ukraine #349-Iv of December 24, 2002 )
1.23. Goods (works, services) provided free of charge shall be understood as:
- Goods provided by taxpayers under donation and other agreements that do not stipulate pecuniary or other compensation for the cost of such tangible and intangible assets or their return, or without any such agreements;
- Works and services provided by taxpayers without any compensation clauses;
- Goods transferred to entities or individuals for safekeeping and used by them in production or business turnover.
1.24. Safekeeping shall be understood as a business transaction whereby a taxpayer transfers tangible assets to another person under a safe custody contract, without that person's right of such individual or entity to use them in business, and to be returned to this taxpayer without any changes in terms of quality or quantity.
1.25. Bad debts shall be understood as debts answering any of the following characteristics:
- Overdue liabilities past the period of limitation;
- the overdue debt, which turned out to be not repaid due to the insufficiency of the property of an individual subject to the condition that the actions of the creditor aimed at the forced collection of the borrower's property did not result in the complete repayment of the debt;
( Paragraph 3 of Item 1.25 of Article 1 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
- the debt, which turned out to be not repaid due to the insufficiency of the property of:
( The Paragraph added to Item 1.25 of Article 1 according to Law of Ukraine #1957-IV of July 01, 2004 )
- an individual, which may be collected in accordance with the law;
( The Paragraph added to Item 1.25 of Article 1 according to Law of Ukraine #1957-IV of July 01, 2004 )
- an individual sole trader or a legal entity declared bankrupt according to the procedure specified by law or in case of the liquidation thereof (the withdrawal from the registration as business entity;
( The Paragraph added to Item 1.25 of Article 1 according to Law of Ukraine #1957-IV of July 01, 2004 )
- Outstanding debts due to insufficient proceeds from sales by public auction of the debtor's property as collateral of the debt, provided the creditor's other legal actions aimed at exacting the borrower's other property failed to cover the debt;
- Debts impossible to collect due to acts of God and other force-majeure circumstances confirmed in keeping with legally set procedures;
- Outstanding debts of decedents, individuals officially proclaimed missing, dead, legally disabled or sentenced to a term of imprisonment;
1.26. Affiliated person shall be understood as a person answering the following characteristics:
- A legal entity controlling a taxpayer or being controlled by a taxpayer, or being controlled jointly with this taxpayer;
- An individual or members of his/her family controlling a taxpayer. The notion of family members includes husband/wife, next of kin (children or parents) of this individual, his/her spouse, or husband or wife of any of the next of kin of this individual or his/her wife/husband;
- Official on the taxpayer's side, authorized to perform legal actions in this taxpayer's behalf, aimed at establishing, changing or terminating legal relationship, and members of that official's family.
In the context of this Item, control is to be interpreted as possession, directly or via a greater number of affiliated individuals or entities, of the controlling interest in the taxpayer's statutory fund or having a controlling majority of votes in the taxpayer's governing body, or having not less than 20% of shares in the taxpayer's authorized fund.
With regard to individuals, the total interest in the taxpayer's authorized fund (votes at the governing body) shall be determined as the total amount of corporate rights belonging to this individual, members of his/her family, and legal entities being controlled by this individual or members of his/her family.
1.27. Issuance revenues shall be understood as revenue excess amount, received by the issuer from sale of its own stocks or other corporate rights and investment certificates over nominal value of such stocks or other corporate rights and investment certificates (from their primary issue), or over the value of reverse repurchase from the second issue of investment certificates and stocks of investment funds.
( The Item in the wording of Law of Ukraine #2831-III of November 29, 2001 )
1.28. Investment shall be understood as a business transaction whereby fixed and intangible assets, corporate rights, and securities are purchased in return for funds or property. Investments shall be subdivided into capital, financial investments, and reinvestments.
1.28.1. Capital investment shall be understood as a business transaction whereby buildings, premises, other immovables, fixed and intangible assets are purchased subject to amortization as set forth hereunder.
1.28.2. Financial investment shall be understood as a business transaction whereby corporate rights, securities, derivatives, and other instruments are purchased. Financial investments shall be subdivided into direct and portfolio investments.
Direct investment shall be understood as a business transaction whereby funds or property are contributed to a legal entity's authorized fund in exchange for corporate rights issued by this entity.
Portfolio investment shall be understood as a business transaction whereby securities, derivative, and other financial assets are purchased on a stock market in return for funds (except when shares [stocks] are bought by a taxpayer directly or by any of his affiliated persons, in amounts exceeding 50% of the total amount of shares issued by another legal entity and being part of direct investments).
1.28.3. Reinvestment shall be understood as a business transaction whereby capital or financial investments are made using proceeds from investment operations.
1.29. Tax, taxation, taxpayer shall be interpreted, respectively, as the company income tax, taxation of company revenues, and company income taxpayers. As defined in this Law, taxes specified in Article 13 hereof, as well as the tax of incomes, payment of redemption premiums, insurance revenues, and other taxes levied when paying incomes (profits/dividends) shall be regarded as types of the income tax, and not as additionally instituted taxes.
( Item 1.29 changed and amended according to Laws of Ukraine #639/97-VR of November 18, 1997, #349-IV of December 18, 2002 )
1.30. Royalty shall be understood as payments in any form received as remuneration for the use or giving the right to use any copyright to works of literature, art or science, including the computer software, other records on information carriers, video and audio cassettes, cinema films or films for radio or television broadcasting; for the acquisition of any patent, registered trade and service mark or trade brand, design, secret drawing, model, formula, process, the right to the information about the industrial, commercial or scientific experience (know-how).
The following shall not be considered royalty: payments for the receipt of the objects of property defined in part one of this item, in ownership or disposal or property of a person or if the conditions of using such property objects vest the user with a right to sell or otherwise alienate such property object or publish (disclose) secret drawings, models, formulae, processes, rights to information about the industrial, commercial or scientific experience (know-how), except for cases, when such publication (disclosure) is obligatory under the legislation of Ukraine.
( The Item in the wording of Law of Ukraine #1523-III of March 3, 2000 )
1.31. Sale of goods shall be understood as any transactions carried out as per purchase-and-sale contracts, barters, supplies or other civil law agreements envisaging assignment of the right of ownership of such goods in return for payment or compensation, regardless of the term of implementation, and as operations in which goods are provided gratuitously.
Transactions in the course of which goods are provided under commission, safekeeping, agency, and other civil law contracts/agreements that do not stipulate the assignment of ownership shall not be regarded as sale of goods.
Sale of the results of works (services) shall be understood as any civil law transactions whereby the results of works are provided along with the right to use or manage goods, including intangible assets and articles of property other than goods in return for compensation, as well as transactions when the results of works (services) are provided gratuitously, including the right to use goods within the framework of a lease, sale, or assignment contract, transfer of this right as per copyright or license agreement, and otherwise transferring articles of copyright, patents, brand names, and other articles of intellectual and industrial property.
( The Item added to the Article according to Law of Ukraine #639/97-VR of November 18, 1997 )
1.32. Economic [business] activity shall be understood as any type of activity carried out by a person, aimed at making profits in the pecuniary form and creating tangible and intangible assets, provided such activity is regular, stable, and substantial. Direct participation shall be understood as such activity carried out by such person via his/their permanent representations, branches, offices, other detached organisation departments, as well as via fiduciaries, agents or any other persons acting in behalf and for the benefit of the principal.
( The Item added to the Article according to Law of Ukraine #639/97-VR of November 18, 1997 )
1.33. Lottery shall be understood as a business transaction involving the sale of the right to take part in drawing a prize on the basis of the accidental probability to a gambler in exchange of monies or other valuables, as well as the receipt of such prize as property free of charge, if such gambler is declared a winner.
Prize fund shall be understood as the set of prizes payable to lottery winners according to the published terms and conditions thereof.
( The Item added to the Article according to Law of Ukraine #1969-III of September 21, 2000 )
1.34. Institutes of Cooperative Investment (ICI) shall be understood as investment funds and joint funds of investment companies, corporate investment funds and share investment funds established in accordance with the legislation.
( The Item added to the Article according to Law of Ukraine #2831-III of November 29, 2001 )
1.35. Freight charge
1.35.1. Freight shall be understood as the fee (compensation) paid under contracts of the transportation, vessel or vehicle (parts thereof) lease or sublease for the purposes of:
- the transportation of the cargo and passengers with sea-going craft or aircraft;
- the cargo transportation with the rail or motor transport.
( Sub-item 1.35.1. of Item 1.35. of Article 1 in the wording of Law of
Ukraine #1957-IV of July 01, 2004 )
1.35.2. The revenues of non-residents obtained as freight charges shall be taxed according to the rules of item 13.5 of Article 13 hereof.
1.35.3. For the purposes hereof, the term "freight charge base rate" shall be understood as the amount of the freight charge, including the expenses related to loading, unloading, reloading and warehousing (storing) the goods increased by the amount of expenses for per run of a vessel or another vehicle paid (reimbursed) by the charterer according to the concluded chartering contract.
( Item 1.35. added to the Article according to Law of Ukraine #349-IV of December 24, 2002 )
1.36. 'Engineering' shall be understood as the provision of services (performance of work) involving the compilation of terms of reference, the performance of the scientific research, the development of design proposals, the conduct of feasibility studies and engineering surveys for the construction purposes, the development of the technical documentation, the design and development of objects of technology, the consultancy and author's supervision in the course of the installation and commissioning works, as well as the economic, financial or other consultancy related to such services (work).
( Item 1.36. added to the Article according to Law of Ukraine #349-IV of December 24, 2002 )
1.37. 'Long-term life insurance contract' shall be understood as a life insurance contract for a period of 10 years and more, which provides for the payment of the insurance premiums during at least 5 years and the disbursement of the insurance amount, if the insured individual has lived till the expiry of the insurance contract or the event specified in the insurance contract, or has attained the age specified by the contract. Such a contract may not provide for partial disbursements during the first 10 years of its validity period, except for those to be undertaken in case of the insured accidents involving the death of the insured individual or an accident with, or the disease of, the insured individual, which have resulted in assigning the insured individual the Group 1 disability; at that the insurance amount shall be disbursed regardless of the period of the payment of insurance premiums.
( Item 1.37. added to the Article according to Law of Ukraine #349-IV of December 24, 2002; in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
1.38. 'Real estate transactions fund certificate' shall be understood as an investment certificate, which certifies the right of the holder thereof to obtain income from investing into real-estate transactions in accordance with the law.
( Item 1.38 added to Article 1 according to Law of Ukraine #1957-IV of July 01, 2004 )
1.39. 'Mortgage certificate (including participatory mortgage certificate and fixed-yield mortgage certificate)' shall be understood as special types of securities secured with mortgage assets or mortgages in accordance with the law.
( Item 1.39 added to Article 1 according to Law of Ukraine #1957-IV of July 01, 2004 )
1.40. 'Consolidated mortgage debt' shall be understood as liabilities under mortgage loan contracts reformed by the creditor in accordance with the law.
( Item 1.40 added to Article 1 according to Law of Ukraine #1957-IV of July 01, 2004 )
1.41. 'Bank management fund' shall be understood as funds of bank management fund participants and other assets being under the trust management of an authorised bank in accordance with the law.
( Item 1.41 added to Article 1 according to Law  of  Ukraine  #1957-IV of July 01, 2004 )
1.42. 'Non-state pension system' shall be understood as the pensions provided by non-state pension funds, insurance organisations, and banks in accordance with the Law of Ukraine "On Non-state Pensions".
( Item 1.42 added to Article 1 according to Law of Ukraine #1957-IV of July 01, 2004 )
1.43. Other terms shall be used with the meanings defined by taxation laws, as well as national accounting provisions (standards) in cases specified by this Law, which do not contradict this Law and other taxation laws in respect of the definition of terms.
( Item 1.43 added to Article 1 according to Law of Ukraine #1957-IV of July 01, 2004 )
Article 2. Taxpayers
2.1. The following shall be qualified as taxpayers:
2.1.1. From among residents: business entities, budget-sustained, voluntary enterprises, institutions, and organizations conducting activities aimed at receiving revenues in Ukraine and beyond its borders.
2.1.2. From among nonresidents: individuals or entities set up in any institutional and legal form receiving revenues originating from Ukraine, except institutions and organizations with a diplomatic status or immunity as per international treaties of Ukraine or under the law.
2.1.3. Branches, sections, and other detached organisation departments of taxpayers (hereinafter referred to as branches), indicated in Item 2.1 hereinbefore, without the legal entity status and located within a territorial community other than the taxpayer's.
A taxpayer having such branches may determine to pay the consolidated tax to the budgets of the territorial communities accommodating that taxpayer's branches, as well as to that taxpayer's territorial community budget, defined under this Law and reduced by the amount of the tax paid to the budgets of the territorial communities accommodating the branches.
The amount of the income tax levied on the branches in the accounting (taxation) period shall be calculated proceeding from the total amount of the tax accrued by the taxpayer and distributed in proportion to the ratio, in the taxpayer's gross costs and capital allowances, of gross costs borne by the branches and capital allowances [allocation for depreciation] accrued as per taxpayer's fixed assets at the place of each branch.
The choice of the procedure of the payment of the profit tax specified by this item shall be made by the tax payer independently till 01 July of the year, which precedes the reporting year, whereof the tax authorities in the location of such a tax payer and his branches (separate units) shall be notified. No changes in the procedure of the tax payment during the reporting year shall be allowed. At that, the branches (separate units) shall submit to the tax authority in their location the calculation of tax liabilities in respect of the payment of the consolidated tax in the format prescribed by the central body of the state tax service of Ukraine taking into account provisions of this sub-item.
( The Paragraph in the wording of Law of Ukraine #1523-III of March 2, 2000 )
The taxpayer having branches shall be responsible for timely and complete income tax payments to the budgets of the territorial communities accommodating the branches.
( Item 2.1.3. in the wording of Law of Ukraine #639/97-VR of November 18, 1997 )
2.1.4. Permanent representatives [agencies] of nonresidents receiving revenues originating from Ukraine or acting as agents for such nonresidents or their founders [shareholders].
2.2. Payers of taxes on incomes received from the business activities of rail transport shall be the railroad departments. Lists of works and services referred to the business activities shall be approved by the Cabinet of Ministers of Ukraine.
2.2.1. Revenues of railroad companies received from the business activities of rail transport shall be determined within the limits of returns allocated among these companies in keeping with procedures approved by the Cabinet of Ministers of Ukraine.
2.2.2. Payers of taxes levied on incomes received from activities other than the business activities of rail transport shall be rail transport enterprises and organization departments thereof.
2.3. The National Bank of Ukraine and its agencies (except self-financing entities subject to taxation on the general terms) shall pay to the State Budget of Ukraine the excess amount of consolidated balance gross revenues over gross costs and part of the gross costs registered in the years preceding the accounting period (when not made good by the gross revenues of those years) after the end of the financial year. When the year's results show excess expenses, as compared to those approved by NBU, over the revenues earned, the deficiency shall be paid by the State Budget of Ukraine.
2.4. Penitentiary institutions and their enterprises, investigation detainment centres, in which convicts and individuals taken into custody are involved into the socially useful labour in accordance with the Penitentiary Code of Ukraine and the Law of Ukraine "On Pre-trial Detention" are involved into the socially useful labour, shall channel the revenues obtained from activities specified by the central executive agency in charge of the penitentiary on the funding of business activities of such institutions and enterprises with the inclusion of amounts of such revenues into their appropriate funding estimates approved by the central executive agency in charge of the penitentiary.
( Item 2.4 of Article 2 changed and amended according to Laws of Ukraine #312-XIV of December 11, 1998, #2377-IV of January 20, 2005, #1254-VI of April 14, 2009 )
2.5. A permanent representation, before it begins operating, shall get registered with the tax authority at the place of its location, in keeping with proceedings established by the central tax authority of Ukraine. A permanent representation commencing operations before such registration shall be qualified as a tax evader and its incomes as tax-sheltered.
Article 3. Object of Taxation
3.1. The object of taxation shall be the income determined by reducing the sum of the adjusted gross revenue during the accounting period, as per Item 4.3 hereunder, by:
- The sum of the taxpayer's gross costs as per Article 5 hereunder;
- The sum of allocation for depreciation [capital charges] accrued as per Articles 8 and 9 hereunder.
Article 4. Gross Income
4.1. Gross income shall be understood as the total amount of revenues received by a taxpayers from all economic activities and accrued for the accounting period in terms of funds, tangible and intangible assets within Ukraine, on its continental shelf, in its exclusive (maritime) economic zone, and beyond its borders.
[The notion of] gross income shall include:
4.1.1. The overall income from the sale of commodities (work, services), including the ancillary and service production facilities without the legal-entity status, as well as the income from the sale of securities, derivatives, participatory mortgage certificates, fixed-yield mortgage certificates, real-estate transaction fund certificates (except for their initial public offering (floatation), their final redemption (liquidation), and transactions with the consolidated mortgage debt in accordance with the law).
( Sub-item 4.1.1 of Item 4.1 of Article 4 changed and amended according to Law of Ukraine #639/97-VR of November 18, 1997; in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
4.1.2. Returns from banking, insurance, and other transactions, financial services, foreign-exchange trade, securities, debentures, and calls.
4.1.3. Returns from operations envisaged by Article 7 hereunder.
4.1.4. Revenues from joint operations and in the form of dividends received from nonresidents, interest, royalties, possession of debentures, as well as leasing returns.
4.1.5. Revenues not covered when accruing gross income in the period preceding the accounting period and those registered during the accounting period.
4.1.6 Revenues from other sources, including but not limited, revenues in the form of:
- sums of the non-repayable financial aid obtained by the taxpayer during the reporting period, the value of goods (work, services) provided free of charge to the taxpayer during the reporting period, except for the provision thereof to not-for-profit organisations under item 7.11 of Article 7 hereof and within such transactions between the taxpayer and its separate units without the legal-entity status except for cases specified in part four of Article 3 of the Law of Ukraine "On Writing off the Value of Unpaid Natural Gas Amounts";
( Paragraph 2 changed and amended according to Law of Ukraine #911-IV (911-15) of June 05, 2003 )
- sums of the repayable financial aid obtained by the taxpayer during the reporting period, which remain non-repaid as of the end of such reporting period, from entities not being the payers of the tax in question (including non-residents) or entities entitled to privileges in respect of such tax by law, including the right to apply a lower tax rate than that specified by item 7.2 of Article 7 or Article 10 hereof. If the taxpayer repays such a repayable financial aid (or a part thereof) during the subsequent tax periods to the entity, which provided the same, the tax payer shall increase the gross expense amount by the value of such a repayable financial aid (or a part thereof) as a result of the tax period of such repayment. At that, the gross expenses of such a taxpayer shall not be increased by the amount of the notional interest; the tax liabilities of the provider of the repayable financial aid shall change neither in case of the provision, nor in case of the repayment thereof. By way of exception from the rule of this paragraph, the transactions of the receipt (provision) of the financial aid between the taxpayer and its branches, outlets and other separate units without the legal entity status located on the territory of Ukraine shall not affect their gross expenses or gross revenues;
- sums of the unutilised part of funds returned from provisions according to the procedure specified by item 12.2 hereof;
- sums of the debt, which must be included into the gross revenues under items 12.3 and 12.4 hereof;
- provision amounts not used for the designated purposes;
- the value of tangibles handed over to the taxpayer under safe custody contracts and used thereby in the own production or business turnover;
- the amounts of fines and/or contractual penalties actually collected on the basis of a decision of parties to the contract or by decision of the relevant state authorities or the court;
- sums of the state duty earlier paid by the claimant, which are refunded to the claimant by court decision;
- sums of the excise duty paid (accrued) by buyers of excisable goods (at their expense) to the benefit of the payer of such an excise duty authorised by law to pay it to the budget, and rent payments as well as amounts of the duty in the form of the special-purpose supplement to the applicable electrical and thermal energy tariff rate;
( Paragraph 10 changed and amended according to Law of Ukraine #849-IV (849-15) of May 22, 2003 )
- revenues from the sale of the electric energy (including the reactive energy).
- sums of grants and subsidies from the universal state insurance funds or budgets received by the taxpayer.
( The Paragraph added to Sub-item 4.1.6 of Article 4 according to Law of Ukraine #1957-IV of July 01, 2004 )
( Sub-item 4.1.6 changed and  amended  according  to  Law  of  Ukraine#639/97-VR of November 18, 1997; in the wording  of  Lawof Ukraine #349-IV of December 24, 2002 )
4.2. The following shall be excepted from the gross income:
4.2.1. Amounts of the value added tax received (accrued) by a payer of the value-added tax accrued on the sales value of goods (work, services), except for cases, when the seller company is not a payer of the value-added tax.
The gross revenues of a payer registered as a party subject to the special tax regime under Article 8-1 of the Law of Ukraine "On Value-added Tax" shall include the positive difference between amounts of the value-added tax charged by such an agricultural enterprise on the price of agricultural commodities supplied thereby during the reporting period or periods preceding the reporting period, and amounts of the value-added tax paid (charged) by them during the reporting period on the price of production inputs defined in item 8-1.15 of Article 8-1 of the said Law.
( Sub-item 4.2.1, Item 4.2, Article 4 has been amended by adding Paragraph 2 according to Law of Ukraine #639-VI of October 31, 2008 )
( Sub-item 4.2.1 changed and amended according to Law of Ukraine 639/97-VR; in the wording of Law of Ukraine #349-IV of December 24, 2002 )
4.2.2. Monetary sums or cost of property received by a taxpayer as compensation (indemnity) for government-enforced alienation of that taxpayer's other property in cases provided by law.
4.2.3. Monetary sums or cost of property received by a taxpayer as rewarded by a court of law or as a result of accommodating claims in keeping with legally set procedures as compensation for direct expenses or damage incurred by infringements of that taxpayer's rights and interests protected by law, provided such losses or dame was not referred by that taxpayer to gross costs or made good using insurance reserves.
( Sub-item 4.2.3 changed and amended according to Laws of Ukraine #639/97-VR of November 18, 1997; #762-IV of May 15, 2003 )
4.2.4. Sums of excessive payments of taxes, duties (compulsory payments) being refunded or to be refunded from the budget provided these amounts were not referred to gross costs.
4.2.5. Monetary sums or cost of property received by a taxpayer in the form of direct investment or reinvestment in the corporate rights issued by that taxpayer, including pecuniary or property contributions as per contract on joint operations on Ukraine's territory, but without forming a legal entity.
4.2.6. Sums of revenues received by government executive bodies and local self-administration from rendering official services (issuance of permits/licenses, certificates, verification, registration, and other services to be acquired under the law), provided said revenues are remitted to relevant budgets.
4.2.7. Fund amounts in the form of contributions, which are:
a) received by taxpayers, which provide non-state pensions in accordance with the law, from pension fund depositors, pension deposit account depositors, and individuals, who entered into the insurance contracts in accordance with the Law of Ukraine "On Non-state Pensions";
b) received by insurers, which provide the long-term life insurance, from the insured;
c) accumulated on pension deposits, accounts of participants of the bank management funds in accordance with the law;
- the amounts of receipts of not-for-profit institutions and organisations in accordance with requirements of item 7.11 of this Law.
( Sub-item 4.2.7. of Item 4.2 of Article 4 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
4.2.8. The joint investment funds, namely the funds raised from investors of the joint investment institutes (JII), revenues from transactions with JII assets and revenues accrued on JII assets, as well as the funds raised from holders of real-estate transaction certificates, revenues from transactions with assets of the real-estate transaction funds, and revenues accrued on assets of the real- estate transaction funds established in accordance with the law.
( Sub-item 4.2.8, Item 4.2 in the wording of Law of Ukraine #977-XIV of July 15, 1999; #2831-III of November 29, 2001; #1957-IV of July 01, 2004 )( Sub-item 4.2.9. of Item 4.2. of Article 4 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
4.2.9. Amounts of the issuance income obtained by the payer;
( Item 4.2 of Article 4 has been  amended  by  adding  Sub-item  4.2.9
according to Law of Ukraine #398-V of November 30, 2006 )
4.2.10. Par value of accounted for but unredeemed securities attesting to loan relationships, as well as of instruments issued by the debtor in the name of a taxpayer as collateral or confirmation of the debt (obligations, savings certificates, treasury bonds, bills, debt warrants [debentures], letters of credit, checks, guarantees, bank orders, and other such instruments).
4.2.11. Revenues from joint operations on Ukraine's territory without forming legal entities, dividends received by taxpayers from other taxpayers and taxed as per Items 7.7 and 7.8 hereunder.
4.2.12. Funds or property returned to the holder of corporate rights issued by a legal entity after that entity's complete and final liquidation or after the expiry of the joint operations contract, but not in excess of the shares' par value.
4.2.13. Funds or property received as international technical assistance from other countries as per international agreements ratified in keeping with legally set procedures.
4.2.14. Funds provided to taxpayers from the State Innovation Fund, to be returned after implementing certain innovation projects, in keeping with procedures established by the Cabinet of Ministers of Ukraine.
( The Sub-item in the wording of Law of Ukraine #40-IV of July 04, 2002 - comes into force as from January 01, 2003 - the validity has been suspended for the year 2003 according to Law of Ukraine #380-IV of 26.12.2002; the validity has been suspended for the year 2004 according to Law of Ukraine #1344-IV of November 27, 2003; the validity has been suspended for the year 2005 according to Law of Ukraine #2285-IV of December 23, 2004; changed and amended according to Law of Ukraine #2505-IV of March 25, 2005 )
4.2.15 Cost of the fixed assets received by the taxpayer gratuitously, to be applied in cases provided by law [specifically]:
- if these fixed assets are received as resolved by a central executive authority;
- in the case of special enterprises receiving installations to supply power, gas, heat, water, also water carriage [sewage] systems, as resolved by local executive authorities or executive committees of councils [of people's deputies] acting within their competence;
- if an enterprise under communal ownership receives social facilities from among those indicated in Sub-item 5.4.9, Article 5 hereunder, previously kept on balance sheets by other enterprises and maintained at their expense.
Fixed assets received in events covered with this sub-item shall be accepted into the balance sheet at the market (appraised) value and shall not be subject to the depreciation for the taxation purposes.
( Paragraph 5 of Sub-item 4.2.15 of Item  4.2  of  Article  4  in  the
wording of Law of Ukraine #398-V of November 30, 2006 )
The Cabinet of Ministers of Ukraine shall determine the procedures of such gratuitous assignment of such fixed assets.
4.2.16. Funds or property granted as non-repayable benefit to public organisations of disabled people and to enterprises and organisations specified in item 7.12 of Article 7 hereof.
( The Sub-item added to the Article according to Law of Ukraine #1926-III of July 13, 2000 )
4.2.17. Other revenues [returns] unambiguously indicated hereunder.
4.2.18. Before January 1, 2003, money drawn by enterprises of the mining and smelting complex from the special account of the State Treasury of Ukraine for the implementation of investment projects, including restructuring and putting out of operation excess and ineffective capacities, as per Article 3 of the Law of Ukraine "On the Further Development of the Mining and Smelting Complex".
(  Sub-item   4.2.18.  added  to  the  Article  according  to  Law  of
Ukraine #2975-III of January 17, 2002 )
4.2.19. The amounts or the value of the property received by the founder of the arbitration tribunal as the arbitration fee or for the purposes of the reimbursement for other expenses related to the dispute settlement by the arbitration tribunal according to the law.
( Sub-item 4.2.19 added to the Article according to Law of Ukraine #1701-IV of May 11, 2004 )( Sub-item 4.2.20 of Item 4.2 of Article 4 has been deleted on the basis of Law of Ukraine #309-VI of June 3, 2008 )

4.3. Adjusted gross income shall be understood as gross income determined as per Item 4.1 hereinbefore and without taking into account the revenues indicated in Item 4.2 hereinbefore.
Article 5. Gross Costs
5.1. Gross production and turnover costs (hereinafter referred to as gross costs) shall be understood as the sum total of any expenses borne by a taxpayer, in terms of money and tangible or intangible assets, as compensation for the cost of goods (works, services) purchased (made/rendered) by that taxpayer for further use in his/their own business activities.
5.2. Gross costs shall be made up of:
5.2.1. Amounts of expanses paid (accrued) over the accounting period in conjunction with preparation, manufacture, and sales of products (works, services) and job safety including expenses on the acquisition of the electrical energy (including the reactive energy), taking into account restrictions set forth in Items 5.3-5.7 hereunder.
( Sub-item 5.2.1. changed and amended according to Laws of Ukraine #639/97-VR of November 18, 1997; #349-IV of December 24, 2002; #1957-IV of July 01, 2004 )
5.2.2. The funds or the value of goods (work, services) voluntarily transferred (handed over) during the reporting year to the State Budget of Ukraine or local self-administration budgets, not-for-profit organisations listed in item 7.11 of Article 7 hereof, amounts of funds transferred to legal entities, including not-for-profit organisations, being founders of a permanent arbitration tribunal, in the amount, which exceeds two per cent but is not more than five per cent of the taxable profit of the previous reporting year, except for contributions specified in sub-item 5.6.2 of item 5.6 of this article, and contributions envisaged by sub-item 5.2.17 of this item.
( Paragraph 1 of Sub-item 5.2.2. of Item 5.2. of Article 5 changed and amended according to Laws of Ukraine #1957-IV of July 01, 2004, #2505-IV of March 25, 2005 )(  Paragraph  2 of Sub-item 5.2.2 of Item 5.2 of Article  5  has  beendeleted according to Law of Ukraine #2505-IV of March  25,2005 )(   Sub-item  5.2.2  of  Item 5.2 of Article 5 changed   and   amendedaccording  to Law of Ukraine #639/97-VR of November  18,1997;  in the wording of Law of Ukraine #349-IV of December24,  2002; changed and amended according to Law  of  Ukraine  #1701-IV of May 11, 2004 )
5.2.3. Monetary sums transferred by enterprises of all-Ukrainian associations of victims of the Chernobyl disaster to these associations for charity programs, provided there are at least 75% of such victims on the payroll, and provided such sums do not exceed 10% of their taxable income.
5.2.4. Monetary sums transferred to insurance reserves in keeping with procedures set forth in Article 12 hereunder.
5.2.5. Sums of paid (accrued) taxes, duties (compulsory payments) established under the Law of Ukraine On Taxation System, (except for those, which are not directly included into the list of taxes, dues (statutory fees) instituted by the said Law), including the excise duty and rental payments as well as the duty in the form of the special-purpose supplement to the applicable electrical and thermal energy tariff rate, except taxes, duties (compulsory payments) stipulated by Sub-items 5.3.3 and 5.3.4, as well as penalties set forth in Sub-item 5.3.5 of this Article 5.
( The Paragraph changed and amended according to Laws of Ukraine #349-IV of December 24, 2002; #849-IV (849-15) of May 22, 2003 )
With regard to taxpayers whose principal activities consist in agricultural production, the notion of gross costs shall include payments for land which is not used in agricultural production.
5.2.6. Sums of expenses not included in the category of gross costs of previous tax periods due to the loss or damage of documents established by the tax accounting regulations and attested to by such documents in the current tax period.
5.2.7. Sums of expenses not taken into account in previous tax periods due to erroneous accounting and revealed when accruing tax payments in the current fiscal period.
5.2.8. Sums of bad debts inasmuch as these amounts were not referred to gross costs in cases when appropriate measures aimed at collecting such debts proved ineffective. This Sub-item shall apply to banks and other nonbanking financial establishments with an eye to the requirements of Article 12 hereunder.
( Sub-item 5.2.8. of Item 5.2. of Article 5 changed and amended according to Laws of Ukraine #639/97-VR of November 18, 1997; #1957-IV of July 01, 2004 )
5.2.9. Sums of expenses involved in operations envisaged by Item 5.9 of this Article 5 and by Article 7 hereunder.
5.2.10. Sums of expenses involved in improving fixed assets within the limits set by Sub-item 8.7.1 hereunder and the sum by which the book cost of fixed and intangible assets exceeds their clearance value, determined in keeping with procedures set forth in Article 8 hereunder.
5.2.11. Disbursements involved in supplies of free coal to workers of the coal industry, unemployed pensioners with a service record of at least 10 years in the field, down coal pits, or at least 20 years on the ground, invalids from among victims of production accidents or occupational diseases, families of coal industry workers who died in production accidents and recipients of allowances due in case of loss of the breadwinner, [which coal is meant] for consumer purposes and received as per quotas established in keeping with procedures established by the Cabinet of Ministers of Ukraine.
( Sub-item 5.2.11 added to Item 5.2, Article 5 according to Law of Ukraine #1133-XIV of October 7, 1999 )
5.2.12. The funds allocated by the authorised banks into the additional special provisions for the insurance of the bank management pension fund monies under Law of Ukraine "On Introducing Changes in the Law of Ukraine "On Housing Construction Experiment on the Basis of Kyivmiskbud Holding Company" (3044-14);
( The Sub-item added to the Article according to Law of Ukraine #1694-III of April 20, 2000; in the wording of Law of Ukraine according to Law of Ukraine #3045-III of February 7, 2002 )
5.2.13. The funds or the value of the property transferred (handed over) voluntarily for the purposes of the protection of the cultural heritage to scientific, educational and cultural institutions, reserves, museums-reserves in the amount, which exceeds two per cent but is not more than ten per cent of the taxable profit of the previous reporting period.
( The Sub-item added to the Article according to Law of Ukraine #1805-III of June 8, 2000 - shall become effective from January 01, 2001; changed and amended according to Laws of Ukraine #349-IV of December 24, 2002; #1957-IV of July 01, 2004; #2245-IV of December 16, 2004; #2505-IV of March 25, 2005 )( Sub-item 5.2.14 of Item 5.2 of Article 5 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
5.2.15. The expense amounts related to the confirmation of the conformity of products, quality systems, quality management systems, environmental management systems and human resource management systems with the requirements in accordance with the Law of Ukraine "On Confirmation of Conformity" .
( The Sub-item added to the Article according to Law of Ukraine #2406-III of May 17, 2001; changed and amended according to Law of Ukraine #882-VI of January 15, 2009 )
5.2.16. Expenses related to the exploration (additional exploration) and the equipment of oil and gas fields (except for expenses for the construction of any wells used for the development of oil and gas fields, and other expenses related to the procurement (manufacture) of fixed assets to be depreciated under Article 8 hereof).
( The Sub-item added to the Article according to Law of Ukraine #2712-III of September 20, 2001 - comes into force as from January 01, 2002; in the wording of Law of Ukraine #2505-IV of March 25, 2005 )
5.2.17. The funds or the value of the property voluntarily transferred (handed over) to organisations of employers and associations thereof established according to the law of the said issue in the form of admission, membership and special-purpose fees, but not more than 0.2 per cent of the labour remuneration fund of the taxpayer calculated for the reporting year.
( The Sub-item added to the Article according to Law of Ukraine #349-IV of December 24, 2002 )
5.2.18. Amounts of funds or the value of the property voluntarily transferred (provided) for the targeted use for the purposes of the production of national films (including animation films) and audiovisual works to the benefit of residents, but not more than 10 per cent of the taxable profit of the previous taxation period.
( Item 5.2 of Article 5 has been amended by adding Sub-item 5.2.18 according to Law of Ukraine #3317-IV of January 12, 2006; in the wording of Law of Ukraine #398-V of November 30, 2006 )( Sub-item 5.2.19 has been deleted on the basis of Law of Ukraine #398-V of November 30, 2006 )
5.3. The following shall be excepted from gross costs:
5.3.1. Expenses on needs that are not associated with normal business, namely:
- Organization and holding of receptions, presentations, celebrations, entertainment programs, purchase and allocation of gifts (except charity donations and aid to unprofitable organizations as per Item 7.11 hereunder, and expenses involved in advertising as per Sub-item 5.4.4. of this Article 5). Restrictions set forth in Section 2 of this Sub-item shall not apply to taxpayers whose principal activities consist in organizing receptions, presentations, and celebrations as ordered by and at the expense of other persons;
- Purchase of lottery tickets and gambling;
- Financing individual needs, except payments stipulated by Items 5.6 and 5.7 of this Article 5 and in other cases provided hereunder.
5.3.2. Purchase, construction, modification, repairs, and other improvements of fixed assets and expenses involved in the extraction of mineral wealth, and in the acquisition of intangible assets subject to depreciation, as per Articles 8 and 9, and Sub-item 7.9.4 hereunder.
5.3.3. Company income, nonpersonal tax, and those stipulated by Items 7.8; 10.2, and Article 13 hereunder; added value tax included in the cost of goods (works, services) purchased by taxpayers for production or otherwise, personal income tax deducted at the expenses of such tax payments under the Law of Ukraine governing personal income tax.
With regard to payers of company income tax, where the company is VAT-exempt, gross production (turnover) costs shall include VAT payments made as part of the acquisition price when purchasing goods (works, services), the cost of which is referred to gross costs.
If a payer of the income tax is also registered as a payer of the value added tax and simultaneously conducts operations involving sales of goods (works, services) subject to VAT but exempted from taxation or not qualified as an object of such taxation, the amount paid as VAT on goods (works, services) purchased and referred to gross costs, fixed and intangible assets subject to depreciation shall be included in gross costs, or the book cost of the relevant item of the fixed assets shall be increased by the amount not included in the taxpayer's tax relief as per Law of Ukraine On the Value Added Tax.
( Sub-item 5.3.3 has been amended by adding Paragraph 3 according to Law of Ukraine #639/97-VR of November 18, 1997 )
The gross expenses of a payer registered as a party subject to the special tax regime under Article 8-1 of the Law of Ukraine "On Value-added Tax" shall be inclusive of the negative difference calculated according to rules of paragraph two of sub-item 4.2.1 of item 4.2 of Article 4 of this Law.
( Sub-item 5.3.3 has been amended by adding Paragraph 4 according to Law of Ukraine #639-VI of October 31, 2008 )
5.3.4. The cost of trading patents allowed for when reducing tax obligations in keeping with procedures set forth in Item 16.3 hereunder.
5.3.5. Penalties as agreed between the contracting parties or as resolved by relevant government bodies and/or by a court.
( The Sub-item changed according to Law of Ukraine #349-IV of December 24, 2002 )
5.3.6. Maintenance of taxpayers' governing bodies, including holding companies as separate legal entities.
Holding companies shall be understood as legal entities in possession of other legal entities or exercising control over such legal entities as affiliated persons, as per Item 1.26 hereinbefore.
( Sub-item 5.3.7 of Item 5.3 of Article 5 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
5.3.7. Payment of the issuance income to the issuer of corporate rights.
( Item 5.3 of Article 5 has been amended by adding Sub-item 5.3.7 according to Law of Ukraine #398-V of November 30, 2006 )
5.3.8. Payment of dividends.
5.3.9. Payment of fees, rewards or other incentive to individuals or entities associated with taxpayers in the absence of documental evidence that such payments or incentive were carried as compensation for actually rendered services (hours worked). In the presence of such documental evidence, sums actually paid as incentive shall be referred to gross costs, but not in excess of the sums calculated at usual prices.
Taxpayers' expenses involved in the sale of goods (works, services) to persons associated with these taxpayers or in trading them at prices lower than the usual price shall not be referred to gross costs.
If the amount of payments as incentive or a part thereof meant for affiliated [associated] persons is not recognized as gross costs, this sum (or a part thereof) shall be the base for accruing contributions to social programs stipulated by Item 5.7 of this Article 5.
Any expenses not confirmed by relevant accounting records, instruments or other documents that are to be executed and stored under the tax accounting regulations shall not be referred to gross costs.
In the event of loss of or damage to said documents, the taxpayer shall have the right to notify the inland revenue authority in writing and take the required steps to have these documents restored. Such written statement shall be sent before or simultaneously with the tax return for the given fiscal period. If the taxpayer fails to submit a written statement on said terms and have said documents restored prior to the end of the tax period following the fiscal period, his/their expenses shall be considered unattested to by said documents and shall not be referred to gross costs, with a penalty accrued on underpaid tax in the amount of the NBU's discount rate multiplied by 1.2.
If the taxpayer has said documents restored in a subsequent [tax] period, expenses thus confirmed (plus paid penalties) shall be referred to gross costs during the tax period in which said documents were thus restored.
5.4. Specificities of referring dual expenses to taxpayers' gross costs.
The following shall be referred to gross costs:
5.4.1. Taxpayers' expenses on such overalls, footwear, and uniforms as may be required by the personnel in the line of duty, as well as on special foods as per lists adopted by the Cabinet of Ministers of Ukraine.
5.4.2. Other than those subject to amortization, expenses on research and technological support, inventions, innovation, research and development, manufacture and testing of models and designs being part of the taxpayer's business activities, also payment of royalties and purchase of intangible assets (except those subject to amortization). This Sub-item shall apply to the above-mentioned expenses whether or not they serve to increase the taxpayer's revenues.
Expenses involved in the acquisition of literature to provide information support of the taxpayer's business endeavours, including legal editions, subscription for special periodicals, and [expenses on] audits as provided by law, including voluntary audits carried out at the taxpayer's discretion.
The expenses of a taxpayer related to the professional education, training, re-training or qualification development of individuals having labour relations with such a taxpayer, the expenses for the education and/or professional training in domestic higher and vocational education establishments of other people not having labour relations with the taxpayer but bound therewith by a written contract stating their commitment to work for the taxpayer at least three years after the graduation from the higher and/or vocational education establishment and the obtainment of the speciality (qualification); the expenses related to the organisation of the educational internship in line with the core business profile of the taxpayer or in structural units supporting the taxpayer's business activities for the individuals studying in higher and vocational education establishments. The said expenses shall be included into the gross expenses in the amount up to 3 per cent of the labour remuneration fund of the reporting period.
( Paragraph 3 of Sub-item 5.4.2 of Item 5.4 of Article 5 in the wording of Law of Ukraine #2229-IV of December 14, 2004 )
Each taxpayer shall be under the obligation to justify expenses as required in line with the principal activities as per this Sub-item.
In the event of differences between the inland revenue authority and the taxpayer as to such justification of expenses, the inland revenue authority shall be under the obligation to bring the matter before Ukraine's Ministry of Science and Technology and the latter's expert findings shall warrant the inland revenue authority's decision.
Decisions made by inland revenue authorities based on such expert findings of the Ministry of Science and Technology may be appealed by taxpayers in due course.
5.4.3. Any expenses on warranty repair (service) or replacement of goods sold by a taxpayer, the cost of which is not to be refunded by the buyer and is not in excess of the sum corresponding to the cost of warranty replacement as made known by the taxpayer, not to exceed 10% of the aggregate cost of goods sold and still under warranty.
In the event of warranty replacement, the taxpayer shall be under the obligation to keep separate books of defective goods returned by buyers and of buyers to whom warranty replacement or repair (service) were provided, in keeping with procedures established by the central inland revenue authority.
Replacements without returning defective goods or without keeping such books shall not warrant raising the seller's gross costs by the cost of such replacements.
Procedures of warranty repair (service) or replacement and lists of goods subject to warranty service shall be adopted by the Cabinet of Ministers of Ukraine in accordance with the laws on protection of consumer rights.
The seller's "making known" his/their obligations in terms of warranty repair and service shall be interpreted as dissemination of this information by way of advertising, technical documentation or by using other documents.
5.4.4. Taxpayer's expenses on resale and advertising of goods (works, services) being sold (provided) by this taxpayer.
Expenses on arrangements for receptions, presentations, celebrations, purchase and allocation of gifts, including dispensation of free specimens of goods or providing free services (works) for advertising purposes, not to exceed 2% of the taxpayer's taxable revenues over the previous accounting (taxation) year.
( The Paragraph changed according to Law of Ukraine #349-IV of December 24, 2002 )
5.4.5. Any expenses borne by the taxpayer in maintaining and using environmental protection assets (except expenses subject to amortization or indemnification as per Articles 8 and 9 hereunder) in that taxpayer's possession; expenses on independent storage, recycling, burial [entombment] or in paying other organizations for storage, recycling, burial, and disposal of the taxpayer's production waste, for purification of affluent, and other expenses on preservation of ecological systems being negatively affected by that taxpayer's business activity.
In the event of differences between the taxpayer and the [local] inland revenue authority in conjunction with such environmental measures, the inland revenue authority shall bring the matter before Ukraine's Ministry of Protection of the Environment and Nuclear Safety, whose expert findings shall warrant the inland revenue authority's decision.
5.4.6. Any expenses on insurance against loss of crops, taxpayer's transportation of produce, civil liability involved in the operation of means of transportation as part of the taxpayer's fixed assets, ecological or nuclear damage that the taxpayer may cause to other persons, taxpayer's property, credit and other risks of the taxpayer related to his/her/its exercise of business activities within the limits of the usual tariff rate price of the relevant insurance type valid as of the time of concluding such an insurance contract, except life or health insurance or other risks involved in the activities of individuals employed by the taxpayer and which insurance is not compulsory under the law, or any expenses on insurance of extraneous individuals or entities.
( Paragraph 1 of Sub-item 5.4.6 of Item 5.4 of Article 5 changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )
If the insurance policy envisages indemnities payable to the taxpayer as the insured, all insured damage shall be referred to that taxpayer's gross costs in the tax period in which this damage was sustained, and the amount of indemnity shall be included in that taxpayer's gross costs in the tax period in which this indemnity was received.
The insurance expenses (except for the medical, pension and insurance expenses and expenses related to the statutory types of insurance) shall be included into the gross expenses of a taxpayer in an amount, which does not exceed 5 per cent of the gross expenses of the tax reporting period as a cumulative amount from the beginning of the year or, in case of agricultural enterprises, for the tax reporting year.
( The Paragraph added to Sub-item 5.4.6 of Item 5.4 of Article 5 according to Law of Ukraine #2505-IV of March 25, 2005; changed and amended according to Laws of Ukraine #2642-IV of June 3, 2005, #2771-IV of July 7, 2005 )
5.4.7. Any expenses on buying licenses and other special permits issued by government bodies, allowing certain economic activities, including registration fee payable to the government registration authority - in particular, to local self-administration authorities and their executive bodies, except expenses on trading patents as per Law of Ukraine On the Patenting of Certain Types of Business. Expenses involved in the acquisition of licenses and other special permits allowing fishing outside Ukraine and transportation services.
5.4.8. Expenses on official business trips of the taxpayer's employees or executives, within the limits of each such individual's actual expenses - two-way traveling (including luggage transport), hotel/motel accommodation, including meals and consumer services (washing, cleaning, repair and ironing of linen, clothes, underwear, mending/polishing shoes), renting other living space, telephone bills, traveling passport, entrance visas, compulsory insurance, expenses on interpretation and translation, other documented expenses in conjunction with the entrance to and stay at the place of destination, including any duties and taxes levied when making such payments.
Said expenses may be referred to gross costs only in the presence of documents attesting thereto - e.g., tickets or checks, hotel/motel bills or receipts from other persons rendering accommodation services, insurance policies, etc. Payments in cash ion cases covered by Sub-items 5.3.1 and 5.4.4 of this Article 5, as well as payments other than for personal needs when on a business trip.
Alcoholic drinks and cigarettes/tobacco shall not be referred to expenses on food, and the same shall apply to tips - except when such tips are stipulated by the laws of the host country - and to sums paid for entertainment.
Expenses not corroborated by documents and made on food and other personal needs (e.g., per diem) within the limits set by the Cabinet of Ministers of Ukraine per full day while on an official business trip, dates of arrival and departure included, shall also be referred to expenses stipulated by Paragraph 1 of this Sub-item.
Said limits shall be in terms of the hryvnia, namely:
- As a uniform amount designated for official business trips abroad, regardless of the host country or the status of the given populated area;
- As a uniform amount designated for official business trips within Ukraine, regardless of the status of the given populated area.
The Cabinet of Ministers of Ukraine shall specially determine the per diem boundaries for business trips made by members of ship crews (and those of other transportation means) or allocations for food for members of ship crews (and those of other transportation means) in the event such ships (other transportation means):
- are on commercial, industrial, research/prospecting or fishing missions outside the territorial waters of Ukraine;
- are on international runs/flights or carry out navigation or passenger/freight carriage programmes outside Ukraine's air space or customs borders;
- are engaged in rescue operations outside Ukraine's air space or customs borders.
Per diem shall be determined:
- When sending employees on business trips within Ukraine and to countries without or with simplified border control procedures, as per entries made by the sending and the receiving side in the warrant for traveling on official business, the form of which shall be adopted by the central inland revenue authority;
- When sending employees to countries with full-scope border control and customs procedures, as per entries made by border control/customs authorities in the traveler's passport or document in its stead.
In the absence of said entries, the per diem amount shall not be included in the taxpayer's gross costs.
Any traveling expenses may be referred to the taxpayer's gross costs when attested to by appropriate documents from which it is evident that such trips were made in line with the taxpayer's principal activities - e.g., invitations from the receiving side, provided its activities are similar to the taxpayer's principal activities; as per contract; other documents establishing or attesting to the intention to establish civil law relationship; documents corroborating the traveler's official status as business negotiator or delegate to a conference or symposium dealing with a subject concurrent with the taxpayer's principal activities.
If so requested by the inland revenue authority, the taxpayer shall have accounting and corroborative documents translated if written in a foreign language, with all costs charged to the taxpayer.
The amount and structure of traveling expenses with regard to civil servants and other individuals sent on official business trips by enterprises, institutions, and organizations completely or partially sustained by budget funds shall be determined by the Cabinet of Ministers of Ukraine. The per diem amount for these categories of individuals shall not exceed the amount established in Paragraph 2 of this Sub-item with regard to other individuals sent on official business trips. The owner [employer] or his/their authorized representative may impose additional restrictions on the sums allocated for such business trips and on their purposes.
5.4.9. The category of gross costs shall include taxpayers' expenses on the maintenance, operation and supporting the principal activity of social facilities that were on those taxpayers' balance and sustained those taxpayers' expense at the time of enactment of this Law (except capital costs subject to amortization), specifically:
(  The  Paragraph  changed  and  amended  according to Law of  Ukraine#349-IV of December 24, 2002 )
- Children's daycare centers;
- Grade schools and secondary vocational training establishments, as well as institutions providing refresher courses for the given taxpayer's employees;
- Children's music and art schools, provided their tuition is free of charge and they are nonprofit otherwise;
- Health care facilities and medical institutions providing examination, disease preventing and other treatment to [the taxpayer's] employees;
- Gyms and playgrounds available free of charge and meant for rest and recreation of employees; community centers, provided they are available free of charge and are nonprofit otherwise (except resorts, tourist lodges, etc.);
- Premises used by the taxpayers as cafeterias for their staff;
- Housing facilities, including apartment buildings, single room flats, housing projects in the rural areas, public utilities on the balance of legal entities in regard to which the taxpayer has documents attesting to their transfer to the balance of local Councils [of People's Deputies];
- Children's rest camps, provided they are not leased out or used in rendering paid services or for other commercial purposes.
5.4.10. The following maintenance, operation and supporting the principal activity expenses shall be referred to gross costs (with the exception of items subject to amortization):
( The Paragraph changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
- stations for the medical examination of employees, whose availability is required by laws or collective agreements concluded according to the law;
( The Paragraph added to the Article according to Law of Ukraine #349-IV of December 24, 2002 )
- Housing facilities owned by legal entities specializing in paid tourist services to other citizens or in letting premises to other citizens or organizations in keeping with procedures determined hereunder;
- Cars, private planes, launches, motorboats, yachts meant for R&R and owned by taxpayers whose basic business is rendering paid transportation or tourist services to other citizens or organisations, provided these vehicles/air/sea/rivercraft belong to sports organisations and used as sports equipment.
Taxpayers' expenses (except wages and salaries) operation of housing facilities (except those indicated in Sub-item 5.4.9 hereinabove), on private planes, launches, motorboats, and yachts meant for R&R and being used for purposes other than those indicated in this Sub-item or by taxpayers other than those indicated in this Sub-item as well as 50 per cent expenses for the procurement of the fuel and lubricants for passenger cars, and the operational lease of passenger cars. In this case, the taxpayer is relieved from the burden of proving that such expenses are attributable to its business activities; maintenance and parking of cars shall not be referred to gross costs.
( The Paragraph of Sub-item 5.4.10 in the wording of Law of Ukraine #639/97-VR of November 18, 1997; changed and amended according to Law of Ukraine #977-XIV of July 15, 1999; #349-IV of December 24, 2002 )
Restrictions imposed by this Sub-item shall not apply to taxpayers specializing in the maintenance and operation of housing facilities, pleasure aircraft, speedboats, and yachts, acting on instructions from their owners and at their expense.
5.5. Specificities of determination of the structure of taxpayers' costs when paying borrowing costs.
5.5.1. The category of taxpayers' gross costs shall include any payments or accrual of borrowing costs (including all types of loans, deposits) throughout the accounting period, provided such payments and accrual were warranted by the taxpayer's business activities.
( Sub-item 5.5.1 changed and amended according to Law of Ukraine #977-XIV of July 15, 1999 )
5.5.2. For a taxpayer, of which 50 and more per cent of the authorised fund (shares, other corporate rights) are owned or managed by a non-resident (non-residents), it shall be allowed to include the expenses related to the payment or accrual of the interest on loans and other debt liabilities to the benefit of such non-residents and parties related to them into the gross expenses in the amount, which does not exceed the amount of revenues of such a taxpayer obtained during the reporting period in the form of the interest from the placement of own assets increased by an amount, which equals 50 per cent of the taxable profit of the reporting period less the amount of such received interest.
( Sub-item 5.5.2. of Item 5.5. of Article 5 changed and amended according to Laws of Ukraine #639/97-VR of November 18, 1997; #977-XIV of July 15, 1999; in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
5.5.3. Legal entities exempt from paying this tax under provisions of items 7.11 to 7.13 and 7.19 of Article 7 of this Law or those, which pay this tax at rates other than those specified in item 7.2 of Article 7 or Article 10 of this Law shall be deemed equivalent to non-residents as defined in sub-item 5.5.2 for the purposes of taxation.
( Sub-item 5.5.3. of Item 5.5. of Article 5 changed and amended according to Laws of Ukraine #977-XIV of July 15, 1999; #349-IV of December 24, 2002; in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
5.5.4. For the purposes of Sub-item 5.5.2, taxable income less the interest shall be defined as an adjusted gross revenue in the given accounting period less the income during the same period received as interest, reduced by the amount of gross costs of this accounting period attributed to interest payments.
5.5.5. Interest payments answering the requirements of Sub-item 5.5.1 hereinabove but not referred to production (turnover) costs, as per Sub-item 5.5.2, in the given accounting period shall be carried over to the indices of subsequent accounting periods, retaining restrictions set forth in Sub-item 5.5.2 hereinbefore.
5.6. Specificities of determination of payroll expenditure.
5.6.1. Considering the provisions of Sub-item 5.3.1. of this Article 5, the category of taxpayers' gross costs shall include expenses as wages and salaries paid to individuals bound by employment contracts with these taxpayers (hereinafter referred to as employees), including basic and additional wages, other remuneration and incentive, reimbursement of the cost of goods (works, services), royalties, and payments for works done (services rendered) as per civil law contracts, as well as any such expenses in the pecuniary form or in kind as may be agreed between the parties (except for sums of the material aid relieved from taxation according to provisions of the law governing the taxation of revenues of the individuals (the legislation setting out the rules of the taxation of individuals with the income tax).
( Sub-item 5.6.1 changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
5.6.2. In addition to payments under sub-item 5.6.1 of this article, the gross expenses of a taxpayer shall comprise the statutory payments, as well as the compensation for the cost of services provided to employees in cases covered by the legislation, the expenses of the taxpayer on the statutory employee life or health insurance in cases envisaged by the legislation, as well as contributions defined in paragraph two of this sub-item.
If, under a long-term life insurance contract or any type of the non-state pension contract, the payer of this tax pays voluntary contributions at own expense for the insurance (non-state pension) of an individual employed by such a taxpayer, then such a taxpayer shall have the right to include the amount of such contributions, which as a whole does not exceed 15 per cent of the salary accrued to such an employee during the tax year of the reporting tax periods, into the gross expenses of each reporting tax period (as a cumulative figure).
At that, the amount of such payments may not exceed the values specified in sub-item 6.5.1 of item 6.5 of Article 6 of the Law of Ukraine "On Individual Income Tax" during such a reporting period.
( The Paragraph changed and amended according to Law of Ukraine #349-IV of December 24, 2002; in the wording of Law of Ukraine #1957-IV of July 01, 2004 )( Sub-item 5.6.3. of Item 5.6. of Article 5 has been deleted on the basis of Law of Ukraine #639/97-VR of November 18, 1997 )
5.7. Specificities of including social payments in [gross] costs.
5.7.1. The gross expenses of a taxpayer shall include the amounts of the obligatory state pension insurance premium and the state statutory social insurance premiums charged on payments listed in sub-item 5.6.1 of this article in amounts and according to the procedure specified by law.
( The Sub-item in the wording of Law of Ukraine #429-IV of January 16, 2003 )
5.7.2. If an employee entrusts the employer to make contributions for the long-term life insurance or any type of the non-state pension at the expense of labour remuneration of such an employee included into the gross expenses of the taxpayer under sub-item 5.6.1 of item 5.6 of this article, or to the pension deposit under item 22.25 of this Law, then such an employer shall not include the amount of such contributions into its gross expenses and the base for the accrual of the amount of contributions for the pension and other types of the state (social) universal insurance.
( Sub-item 5.7.2. of Item 5.7. of Article 5 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )( Item 5.8 of Article 5 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
5.9. A taxpayer shall keep tax accounts for the increase (decrease) in the book value of goods (except for those subject to depreciation, and securities), raw materials, materials, components, semi-finished products, low-value items (hereinafter referred to as 'stock') in warehouses, the non-finished production and remnants of ready products, if the expenses for the acquisition and enhancement (transformation or storage) thereof are included into the gross expenses hereunder (except for those obtained free of charge).
The value of the stock paid for but not received (not registered as received) by the taxpayer being a buyer shall not be included into the stock increase value.
The value of the stock paid for but not shipped (not unregistered) by the taxpayer being a seller shall not be included into the stock decrease value.
If the book value of such stock as of the end of the reporting period exceeds their book value as of the beginning of the same reporting period, the difference in question shall be included into the gross revenues of the taxpayer during such a reporting period.
If the book value of such stock as of the end of the reporting period is lower than their book value as of the beginning of the same reporting period, the difference in question shall be included into the gross expenses of the taxpayer during such a reporting period.
In case of agricultural product manufacturers subject to Article 14 hereof, the provisions of this item shall apply to a tax period equivalent to twelve calendar months starting from 01 July of the current reporting (budget) year.
( Paragraph 6 of Item 5.9. of Article 5 changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )
If the taxpayer decides to devalue (appreciate) the stock according to the accounting rules, then such a devaluation (appreciation) for the tax accounting purposes shall not alter the book value of the stock and the gross revenues or gross expenses of such a taxpayer related to the acquisition of such stock.
For the purposes of the tax accounting, the taxpayer, at its discretion, shall evaluate the retirement of inventories according to one of the following accounting techniques as defined in the appropriate standard:
( Paragraph 8 of Item 5.9 of Article 5 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
- the identified value of the appropriate inventory unit;
( The Paragraph added to Item 5.9 of Article 5 according to Law of Ukraine #1957-IV of July 01, 2004 )
- the weighted average value of uniform inventories;
( The Paragraph added to Item 5.9 of Article 5 according to Law of Ukraine #1957-IV of July 01, 2004 )
- the First-In-First-Out value of inventories;
( The Paragraph added to Item 5.9 of Article 5 according to Law of Ukraine #1957-IV of July 01, 2004 )
- the target expenses;
( The Paragraph added to Item 5.9 of Article 5 according to Law of Ukraine #1957-IV of July 01, 2004 )
- the inventory sales price (solely for inventories sold on a retail basis).
( The Paragraph added to Item 5.9 of Article 5 according to Law of Ukraine #1957-IV of July 01, 2004 )
Only one method of those listed above shall be applied for all units of the tax accounting of inventories having the same designated purpose and the same utilisation conditions.
( The Paragraph added to Item 5.9 of Article 5 according to Law of Ukraine #1957-IV of July 01, 2004 )
If a taxpayer has chosen a method of the evaluation of the retirement of inventories, it shall be disallowed to change such a method during the tax year for the tax accounting purposes.
( The Paragraph added to Item 5.9 of Article 5 according to Law of Ukraine #1957-IV of July 01, 2004 )
The tax accounting for the increase (decrease) in the book value of reserves used for the electrical energy generation purposes in accordance with the list specified by the Cabinet of Ministers of Ukraine shall take place as a result of the reporting (tax) year, while the rest of reserves shall be adjusted in accordance with the generally applicable procedure.
( The Paragraph added to Item 5.9 of Article 5 according to Law of Ukraine #1957-IV of July 01, 2004; in the wording of Law of Ukraine #2505-IV of March 25, 2005 )( Item 5.9 of Article 5 changed and amended according to Law of Ukraine #639/97-VR of November 18, 1997, in the wording of Law of Ukraine #349-IV of December 24, 2002 )
5.10. If upon the sale of goods (work, services) the compensation for their value undergoes any changes, including the recalculation in cases of the return of the sold goods or the title to such goods (results of work and services) to the seller, the taxpayer being the seller and the taxpayer being the buyer shall undertake the appropriate recalculation of gross revenues or gross expenses (the book value of the fixed assets) during the reporting period, during which such a change in the compensation value has occurred.
This item shall not regulate the rules of determining and adjusting the gross expenses and gross revenues as a result of the settlement of contingent or bad debt, or the recognition of the buyer's debt to be bad, which are regulated by Article 12 hereof.
( Item 5.10. added to the Article according to Law of Ukraine #349-IV of December 24, 2002 )
5.11. Other than those stipulated by this Law, no restrictions shall be allowed in referring taxpayers' expenses to their gross costs.
Article 6. Procedure of Including the Negative Value of the Taxation Object into Results of Subsequent Tax Periods
6.1. If the object of the taxation of a resident taxpayer has a negative value of the taxation object as a result of the tax year (taking into account the depreciation charges), the amount of such a negative value must be included into gross expenses of the first calendar quarter of the next tax year. The calculation of the taxation object as a result of six months, three quarters and one year shall be undertaken taking into account the previous-year negative value of the taxation object in the gross expenses of such tax periods on a cumulative basis, until such a negative value is fully covered.
6.2. Tax authority may not reject a tax return containing the negative value of the taxation object because of the availability of such a negative value.
6.3. If the negative value of the taxation object has been declared by the taxpayer during four consecutive tax periods, the tax authority shall have the right to undertake a non-scheduled audit of the correctness of the calculation of the taxation object. In other cases, the availability of a negative value of the taxation object shall not constitute sufficient basis for such a non-scheduled audit.
( Article 6 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
Article 7. Taxation of Special Transactions
7.1. Taxation of commodity exchanges (barters [swap deals])
7.1.1. Profits and losses resulting from commodity exchanges (swap deals) shall be determined proceeding from the contractual price of each such transaction, but not less than the usual price.
(  Sub-item  7.1.1  changed  according  to  Law  of  Ukraine   #349-IV  of December 24, 2002 )
( Sub-item 7.1.2 deleted according to Law of Ukraine #349-IV of December 24, 2002 )
7.1.2. Each taxpayer shall quarterly submit an estimate of fiscal effects of barter transactions, along with a tax return, to the local inland revenue authority.
7.2. Taxation of insurance activities
7.2.1. The income from insurance activities of resident legal entities shall not be taxed at the rate specified in item 10.1 of Article 10 of this Law; it shall be taxed:
( Paragraph 1 of Sub-item 7.2.1. of Item 7.2. of Article 7 in the wording of Law Ukraine #1957-IV of July 01, 2004 )
- at the rate of 0 per cent - in case of the obtainment of the income as a result of the implementation of long-term insurance and pension insurance contracts for the non-state pension system purposes in case of the compliance with requirements for such contracts set forth in item 1.37 and item 1.42 of Article 1 of this Law";
( The Paragraph added to Sub-item 7.2.1. of Item 7.2. of Article 7 according to Law of Ukraine #1957-IV of July 01, 2004 )
- at the rate of 3 per cent - in case of the obtainment of the income as a result of the implementation of other types of insurance contracts.
( The Paragraph added to Sub-item 7.2.1. of Item 7.2. of Article 7 according to Law of Ukraine #1957-IV of July 01, 2004 )
For the purposes of the taxation of insurance activities, the 'taxable revenues' shall be understood as the amount of insurance payments, insurance contributions, insurance premiums (hereinafter referred to as 'gross contribution amount') obtained (accrued) by resident insurers during the reporting period under risk insurance and re-insurance contracts on the territory of Ukraine or abroad less the insurance payments (insurance contributions, insurance premiums) paid by the insurer under re-insurance contracts with a resident.
( Pargraph 4 of Sub-item 7.2.1 of Item 7.2 of  Article 7  changed  and
amended  according to Law of Ukraine #1957-IV of  July  1,
2004; #2505-IV of March 25, 2005 )
7.2.2. The insurer keep separate tax accounts in respect of transactions, which are taxed at different rates under sub-item 7.2.1 of this item according to the rules instituted in line with the procedure prescribed by law for ascertaining the form of the relevant tax return (calculation).
( Sub-item 7.2.2. of Item 7.2. of Article 7 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
7.2.3. If an insurer receives revenues from sources other than those listed in sub-item 7.2.1 of this item, such revenues shall be taxed at a rate specified by item 10.1 of Article 10 hereof. At that, the gross expenses related to the obtainment of such revenues shall not include the expenses incurred by the insurer in the course of insurance (re-insurance) transactions.
( Paragraph 1 of Sub-item 7.2.3. of Item 7.2 of Article 7 changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )
The investment income obtained by an insurer from investing the life insurance provisions shall be taxed at the insurer's to the extent of its being owned by the insurer. The portion of the investment income obtained from the investment of life insurance provisions owned by the insurer shall be determined as the difference between the income received (accrued) from the investment of life insurance provisions and the amount of business expenses of the insurer, which may not exceed 15 per cent of the obtained investment income.
If the insurer makes allocations into mathematical life insurance provisions, the investment income amount owned by the insurer shall be reduced by the amount of allocations to such mathematical provisions, which may not exceed 85 per cent of the investment income amount owned by the insurer.
The revenues obtained by the assignor insurer during the reporting period from re-insurers under re-insurance contracts shall be reduced by the amount of insurance payments made by the assignor insurer within the portion (within portions) of the re-insurer's liability under re-insurance contracts concluded with the assignor insurer, and taxed on a generally applicable basis at a rate specified in item 10.1 of Article 10 hereof.
7.2.4. In case of the violation of requirements of a long-term life insurance contract specified in item 1.37 hereof or a non-state pension contract concluded in accordance with the Law of Ukraine "On Non-state Pensions", including their early breakage, the income obtained by the insurer under such a contract shall be taxed at a rate of 3 per cent during the tax period of such violation with the accrual of the fine on the amount of the tax debt calculated from the beginning of the tax period following the tax period of the obtainment of such income by the insurer till the date of their inclusion into the gross revenues of such an insurer under this sub-item.
( Paragraph 1 of Sub-item 7.2.4. of 7.2 of Article 7 in the wording of Laws of Ukraine #889-IV of May 22, 2003; #1957-IV of July 01, 2004 )
If a long-term life insurance or non-state pension contract is broken for any reason before the expiry of its minimum validity period or before the onset of the relevant insured event as prescribed by this Law or other legislation, as a result of which the partial insurance amount disbursement, the disbursement of the buy-out amount or the complete termination of insurer's liabilities under such a contract to such a taxpayer takes place, then the taxpayer, who increased its gross expenses according to the procedure of sub-item 5.6.2 of item 5.6 of this Law must include the amount of such previously paid premiums increased by the amount of the fine charged on the tax debt amount calculated since the beginning of the tax period, which follows the period of the first increase in gross expenses by the amount of such premiums under such a contract, into its gross income of the relevant reporting period before the date of the submission of the tax return resulting from the tax period of such an early breakage or the violation of such other requirements. In this case, the buy-out amount or a portion thereof returned to the taxpayer by the insurer shall not be included into the gross income of such a taxpayer.
( Paragraph 2 of Sub-item 7.2.4. of 7.2 of Article 7 in the wording of Law of Ukraine #1967-IV of July 01, 2004 )
The penalties for understating the taxation object shall be applied neither to the insurer, nor to the taxpayer in cases covered by this sub-item.
( Item 7.2. changed and amended according to Law of Ukraine #639/97-VR of November 18, 1997; in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.3. Taxation of foreign exchange operations
7.3.1. Revenues received (accrued) by taxpayers in terms of foreign currency and resulting from the sale of goods (works, services) during the accounting period shall be translated into the hryvnia at the official exchange rate of the National Bank of Ukraine effective on the date of receipt (accrual) of said revenues and shall not be recomputed, due to exchange rate fluctuations, throughout this accounting period.
The book cost of foreign currency proceeds from such sales shall be assessed at the exchange rate indicated in Paragraph 1 of this Sub-item.

7.3.2. Losses sustained (accrued ) by a taxpayer in foreign currency terms during the accounting period, as a result of purchase of goods (works, services), the cost of which is referred to gross costs, shall be expressed in an amount equal to the book cost of this [amount in] foreign currency, as determined in accordance with Sub-items 7.3.1; 7.3.4, and 7.3.6. of this Article 7, and nor shall they be recomputed, due to exchange rate fluctuations, throughout this accounting period.
7.3.3 The book value of the debt, whose principal (less interest, commissions and fees) is denominated in a foreign currency, shall be reflected in tax accounts of the taxpayer by means of the conversion into hryvnia at the official exchange rate of the National Bank of Ukraine, which was valid as of the date of its registration (emergence).
In case of the sale (repayment) of the debt (a part thereof) denominated in a foreign currency during the reporting period, its book value shall be determined by converting the amount of such debt (a part thereof) in UAH at the official exchange rate of the National Bank of Ukraine, which was valid as of the date of such sale (repayment).
The foreign-currency debt not repaid during the reporting period shall be deemed to be notionally sold (repaid) on the last day of the reporting period at the official exchange rate of the National Bank of Ukraine valid as of such date. At that, the book value of such debt in the next reporting period shall be determined on the basis of such conversion.
In case of the sale (repayment) of the debt (a part thereof) according to paragraph two of this sub-item, or the notional sale (repayment) of the debt according to paragraph three of this sub-item, the taxpayer must acknowledge the profit or loss from such a transaction calculated as difference between the book value of such a debt (a part thereof) as of the beginning of the reporting period or as of the date of its registration (emergence), whichever event occurred later, and the book value of such a debt (a part thereof) as of the date of the sale (repayment) thereof. At that, the profit obtained as a result of such conversion shall increase the gross revenues of the creditor taxpayer and the gross expenses of the debtor taxpayer; the loss obtained as a result of such conversion shall increase the gross expenses of the creditor taxpayer and the gross revenues of the debtor taxpayer in the tax period, during which such a sale (repayment) occurred.
The same procedure shall apply to the conversion of the book value of the foreign currency obtained as an advance payment or proceeds, or as a result of any other transactions (including direct or portfolio investments), which are accounted for on bank accounts of the taxpayer or in its cash desk as of the expiry date of the reporting period.
For the purposes of this sub-item, the word 'debt' shall be understood as:
- the principal (the non-repaid portion of the principal) of a financial loan or deposit;
- the interest accrued onto such a principal of a financial loan or deposit, whose payment deadline has passed as of the reporting period expiry date;
- the value (the non-repaid portion of the value) of a financial leasing object;
- the payments for such a financial leasing object, whose deadline has passed as of the reporting period expiry date;
- the book value of securities certifying the debt relations, as well as the commodity or stock derivatives, unless otherwise provided hereby.
( Sub-item 7.3.3 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.3.4. When purchasing amounts in foreign currencies in return for the hryvnia, the taxpayer's gross costs or revenues shall not change. In such cases the amount paid in the hryvnia (less the commission fees or the cost of other services rendered by persons doing the conversion on the taxpayer's instructions) shall be considered the book value of such [amount in] foreign currency.
When purchasing an amount in a foreign currency in return for an amount in another foreign currency, the book value of the amount in a foreign currency thus acquired shall correspond to the book value of the amount in a foreign currency thus sold.
7.3.5. When selling an amount in a foreign currency in return for an amount in the hryvnia, the taxpayer's gross revenues shall increase by the amount in the hryvnia received from the buyer, and his/their gross costs shall increase by the book value of this amount in a foreign currency.
7.3.6. The taxpayer shall on its own choose the method of the valuation of the book value of the foreign currency at the weighted average or identified value. The alteration of the foreign currency book value valuation method during the tax year shall be disallowed for the purposes of the tax accounting.
( Sub-item 7.3.6 of Item 7.3. of Article 7 in the wording of Laws of Ukraine #349-IV of December 24, 2002; #1957-IV of July 01, 2004 )
7.3.7. Gross costs of taxpayers operating on the currency market shall include any expenses on conversion provided by other persons on these taxpayer's instructions.
7.3.8. Banks shall keep special records of foreign exchange transactions.
Books and records of foreign exchange sale or purchase operations performed on bank clients' instructions and at their expense shall be kept separately from those of such transactions made by such banks at their own discretion and using other (their own) finance sources.
In the case of foreign exchange sale or purchase transactions on bank clients behalf and at their expense, the bank's gross revenues shall include commission (brokerage) and other fees received (accrued) by this bank in conjunction with such transactions during the accounting period.
In the case of foreign exchange sale or purchase transactions made at the banks discretion, its gross revenues or costs shall include the net fiscal effect of conversion operations during the accounting period.
The net fiscal result of such conversion operations as per results of the accounting period shall be computed as an amount of fiscal effects of conversion operations as per results per business day. The fiscal effect of conversion transactions per business day shall be the difference between gross revenues received by the bank from foreign exchange sales during this business day and gross costs resulting from foreign exchange purchases during the same day.
The fiscal effect of conversion operations shall not include commission (brokerage) or other fees paid or received (accrued) by the bank in conjunction with such conversion transactions as they are to be referred to gross revenues or costs of the bank on the general terms.
( The Paragraph deleted according to Law of Ukraine #349-IV of December 24, 2002 )
Procedures set forth in Sub-item 7.3.6 of this Article 7 shall apply to any such foreign currencies as may be part of the bank's assets on the last day of the accounting period.
7.4. Taxation of operations with affiliated persons
For taxation purposes:
7.4.1. Taxpayers' revenues from goods (works, services) sold to affiliated persons shall be determined proceeding from contractual prices, but not less than their usual prices effective on the date of sale.
7.4.2. Expenses borne by taxpayers when purchasing goods (works, services) from affiliated persons shall be determined proceeding from contractual prices, provided they do not exceed their usual prices effective on the date of purchase.
7.4.3. The requirements of Sub-items 7.4.1 and 7.4.2 hereinabove shall also apply to operations with entities that are exempted from tax payments set forth by Article 10 hereunder, in that they pay income tax at rates other than such taxpayers.
( Sub-item  7.4.3  of  Item  7.4  of  Article  7  changed  and amended
according to Law of Ukraine #1957-IV of July 01, 2004 )
7.4.4. Expenses borne by taxpayers when paying interest on deposits, rental charges, and civil law contracts with affiliated persons shall be determined proceeding from contractual prices (deposit interest rate), provided they are not in excess of the usual prices (usual deposit interest rate).
7.5. Taxpayers' gross revenues shall include proceeds from sales (swap, other types of alienation) of fixed or intangible assets subject to amortization as per Article 8 hereunder.
7.6. Taxation of securities and derivative operations
( The Paragraph changed according to Law of Ukraine #349-IV of December 24, 2002 )
7.6.1 Taxpayers shall keep separate tax accounts for financial results of transactions with securities (including the participatory mortgage certificates, fixed-yield mortgage certificates, and real-estate transaction fund certificates) and derivatives broken down by types of securities, as well as stock and commodity derivatives. At that, the transactions with shares shall be accounted for together with corporate rights other than securities.
( Paragraph 1 of Sub-item 7.6.1. of Item 7.6. of Article 7 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
If the expenses for the purchase of each type of securities and derivatives incurred (accrued) over the reporting period by the taxpayer exceed the revenues obtained (accrued) from the sale (alienation) of securities or derivatives of the same type during the same reporting period, the negative financial result shall be moved to reduce the financial result from transactions with securities or derivatives of the same type in the future reporting periods according to the procedure specified by Article 6 hereof.
If the revenues from the sale of each type of securities and derivatives obtained (accrued) over the reporting period by the taxpayer exceed the expenses incurred (accrued) by the taxpayer from the purchase of securities or derivatives of the same type during the same reporting period (taking into account the negative financial result of transactions with securities or derivatives of the same type in the previous periods), the profit shall be included into the gross revenues of such a taxpayer as a result of such a tax period.
All other expenses and revenues of such a taxpayer, except for expenses and revenues related to transactions with securities (corporate rights) and derivatives covered by this sub-item, shall be included into the calculation of the taxation object of such a taxpayer on a general basis as provided for hereby.
Provisions of this item shall not apply to transactions involving the issue of corporate rights or other securities undertaken by the taxpayer, as well as the buyout or redemption thereof by such a taxpayer.
( Sub-item 7.6.1 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.6.2. Provisions of this item shall apply to taxpayers being traders in securities and derivatives, as well as any other taxpayers undertaking the trade transactions with securities or derivatives.
The same applies to the accounting for transactions of the purchase or sale of corporate rights other than shares undertaken by such taxpayers.
( Sub-item 7.6.2 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.6.3. The term "expenses" shall be interpreted as an amount or cost of property paid (accrued) by a taxpayer to the seller of securities and derivatives as compensation for their cost.
The category of expenses shall also include any such buyer's liabilities as may arise from such purchase.
7.6.4. The term "revenues" shall be interpreted as an amount or cost of property received (accrued) by a taxpayer as a result of sale, barter or other alienation of securities and derivatives, multiplied by the cost of any tangible or intangible assets being transferred to this taxpayer in conjunction with such purchase, swap or alienation.
(  Sub-item   7.6.4.  changed  and  amended  according   to   Law   of
Ukraine #349-IV of December 24, 2002 )
The category of revenues shall also include any such liabilities of a taxpayer as may be redeemed as a result of such purchase, barter or alienation.
7.6.5. This Sub-item shall also apply when defining book losses or balance sheet profits of taxpayers resulting from operations with corporate rights in terms other than securities.
( Sub-item 7.6.6. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
7.6.6. This Sub-item shall not apply to operations involving term purchase of tangible assets.
7.7. Taxation of joint operations on Ukraine's territory without forming legal entities
7.7.1. Joint operations without forming legal entities shall be carried out as per joint operations contracts stipulating joining of funds or conglomeration of property of the parties to reach a common business target.
7.7.2. Taxpayers and other persons authorized under such contracts shall keep record of such joint operations separately from the fiscal effects of these taxpayers.
7.7.3. The disbursement (accrual) of the part of the profit obtained by parties to joint activities shall be taxed at the rate specified in item 10.1 of Article 10 of this Law by the person authorised to keep accounts of results of the joint activities before or during such a disbursement.
( Sub-item 7.7.3. of Item 7.7. of Article 7 changed and amended according to Law of Ukraine #349-IV of December 24, 2002; in the wording of Law of Ukraine #1957-IV of July 01, 2004; changed and amended according to Law of Ukraine #2505-IV of March 25, 2005 )
7.7.4. If the profit from joint activities is not allocated during the reporting period, it shall be deemed allocated among the parties to joint activities under conditions of the joint activities contract as of the end of such a reporting period for the taxation purposes and must be taxed under sub-item 7.7.3 of this article.
( Sub-item 7.7.4. of Item 7.7. of Article 7 in the wording of  Law  of
Ukraine #1957-IV of July 01, 2004 )
7.7.5. If, at any time during an accounting period, expenses borne by a taxpayer in conjunction with joint operations exceed the revenues from these operations, the book losses shall be carried on account of reduced revenues from such operations in subsequent accounting periods, within time-limits set forth by Article 6 hereinbefore.
7.7.6. For taxation purposes, business relationships among the participants in joint operations shall be set equal to such relationship as may be stipulated by separate civil law contracts.
7.7.7. Procedures of tax accounting and reports on joint operations shall be adopted by the central inland revenue authority.
7.8. Taxation of dividends
7.8.1. When resolving to pay dividends, the issuer of corporate rights on which these dividends were accrued shall make these payments to the holder of these corporate rights in proportion to that holder's interest in the authorized fund of the issuer's enterprise, regardless of whether this enterprise showed any profit during the accounting period provided the issuer has other finance sources allowing the payment of such dividends as well as on that, whether the profit calculated according to the tax accounting rules is available or not.
(   Sub-item  7.8.1.  changed and  amended   according   to   Law   of
Ukraine #349-IV of December 24, 2002 )
7.8.2. Except as provided by sub-item 7.8.5 of this item, the issuer of corporate rights, who makes a decision to pay dividends to its shareholders (owners), shall accrue an advance profit tax contribution and pay the same to the budget at a rate specified by item 10.1 of Article 10 hereof accrued on the amount of the dividends intended for the payment without reducing the amount of such a payment by the amount of such a tax. The said advance payment shall be paid to the budget before or simultaneously with the dividend payment.
In case of the dividend payment in a form other than pecuniary (except as provided by sub-item 7.8.5 of this item), the value of such a payment calculated at usual prices shall constitute the basis for the accrual of the advance contribution according to paragraph one of this sub-item.
The duty to accrue and pay the advance contribution of this tax at a rate specified in item 10.1 of Article 10 hereof shall be laid upon any resident issuer of corporate rights, regardless of such issuer's or dividend recipient's being a payer of the profit tax or enjoying the profit tax privileges extended by this Law or other legislative acts, or in the form of the application of a taxation rate other than that specified by item 10.1 of Article 10 hereof (except for the payers of this tax subject to item 7.2 of Article 7 of sub-item 10.2.3 of item 10.2 of Article 10 hereof).

This rule shall also apply to state-owned non-corporatised, government-owned or community-owned enterprises, which credit the dividend amounts in the volume specified by the state or local executive agency, which manages such enterprises, to the state or local budget respectively.
If, according to the legislation, this tax is a component of the universal tax (special trade patent), then the entity being a payer of such universal tax (special trade patent) must accrue the contribution according to rules established by this sub-item for the payment of the profit tax advance contribution, and pay it to the budget in case of the dividend payment without the right to apply provisions of sub-item 7.8.3 of this item.
At that, if any payment by any entity is called 'dividend', then such a payment shall be taxed in case of such payment according to norms specified in paragraphs one, two and three of this sub-item, regardless of the entity's being a payer of the profit tax.
( Sub-item 7.8.2 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.8.3. A taxpayer being a corporate rights issuer, state-owned non-corporatised, government-owned or community-owned enterprise shall reduce the amount of the accrued profit tax of the reporting period by the amount of the advance contribution paid earlier during such a reporting period in connection with the dividend accrual under sub-item 7.8.2 of this item. It shall be disallowed to net this off with the tax envisaged by item 7.2 of Article 7 or item 10.2 of Article 10 hereof.
( Sub-item 7.8.3. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.8.4. If the tax liability of a taxpayer as a result of the reporting period is negative, the advance payment paid earlier during such a reporting period in connection with the dividend accrual shall be added to increase such a negative value.
If the amount of such an advance payment exceeds the sum of tax liabilities of the enterprise being a corporate rights issuer under the profit tax in such a reporting period, the difference shall be moved to reduce the tax liabilities of the next reporting period or, in case of the negative value of the tax liability of such next period, to reduce the tax liabilities of the future tax periods.
( Sub-item 7.8.4. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.8.5. The advance payment under sub-item 7.8.2 of this item shall not be charged in case of the payment of dividends in the form of shares (interests, units) issued by the enterprise that accrues the dividends, provided that such a payment does not alter the proportions (shares) of the participation of all shareholders (owners) in the authorised fund of the issuing enterprise, regardless of whether the said shares (interests, units) have been properly registered (reflected in changes to constituting documents) or not, and in case of the payment of dividends by the joint investment institutes and in case of the payment of dividends by the taxpayer, whose prevailing share of income (over 90 per cent) has been received in the form of dividends paid by resident legal entities controlled thereby under item 1.26 of this Law.
( Sub-item 7.8.5, Item 7.8 changed and amended according  to  Laws  of
Ukraine #977-XIV of July 15, 1999; #2831-III of 
November 29, 2001; in the wording of Law of Ukraine #349-IV
of December 24, 2002; changed and amended according to Law  of Ukraine #398-V of November 30, 2006 )
7.8.6. Resident legal entities, which receive dividends, shall not include the amount thereof into the gross revenues (except for permanent representative offices of non-residents).
If the dividends are received by a resident taxpayer from a non-resident being a source of the payment, the taxpayer shall include the received dividend amount into the gross revenues of the tax period of the receipt of such dividends.
The dividends received by individuals shall be taxed according to the rules prescribed by the law on the taxation of the income of individuals.
( Sub-item 7.8.6. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.8.7. The dividend payment to individuals (including non-residents) under shares (other corporate rights) with the preference status or another status envisaging the payment of a fixed dividend or an amount exceeding the amount of payments calculated on any other share (corporate right) issued by such a taxpayer shall be considered equivalent to the salary disbursement for the taxation purposes with the appropriate taxation and inclusion of the payment amount into the gross expenses of the taxpayer.
At that, the advance contribution under sub-item 7.8.2 of this item shall not be levied and such a payment shall not be taxed as dividend according to provisions of the law on the taxation of the income of individuals.
( Sub-item 7.8.7. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.8.8. The advance corporate profit tax contribution paid in connection with the accrual (payment) of dividends shall be a part of the corporate profit tax and may not be treated as a tax on the dividend repatriation (the payment thereof to the benefit of non-residents) according to provisions of Article 13 hereof or international treaties of Ukraine.
( Sub-item 7.8.8. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
7.8.9. If, during the allocation of funds or property of the taxpayer being liquidated by the liquidation commission, the owner of corporate rights obtains funds or property, whose sum (or the usual value, in case of the property) is different from the amount of expenses incurred by such a taxpayer for the acquisition of such corporate rights, the amount of such excess shall be included into the gross revenues of such a taxpayer, and the negative amount shall be included into its gross expenses. At that, such an allocation shall not be deemed to constitute the dividend payment.
( Sub-item 7.8.9. added to the Item according to Law of Ukraine #349-IV of December 24, 2002 )
7.9. Taxation of operations with debt claims and liabilities
7.9.1. Considering the specificities established by this Law, funds or property acquired by taxpayers as described below shall not be referred to gross revenues and shall be tax-exempt:
- the obtainment of financial loans by the taxpayer from other creditors, as well as the repayment of the principal of financial loans granted by the taxpayer to other debtors, the obtainment of a part of the consolidated mortgage debt by holders of the participatory mortgage certificates, the replacement of a portion of the consolidated mortgage debt with another portion;
( Paragraph 2 of Sub-item 7.9.1. of Item 7.9. of Article 7 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
- the taxpayer's raising funds or property into the trust management, funds to a deposits, including the issue of the savings (deposit) certificates (fixed-yield mortgage certificates), or to other term or trust accounts, including the issue of bonds, as well as the repayment to the taxpayer of funds or property from the trust management, and the deposit principal, including the repayment (redemption) of savings (deposit) certificates (fixed-yield deposit certificates), or from other term or trust accounts opened by other parties to the benefit of such a taxpayer, including the maturity of bonds;
( Paragraph 3, Sub-item 7.9.1 in the wording of Law of Ukraine #977-XIV of July 15, 1999; changed and amended according to Laws of Ukraine #2831-III of November 29, 2001; #349-IV of December 24, 2002; in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
- Property acquired by taxpayers under contracts of concession, commission, consignment, trusteeship, safekeeping, and pursuant to other civil law agreements that do not stipulate transfer of ownership of such property, taking into account provisions of sub-item 7.9.6 of this item.
( Paragraph 4 changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
7.9.2. Taking into account the specific features instituted by this Law, the funds or property granted by the taxpayer in connection with the following shall not be included into the gross expenses:
- the repayment by the taxpayer of the loan principal, including a portion of the consolidated mortgage debt during the repayment of the participatory mortgage certificate, but not more than the amount paid for such a certificate, to other creditors, as well as the provision of a loan to other debtors, the buy-out (replacement) of a portion of the consolidated mortgage debt with another portion according to the law;
- the repayment by the taxpayer of funds or property from the trust management, and the deposit principal, including the funds raised by means of the issue of savings (deposit) certificates, fixed-yield deposit certificates, or funds from other term or trust accounts, including the buy-out (maturity) of bonds, as well as the placement by the taxpayer of funds or property into the trust management, the lodgement of funds to a deposit, for instance, by acquiring savings (deposit) certificates, fixed-yield mortgage certificates, or to other term and trust accounts opened to the benefit of such a taxpayer, for instance, by means of purchasing bonds;
- the provision of the property by the taxpayer on the basis of concession, commission, consignment, trust management and safe custody contracts or under other contracts governed by the civil law, which do not provide for the conveyance of the title to such property to another person, taking into account the provisions of sub-item 7.9.6 of this item.
The term "principal" shall be understood as the amount of the granted loan or the deposit (term or trust account) without the accrual of the interest (fixed payments, premiums, winnings), and the consolidated mortgage debt amount to the extent that matches the price of the liability.
( Sub-item 7.9.2. of Item 7.9. of Article 7 changed and amended according to Laws of Ukraine #977-XIV of July 15, 1999; #2831-III of November 29, 2001; #349-IV of December 24, 2002; in the wording of Law of Ukraine #1957-IV of July 01, 20004 )
7.9.3. Under the interest-bearing securities emitted by the tax payer, the interest amounts shall be included in the tax payer's gross expenses of the tax period, during which such interest was or had to be paid. Under the discount securities emitted by the tax payer, the balance sheet losses due to the distribution of such securities shall be included in the tax payer's gross expenses of the tax period, during which such securities were retired (bought out).
The tax payer engaging in the trust transactions with the funds or property of the principal shall ascribe the final financial result of such trust transactions to his gross income, the former to be determined on the basis of the results of the tax period, during which a part of the income actually received by the trustee from transactions related to the placement of funds or property of such a principal is paid to the principal, and to be equivalent to the commission for the implementation of such trust transactions deducted to the benefit of the trustee at the expense of the payment of such an income.
( Sub-item 7.9.3 of Item 7.9 in the wording of Law #977-XIV of July 15, 1999 )
7.9.4. Taxation of operations with irredeemables shall be carried out following the procedures prescribed for the taxation of dividends.
This Sub-item shall not apply to securities attesting to corporate rights..
Irredeemables shall be understood as securities without a set date of maturity or with maturity occurring more than 10 years from the date of issue, or with the contract of issue stipulating the issuer's right to make unilateral decisions on extending the date of maturity (liquidation) regardless of the general term of these securities.
Expenses borne by taxpayers when purchasing irredeemables shall not be referred to gross costs and shall be subject to amortization as intangible assets, in accordance with Article 8 hereunder. This Sub-item shall not apply to securities attesting to corporate rights.
7.9.5. When alienating property left as a collateral of the full amount of liability, the pledgee's and pledger's gross costs and revenues shall be determined as follows:
- For the pledger, alienation of the object of pledge shall be equal to selling this object during the accounting period in which this alienation took place, with the principal of loan and accrued interest still to be returned to the creditor (guarantor) being equal to the selling price of the pledged property;
- If under the contract or law the object of pledge is assigned to the pledgee on account of the debt, such assignment shall be equal to the purchase of the object of pledge by the pledgee in the accounting period in which this assignment took place, with the principal of loan and accrued interest still to be returned to the creditor (guarantor) being equal to the buying price of the pledged property;
- If the creditor subsequently assigns the object of pledge to other persons, that creditor's revenues or losses shall be recognized on the general terms;
- If under the contract or law the object of pledge is to be sold at an auction (public tenders) to cover the debt, the pledgee's gross revenues and costs shall be determined as per Sub-item 12.3.4 hereunder and in accordance with the Law of Ukraine On Pledge;
Procedures of issuance and redemption of pledged debt liabilities shall be established by relevant legislation.
7.9.6 The leasing (lease) transactions shall be taxed according to the following procedure:
- the transfer of the property on an operational leasing (lease) basis shall not alter the tax liabilities of the lessor and the lessee. At that, the lessor shall increase the gross revenues and the lessee shall increase the gross expenses by the amount of the leasing payment accrued as a result of the tax period of such accrual. The transactions involving the lease of the land and residential space shall be taxed on the same basis;
- the transfer of the property on a financial leasing (lease) basis shall be deemed to be equivalent to the sale thereof at the time of such transfer for the taxation purposes. At that, the lessor shall increase the gross revenues and, in case of the transfer of the property considered as the lessor's fixed assets at the time of such a transfer, modify the relevant fixed-asset group according to rules of Article 8 hereof for the sale thereof; the lessee shall increase the relevant group of fixed assets by the value of the financial leasing object (exclusive of the interest or commissions accrued or to be accrued on the value of the financial leasing object according to the contract) as a result of the tax period of such transfer. In case of the leasing payment accrual, the lessor shall increase the gross revenues and the lessee shall increase the gross expenses with the portion of the leasing payment equivalent to the sum of the interest or commissions accrued on the value of the financial leasing object (disregarding the portion of the leasing payment made to compensate for a part of the value of the financial leasing object) as a result of the tax period of such accrual. If during the next tax periods the lessee returns the financial leasing object to the lessor without acquiring the title to such an object, the transfer shall be considered equivalent to the re-sale of the object by the lessee to the lessor effected at the usual price prevailing at the moment of such re-sale but not less than the acquisition cost of such a fixed asset reduced by the amount of the accrued depreciation charges according to provisions of Article 8 hereof for the taxation purposes. If the value of the financial leasing object commissioned for the first time is determined by the contract in the amount being less than the value of expenses for the acquisition or construction thereof, the tax authority shall have the right to undertake a non-scheduled audit for determining the level of the usual price;
- the housing facilities or land shall be let on lease according to the operational leasing rules.
( Sub-item 7.9.6. added to the Item according to Law of Ukraine #349-IV of December 24, 2002 )
7.9.7. For the purposes of taxation, the taxable person shall keep a record of the financial performance results of transactions of the sale (transfer) or the acquisition of the claims on pecuniary liabilities for the supplied commodities, the performed work or the provided services of a third party, the liabilities under financial loans, and under other contracts governed by the civil law.
On the first assignment of liabilities, the gross expenses incurred by the taxable person being the first creditor shall be determined in the amount of the contractual value of the commodities, work and services, under which the debt has come into existence or, in case of financial loans, in the amount of the actual debt under the principal, the interest and other payments due under the contract, provided that such interest and payments were include into the gross income in prior tax periods in accordance with requirements of this Law or, under other contracts governed by the civil law, in the amount of the actual debt to be assigned. The gross income shall be inclusive of the amount of funds or the value of other assets obtained by the taxable person being the first creditor from the said assignment, as well as the amount of its debt being repaid, provided that the said debt was included into the gross expenses in accordance with requirements of this Law.
If the income obtained by the taxable person from the subsequent assignment of the claim to liabilities of a third party (debtor) or the performance of the claim by the debtor exceeds the expenses incurred by the said taxable person on the acquisition of the claim to liabilities of the third party (debtor), the profit so obtained shall be included into the gross income of the taxable person.
If the expenses incurred by the said taxable person on the acquisition of the claim to liabilities of a third party (debtor) exceed the income obtained by the taxable person from the subsequent assignment of the claim to liabilities of the third party (debtor) or the performance of the claim by the debtor, the losses so incurred shall not be included into the gross income of the taxable person, nor shall they reduce the profit obtained from the performance of other transactions of the sale (assignment) or the acquisition of the claim on pecuniary liabilities of a third party for the supplied commodities or the provided services.
( Item 7.9 of Article 7 has been amended by adding Sub-item 7.9.7 on the basis of Law of Ukraine #1617-VI of July 24, 2009 )
7.10. Procedures of taxation of revenues resulting from the performance of long-term contractual obligations
7.10.1. A taxpayer may choose special procedures of taxation of the fiscal effects of long-term contracts.
7.10.2. Long-term contract shall be understood as any contract providing for the manufacture, construction, installation or assembly of tangible assets being components of the customer's fixed assets, and for the creation of intangible assets connected with such manufacture, construction, installation or assembly (e.g., engineering, research-and-development services and designs), provided this contract is to be completed in at least 9 months from the date of sustaining the first expenses or receiving an advance (up-front sum).
7.10.3. The executor shall independently determine the revenues and expenses accrued (sustained) during the accounting period, in conjunction with the long-term contract, using the assessment factor [coefficient] of this long-term contract.
7.10.4. The assessment factor of a long-term contract shall be determined as the ratio of the amount of actual expense in the given accounting period against the general costs during the same period as estimated by the executor when performing this long-term contract.
7.10.5. The executor's revenues in the given accounting period shall be determined as the result of the general contractual price of the long-term contract multiplied by the assessment factor in performing this contract.
7.10.6. The executor's expenses in the given accounting period shall be determined at the level of actually paid (accrued) disbursements when performing this long-term contract in this accounting period.
7.10.7. Expenses and revenues sustained and received (accrued) by the executor of a long-term contract during the given accounting period shall be referred to gross costs or revenues of this executor as per the fiscal effects of this period, in terms stipulated by Sub-items 7.10.5 and 7.10.6 hereinabove.
7.10.8. For taxation purposes, the amounts of advances or up-front sums received by the contractor of a long-term contract shall be referred to that executor's gross revenue, but only within the limits set forth in Sub-item 7.10.5 of this Article 7.
( Sub-item 7.10.8. changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )
7.10.9. After completing a long-term contract, its executor shall recompute the amounts of tax liabilities estimated by this executor as per results of each accounting period for the duration of this long-term contract in order to determine the actual performance coefficient as a ratio between the expenses of previous accounting periods and actual general costs sustained (accrued) by the executor when performing this long-term contract, and the revenues of these periods as the result of the final contractual price of the object of this long-term contract multiplied by the actual performance coefficient.
If the results of such recalculation show that the executor has overstated or understated the amount of liabilities assessed as per results of any of the previous accounting periods for the duration of this long-term contract, said overstatement or understatement shall be reflected, accordingly, in the reduction or increase of that taxpayer's gross revenues in the accounting period in which this long-term contract was completed, in which case interest shall be accrued on this difference in the amount of 120% of the NBU's rate effective on the date of recalculation and applicable to the duration of such overpayment or underpayment.
In such cases, the period of limitation shall commence from the accounting period in which this long-term contract was completed.

7.10.10. Tax reports on the performance of executors of long-term contracts per accounting period shall be submitted to inland revenue authorities using the form adopted by the central inland revenue authority.

7.10.11. If the object of a long-term contract belongs to the customer's fixed assets, the customer shall, in keeping with procedures laid down in Article 8 hereunder, increase the balance sheet value of the relevant item of fixed assets by the amount of money, tangible or intangible assets subject to depreciation and given the executor as an advance (up-front), or by the cost of the object of a long-term contract or parts thereof entered in the customer's balance sheet.
If the object of a long-term contract does not belong to the customer's fixed assets, the customer shall increase the gross costs of the accounting period by the amount of money, tangible or intangible assets given the customer as an advance (up-front sum), or by the cost of the object of a long-term contract or parts thereof entered in the customer's balance sheet during this accounting period.
7.10.12. Sub-items 7.10.3-7.10.8 shall also apply when assessing the revenues and disbursements of accounting periods when subscriptions for periodicals, operational leasing, land and living space lease transactions were carried out provided advance payments were made in each such transaction for a term in excess of the given accounting period.
In such cases Sub-item 7.10.9 shall not apply.
7.11. Taxation of nonprofit institutions and organizations
7.11.1. This Article shall apply to nonprofit institutions and organizations having the status of:
(a) Government authorities of Ukraine, bodies of local self-administration, as well as institutions or organizations established by them at the expense of relevant budgets;
( Till April 01, 2001, the rights of charity organisations specified by Decree of the Cabinet of Ministers of Ukraine "On Income Tax on Individuals" shall be enjoyed by not-for-profit organisations specified in paragraph 'a' of sub-item 7.11.1 of item 7.11 of Article 7 (except for political parties, blocs and unions thereof) according to Law #2136-III of December 07, 2000 )
(b) by charitable foundations and charitable organisations set up according to the procedure prescribed by law for the exercise of charitable activities, including the public organisations established to exercise the environmental, health care, amateur sports, cultural, educational and scientific activities, as well as creative unions and political parties, public organisations of disabled people and their local cells established according to the Law of Ukraine "On Associations of Individuals", scientific research institutions and higher education establishments of accreditation levels III to IV entered into the State Register of Scientific Institutions enjoying the state assistance, the reserves and museum reserves;
( Sub-Item (b) changed and amended according to Laws of Ukraine #639/97-VR of November 18, 1997, #285-XIV of December 1, 1998, #1805-III of June 8, 2000; #349-IV of December 24, 2002 )
(c) Pensions funds and credit unions set up in keeping with legally set procedures;
(d) Legal entities as building and loan associations other than those indicated in Item (b) hereinabove, whose activities are not aimed at receiving profits, set up in accordance with relevant legislation;
( The Sub-Item changed and amended according to Laws of Ukraine #639/97-VR of November 18, 1997; #2866-III of November 11, 2001 - comes into force as from January 01, 2002 )
(e) Unions, associations and other alliances of legal entities set up to represent their founders' interests, sustained exclusively by their founders' membership dues and conducting no profit-making business except when receiving passive incomes;
(f) Religious organizations registered in keeping with legally set procedures;
(g) housing co-operatives, associations of joint owners of housing facilities organized according to the procedure determined by the Law;
( The Sub-Item added to the Item according to Law of Ukraine #2866-III
of November 11, 2001 - comes into force as from January 01, 2002 )
(h) by trade unions, their associations and trade-union organisations set up according to the procedure specified by law;
( Sub-Item (h) added to  the  Article  according  to  Law  of  Ukraine #1096-IV of July 10, 2003 )
(i)  associations  and  other voluntary  unions  of  local  self-government   bodies  registered  in  accordance  with  the   procedure prescribed by law.
( Sub-Item (i) added to  the  Article  according  to  Law  of  Ukraine #1275-VI of April 16, 2009 )
7.11.2. The following revenues of nonprofit organizations indicated in Item (a), Sub-item 7.11.1, shall be tax-exempt:
- Funds or property received free of charge or as grants or voluntary donations;
- Passive incomes;
- Funds or property received by such nonprofit organizations as compensation for government services rendered including the revenues of state-owned vocational education establishments obtained from the manufacture and sale of commodities (performance of work, provision of services) related to their principal activities according to the charter;
( The Paragraph changed and amended according to Law of Ukraine #1158-IV of October 15, 2003 )
- Grants or subsidies obtained from the state or local budgets, state special-purpose funds or within the scope of the charitable aid, including the humanitarian aid or technical assistance provided to such not-for-profit organisations according to terms and conditions of international treaties accepted as binding by the Supreme Council (Parliament) of Ukraine, except for the grants for regulating the prices for paid services provided to such not-for-profit organisations or via them to the recipients according to the legislation, in order to reduce the level of such prices.
( The Paragraph added to the Sub-item according to Law of Ukraine #349-IV of December 24, 2002 )
7.11.3. The following revenues of nonprofit organizations indicated in Item (b), Sub-item 7.11.1, shall be tax-exempt:
- Funds or property received free of charge or as grants or voluntary donations;
- Passive incomes;
- Funds or property received by such nonprofit organizations as a result of their principal activities, taking into account the provisions of Sub-item 7.11.11 hereinbefore.
7.11.4. The following revenues of nonprofit organizations indicated in Item (c), Sub-item 7.11.1, shall be tax-exempt:
- Assets received by credit unions and pension funds in the form of contributions for non-state pensions or for other purposes provided by law;
( Paragraph 2 of Sub-item 7.11.4. of Item 7.11. of Article 7 changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )
- The income from transactions with assets (including the passive income) of non-state pension funds and credit unions, transactions under pension deposits, accounts of bank management fund participants in accordance with the law on these issues;
( Paragraph 3 of Sub-item 7.11.4. of Item 7.11. of Article 7 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
- Grants or subsidies obtained from the state or local budgets, state special-purpose funds or within the scope of the charitable aid, including the humanitarian aid or technical assistance provided to such not-for-profit organisations according to terms and conditions of international treaties accepted as binding by the Supreme Council (Parliament) of Ukraine, except for the grants for regulating the prices for paid services provided to such not-for-profit organisations or via them to the recipients according to the legislation, in order to reduce the level of such prices.
( The Paragraph added to the Sub-item according to Law of Ukraine #349-IV of December 24, 2002 )
7.11.5. Revenues of nonprofit organizations indicated in Item (d), Sub-item 7.11.1, received as funds or property resulting from their principal activities and as passive incomes shall be tax-exempt, Grants or subsidies obtained from the state or local budgets, state special-purpose funds or within the scope of the charitable aid, including the humanitarian aid or technical assistance provided to such not-for-profit organisations according to terms and conditions of international treaties accepted as binding by the Supreme Council (Parliament) of Ukraine, except for the grants for regulating the prices for paid services provided to such not-for-profit organisations or via them to the recipients according to the legislation, in order to reduce the level of such prices.
( The Paragraph added to the Sub-item according to Law of Ukraine #349-IV of December 24, 2002 )
7.11.6. The following revenues of nonprofit organizations indicated in Item (e), Sub-item 7.11.1, shall be tax-exempt:
- Single or periodical contributions of their founders and members;
- Passive incomes;
- Grants or subsidies obtained from the state or local budgets, state special-purpose funds or within the scope of the charitable aid, including the humanitarian aid or technical assistance provided to such not-for-profit organisations according to terms and conditions of international treaties accepted as binding by the Supreme Council (Parliament) of Ukraine, except for the grants for regulating the prices for paid services provided to such not-for-profit organisations or via them to the recipients according to the legislation, in order to reduce the level of such prices.
( The Paragraph added to the Sub-item according to Law of Ukraine #349-IV of December 24, 2002 )
7.11.7. The following revenues of nonprofit organizations indicated in Item (f), Sub-item 7.11.1, shall be tax-exempt:
- Funds or property received free of charge or as grants or voluntary donations;
- Any other revenues from cultural services rendered and passive incomes.
Exempt from taxation shall be income of non-profit companies specified in the Paragraph "g" of the Sub-item 7.11.1, received as fees, funds or property, provided to such non-profit organizations for needs of their normal operation as passive incomes.
( The Paragraph added to the Sub-item according to Law of Ukraine #2866-III of November 11, 2001 - comes into force as from January 01, 2002 )
The revenues of not-for-profit organisations listed in paragraph 'i' of sub-item 7.11.1 received in the form of membership fees, funds allocated by enterprises, institutions and organisations for the mass culture, physical culture and health care activities, the non-repayable financial aid or voluntary donations and passive revenues shall be exempt from the taxation.
( The Paragraph added to the Sub-item according to Law of Ukraine #1096-IV (1096-15) of July 10, 2003 )
7.11.8. Revenues or property of nonprofit organizations, except nonprofit organizations indicated in Items (a) and (b), Sub-item 7.11.1, shall not be allocated among their founders, participants or members, and nor shall these revenues or property be used for the benefit of any separate founder, participant or member thereof, including executives (except in the form of wages and deductions for social facilities).
( The Paragraph changed and amended according to Law of Ukraine #1096-IV (1096-15) of July 10, 2003 )
The revenues of not-for-profit organisations listed in paragraph "a" of sub-item 7.11.1, including the revenues of education, science, culture and health-care establishments and institutions, as well as budget-funded archive institutions and rehabilitation institutions for disabled people and disabled children being in possession of the appropriate licence, shall credited to budget estimates (a special account) for the maintenance of such not-for-profit organisations, and spent solely on funding the expenses of such budget estimates (including the funding of production activities according to their charters) calculated and approved according to the procedure specified by the Cabinet of Ministers of Ukraine.
( Paragraph 2 of Sub-item 7.11.8 of Item 7.11 of Article 7 in the wording of Law of Ukraine #639/97-VR of November 18, 1997; changed and amended according to Law of Ukraine #2772-IV of July 7, 2005 )
If, proceeding from the results of the accounting (taxation) period, the income items on such sheets surpass the amount allocated for expenditures, the excess amount shall be carried over to the next year's statement.
In such cases, the amount of incomes in excess of expenses of the said non-profit organisations shall be exempted from the income tax envisaged by Item 10.1 hereunder.
Lists of services to be rendered by the above-mentioned establishments and institutions shall be approved by the Cabinet of Ministers of Ukraine.
Revenues of nonprofit organizations indicated in Item (c), Sub-item 7.11.1., shall be allocated only among their founders (participants) in keeping with legally set procedures.
7.11.9. Should the revenues of non-profit organisations received over the accounting (taxation) period from sources indicated in Sub-item 7.11.5 exceed, by the end of the first quarter following the accounting year, 25% of the gross revenues received over this accounting (taxation) period, these non-profit organisations shall be under the obligation to pay the tax on the undivided amount of the revenue at a rate specified by item 10.1 of Article 10 hereof of the excess amount. This tax shall be remitted to the budget proceeding from the results of the first quarter following the accounting period, within the same time-limits as established for all the other taxpayers.
( The Paragraph changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
Paragraph 1 hereinabove notwithstanding, should a non-profit organisation receive revenues from sources other than indicated in Sub-items 7.11.2 - 7.11.7 hereinabove, it shall be under the obligation to pay the income on a revenue identified as the sum total of incomes received from such other sources, reduced by the amount of expenses involved in receiving these incomes, provided it does not exceed the total amount of these incomes.
When calculating the amount of incomes in excess of expenses, as per Paragraph 1 hereinbefore, as well as when determining the taxable revenue as per Paragraph 2 hereinabove, the amount of depreciation charges shall be disregarded.
7.11.10. For taxation purposes, the central inland revenue authority shall keep records of all nonprofit organizations exempted pursuant to this Article.
State registration of nonprofit organizations shall be carried out in keeping with legally set procedures.
7.11.11. In the event of liquidation, a nonprofit organization's assets shall be transferred to another relevant nonprofit organization or remitted to the budget. In case of the liquidation of a non-state pension fund, its assets must be allocated according to the law, which governs the non-state pension issues.
( The Paragraph changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )
The assets of a not-for-profit organisation mentioned in paragraph 'h' of sub-item 7.11.1 must be used according to the law on such an organisation in case of its liquidation (self-disbandment) taking into account the provisions of sub-item 7.11.8.
( The Paragraph added to the Article according to Law of Ukraine #1096-IV (1096-15) of July 10, 2003 )
7.11.12. The central inland revenue authority shall establish procedures of accounting and the utilisation of funds of not-for-profit organisations (not-for-profit organisations defined in paragraph 'i' of sub-item 7.11.1 in terms of accounting and submitting the tax reports on the taxable revenues), and shall perforce resolve to strike an organization guilty of transgressions of this Law or other legislative acts on nonprofit organizations from the lists of nonprofit organizations, exposing it to the company income tax. Such decisions may be contested in due course of law.
( The Paragraph changed and amended according to Law of Ukraine #1096-IV (1096-15) of July 10, 2003 )
The status of a not-for-profit organisation shall be obtained in the course of its primary registration. The re-registration of such a not-for-profit organisation in cases covered by law shall be undertaken without charging any fee from such a not-for-profit organisation.
( The Paragraph added to the Sub-item according to Law of Ukraine #349-IV of December 24, 2002 )
7.11.13. Government services shall be understood as any paid services that must be acquired under the law and which are rendered individuals and entities by organs of executive authority, local self-administration, and institutions and organizations formed by them and sustained by relevant budgets. The category of government services shall not include taxes and duties (compulsory payments) determined by the Law of Ukraine On Taxation System.
Passive incomes shall be understood as revenues received as interest, dividends, insurance benefits and indemnities, as well as royalties.
Principal activities shall be understood as activities of not-for-profit organisations involving the provision of the charitable aid, the educational, cultural, scientific, educational and other similar services for the public consumption, as well as the establishment of the systems of the social self-protection of individuals (non-state pension funds, credit unions, and other similar organisations). The principal activities shall also include the sale of goods (services) by a not-for-profit organisation, if they promote the principles and ideas, for whose protection such a not-for-profit organisation was established, and which are closely linked to its principal activities, provided that the price for such goods (services) is lower than usual or if such a price is regulated by the state. The principal activities shall not include the transactions involving the provision of goods (services) by not-for-profit organisations listed in paragraphs 'c' to 'f' of sub-item 7.11.1 eof this item to persons other than founders (members, participants) of such organisations. The Cabinet of Ministers of Ukraine may institute temporary restrictions on the applicability of provisions of this item to the sale of certain goods or services by not-for-profit organisations, if such a sale undermines or contradicts and rules of the competition on the market of the specified goods, provided that the sufficient evidence of such violation has been provided by entities subject to such tax and providing similar goods (services). Charter documents of not-for-profit organisations must contain an exhaustive list of their activities
( The Paragraph changed and amended according to Law of Ukraine #639/97-VR of November 18, 1997; in the wording of Law of Ukraine #349-IV of December 24, 2002; the validity of Sentence 2 of the Paragraph suspended for the year 2004 according to Law of Ukraine #1344-IV of November 27, 2003; changed and amended according to Law of Ukraine #1957-IV of July 01, 2004; the validity of second sentence of Paragraph 3 of Sub-item 7.11.13 of Item 7.11 of Article 7 has been suspended for the year 2005 according to Law of Ukraine #2285-IV of December 23, 2004; #2505 of March 25, 2005 )
7.11.14. Revenues of not-for-profit organisations received in a cash form as the arbitration fee shall be exempt from taxation.
( Sub-item  7.11.14  added  to Article 7 according to Law  of  Ukraine#1701-IV of May 11, 2004; in the wording of Law of Ukraine#2505-IV of March 25, 2005 )

7.12. Specific Features of the Taxation of Enterprises and Organisations of Public Organisations of Disabled People.
7.12.1. The profit of enterprises and organisations founded and fully owned by public organisations of the disabled people, which is derived from the sales of commodities (work, services), other than the excisable commodities, the services of the supply of excisable commodities received under commission (consignment), surety, entrustment, trust management contracts and other contracts governed by the civil law that authorise such an agent to supply commodities in the name and on behalf of the principal without conveying the ownership of the said commodities, and the profit derived from the gambling business, where the number of the disabled people having their major place of employment amounts to at least 50 per cent of the average registered staffing level during a year, and provided that the labour remuneration fund of such disabled people amounts during the reporting period to at least 25 per cent of the total labour remuneration expenses booked to the gross production (circulation) expenses.
The said enterprises and organisations of public organisations of disabled people shall have the right to apply this privilege subject to the availability of the permit for the use of such a privilege granted by the interagency Commission for activities of enterprises and organisations of public organisations of disabled people under the Law of Ukraine "On Fundamentals of the Social Protection of Disabled People in Ukraine".
In case of the violation of requirements of this article, the said public organisations of the disabled people, their enterprises and organisations must pay tax amounts due for the relevant period indexed to account for the inflation, as well as the penalty in accordance with the law.
Enterprises and organisations subject to this sub-item shall register themselves with the relevant tax service agency in accordance with the procedure envisaged for payers of the said tax.
( Sub-item 7.12.1 of Item 7.12 of Article 7 in the wording of  Law  of
Ukraine #2960-IV of October 6, 2005 )
( Item 7.12 of Article 7 in the wording of Law of Ukraine #1926-III of
July 13, 2000 )
7.13. Specificities of taxation of separate taxpayers
7.13.1. Revenues of enterprises received from sales of baby foods produced by these enterprises on Ukraine's territory shall be tax-exempt and aimed at increasing output while lowering retail prices.
Lists of baby foods shall be adopted by the Cabinet of Ministers of Ukraine.
7.13.2. For the period of preparation to removal and removal from service of the Chornobyl Nuclear Power Station power units and conversion of the Containment into an ecologically safe system the Chornobyl Nuclear Power Station incomes shall be tax-exempt provided this money is used to finance of works involved in the preparations for removal and the removal of Chornobyl Nuclear Power Station from service and conversion of the Containment into an ecologically safe system.
In case of deviation from target use of this money, the taxpayer shall be under the obligation to determine the income exempted due to tax privileges, tax it in the accounting period, and pay a penalty in the amount and for the period determined by the laws currently in effect in Ukraine.
7.13.3. Income received by enterprises due to international technological aid granted on a gratuitous basis or at the expense of funds earmarked in the state budget as the contribution of Ukraine to Chernobyl 'Shelter' Foundation for the implementation of the international programme named "Implementation Plan for "Shelter" Facility" according to provisions of the Framework Agreement between Ukraine and the European Reconstruction and Development Bank (996_004) for further operation, preparation for removal and removal of the Chornobyl Nuclear Power Station power units from operation, as well as for conversion of the Containment into an ecologically safe system and social protection of the Chornobyl Nuclear Power Station personnel and Slavutych residents shall be tax-exempt.
( The Paragraph changed and amended according to Laws of Ukraine #722-XIV of June 03, 1999; #856-IV (856-15) of May 22, 2003 )
In case of deviation from target use of international technological aid the recipient shall be under the obligation to increase the tax commitments, and shall pay a to pay a penalty levied on the amount of the privileges [benefits] thus received, proceeding from 120% of NBU discount rate effective on the date of such tax obligation increment, and for the period from date of receipt of such tax benefits to the date of such tax commitment increment, in keeping with legally set procedures.
( Sub-item 7.13.4. of Item 7.13. of Article 7 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )

( Sub-item 7.13.5. of Item 7.13. of Article 7 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )

( Sub-item 7.13.6. of Item 7.13. of Article 7 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
7.13.7. "On a temporary basis till 01 January 2015, the profit of publishing houses, publishing organisations and polygraphy enterprises obtained from the activities related to the production of book products on the territory of Ukraine, except for the products of erotic nature, shall be exempt from taxation.
( Paragraph 1 of Sub-item 7.13.7 of Item 7.13 of Article 7 in the wording of Law of Ukraine #2505-IV of March 25, 2005; changed and amended according to Law of Ukraine #521-VI of September 18, 2008 )
The amounts of funds relieved as a result of the provision of tax breaks shall be spent by the business entity being a taxpayer on the re-equipment of the publishing polygraphy base, the development and implementation of novel technologies, the expansion of the manufacture of book products according to the procedure specified by the Cabinet of Ministers of Ukraine.
( Sub-item 7.13.7 added to the Item 7.13. according to Law of Ukraine #601-IV of March 06, 2003; in the wording of Lawof Ukraine #1300-IV of November 20, 2003 )
( Sub-item 7.13.8. of Item 7.13. of Article 7 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
7.13.8. The profit of state-owned enterprises "Artek International Children Centre" and "Moloda Hvardiya Ukrainian Children Centre" from the exercise of the children rehabilitation and recreation business shall be exempted from taxation.
( Item 7.13 of Article 7 has been amended by adding Sub-item 7.13.8 according to Law of Ukraine #906-VI of February 3, 2009 )
( Item 7.14. of Article 7 has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
7.15. The procedures of qualification of special children's foodstuffs as own products, as per Sub-item 7.13.1 hereinbefore, shall be determined by the Cabinet of Ministers of Ukraine.
( Paragraph 1 of Item 7.15 of Article 7  in  the  wording  of  Law  of
Ukraine #607/97-VR of November 04, 1997 )
Tax accounting of enterprises indicated in Items 7.12. and 7.13. hereinabove shall be effected in keeping with procedures established by the central inland revenue authority.
( Paragraph 2 of Item 7.15 of Article 7 changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )
7.16. The category of gross revenues shall not include funds received by the State Rail Transport Administration of Ukraine (Ukrzaliznytsia) and railroad companies from enterprises, organizations, and their organization departments subordinated to the Ukrzaliznytsia and [other] railroad companies, entered on account of net profits left at the disposal of these enterprises as per results of any given accounting period, after carrying out all liabilities, including taxes and duties (compulsory payments) mature.
When, on the Ukrzaliznytsia's decision, the rolling stock of one government-run public transport company is transferred to the next, the book cost of such fixed assets as set forth in Article 8 hereunder shall undergo no changes, and such transfer shall be considered an operation with free transfer of goods (works, services), adding nothing to the taxpayer's gross revenues.
7.17. Specific features of the taxation of the profit derived from the implementation of a product sharing agreement
It shall be established that the profit tax derived by a tax payer from the implementation of a product sharing agreement shall be taxable taking into account the specific features specified by the Law of Ukraine "On Product Sharing Agreements".
( The Item added to the Article according to Law of Ukraine #1807-III of June 8, 2000 )( Item 7.18 of Article 7 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )( Item 7.19 of Article 7 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
7.20. Taxable persons listed in items 7.11, 7.13, and 7.21 of this article shall keep a separate record of revenues not included into the gross income or exempted from taxation in accordance with provisions of the said items. At that:
( The Paragraph changed according to Laws of Ukraine #349-IV of December 24, 2002; #760-V of March 16, 2007 - the changes shall remain in effect for five years upon the obtainment of the first profit as a result of the improvement of the energy efficiency of the production )
- expenses incurred in connection with deriving such exempt revenues shall not be included in gross revenues of such taxpayers;
- the book value of procured commodities, materials, raw materials, components and semi-finished products, which are in a warehouse or whose production is not completed and in case of remaining finished products, used for deriving such exempt revenues shall not be considered in the calculation of the increase (decrease) in the book value under item 5.9 of Article 5 hereof;
- the depreciation charges on the relevant group of capital assets used for deriving such exempt revenues shall not be considered during the reduction of the adjusted gross revenue under item 3.1 of Article 3 hereof. If the capital assets are used for deriving both exempt revenues, and the revenues subject to the inclusion in gross revenues hereunder according to the usual procedure, the adjusted gross revenue of the taxpayer shall be reduced by a share of depreciation charges, whose ratio to the total amount of depreciation charges over the reporting period is the same as the ratio of the revenues subject to the inclusion in gross revenue hereunder according to the usual procedure to the total gross revenue, including the exempt revenues.
The same procedure shall apply to separate accounts to be kept of the financial performance related to revenues included in the taxation object at a rate lower than the rate specified in item 10.1 of Article 10 hereof.
( The Item added to the Article according to Law of Ukraine #2410-III of May 17, 2001 )
7.21. The following shall be exempted from tax:
7.21.1. The profit of companies obtained from the sales of the following commodities of own manufacture on the customs territory of Ukraine according to a list specified by the Cabinet of Ministers of Ukraine:
the equipment operating on non-traditional and renewable energy sources;
the energy saving equipment and materials, products whose operation ensures the savings and the sustainable consumption of fuel and energy resources;
the fuel and energy resource consumption instrumentation, control and management facilities;
the equipment for the manufacture of alternative fuel types.
Amounts made free due to the provision of the tax break shall be spent by the taxable person on increasing the product output. In case of the violations in terms of the use of funds for designated purposes, the taxable person must determine the profit not taxed due to being granted a tax break, and tax it in the ongoing period, as well as pay the fine in amounts and for the period specified by the legislation of Ukraine.
7.21.2. The profit of companies entered into the State Register of Enterprises, Institutions and Organisations Involved into the Development, the Implementation and the Utilisation of Energy Saving Measures and Energy Efficient Projects, but not more than 50 per cent of the taxable profit amount.
The enterprises, institutions and organisations involved into sectoral energy conservation programmes shall be entered into the State Register of Enterprises, Institutions and Organisations Involved into the Development, the Implementation and the Utilisation of Energy Saving Measures and Energy Efficient Projects as a result of the expert appraisal to be carried out by the State Energy Conservation Inspectorate with the opinion that the energy conservation measures and energy efficient projects that have been or are being developed and implemented are in conformity with energy conservation criteria.
The National Agency of Ukraine for the Efficient Use of Energy Resources shall be tasked with the maintenance of the State Register of Enterprises, Institutions and Organisations Involved into the Development, the Implementation and the Utilisation of Energy Saving Measures and Energy Efficient Projects. The procedure of the entry of companies into the State Register of Enterprises, Institutions and Organisations Involved into the Development, the Implementation and the Utilisation of Energy Saving Measures and Energy Efficient Projects shall be approved by the National Agency of Ukraine for the Efficient Use of Energy Resources.
( Article 7 has been amended by adding Item 7.21 according  to  Law of
Ukraine #760-V of March 16, 2007 - the changes shall remain
in effect for five years upon the obtainment of the first  profit as a
result of the improvement of the energy efficiency of the production )
Article 8. Amortization
8.1. Definition.
8.1.1. The term "amortization", with regard to fixed and intangible assets, shall be interpreted as a gradual referral of expenses on their acquisition, manufacture or modification to a taxpayer's reduced and adjusted revenues within the limits of allocation for depreciation [capital allowances/charges] as determined by this Article 8.
8.1.2. The following expenses shall be subject to amortization:
- Acquisition of fixed and intangible assets for own production needs, including expenses on pedigree livestock, purchase, sowing, and growing of perennial plantations prior to fructification;
- Independent creation of fixed assets for own production needs, including expenses on wages for manpower employed in the production of these assets;
- All types of repair, renovation, modernization or other improvements of fixed assets;
- The capital improvement of the land not related to the construction, namely: the irrigation, drainage, enrichment and other similar capital improvements of the land.
( The Paragraph in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.1.3. The following expenses of taxpayers shall not be subject to amortization and shall in their entirety be referred to such taxpayers' gross costs in the given accounting period:
- Purchase and fattening of commercial livestock;
- Growing perennial fruit-bearing plantations;
- Acquisition of fixed or intangible assets to be further sold to other persons or used as components of other fixed assets meant to be sold to other persons;
- Conservation of fixed assets.
( Paragraph 6 of Sub-item 8.1.3 of Item 8.1 of Article 8 has been deleted according to Law of Ukraine #398-V of November 30, 2006 )

8.1.4. The following shall not be subject to amortization and shall be carried on account of appropriate finance sources:
- Budget spending on the construction and maintenance of improvements and dwelling buildings, purchase and maintenance of library stocks and archives;
- Budget disbursements on the construction and maintenance of highways;
- Expenses on purchase and maintenance of the National Archives of Ukraine, as well as library stocks formed and preserved at the expenses of [local] budgets, library and archival funds;
- Expenses on the acquisition, repair, and modernisation or other improvements in the non-productive assets.
Non-productive assets shall be understood as capital assets that are not used in the taxpayer's business activities. This notion shall include:
- capital assets (or structural components thereof) identifiable under Group 1 of the fixed assets as per Sub-item 8.2.2 hereunder, including leased assets;
- capital assets identifiable under Groups 2 and 3 of the fixed assets as per Sub-item 8.2.2 hereunder, being an inalienable component and placed or used to secure the non-productive assets, identifiable under Group 1 of the fixed assets or detached from the taxpayer's business activities and transferred gratuitously to persons that are not qualified as payers of this tax.
The accounting procedures with regard to non-productive assets shall be determined by the Ministry of Finance of Ukraine. Such accounting shall be carried out separately from tax accounting and shall have no effect on the taxpayer's tax liabilities.
When selling non-productive assets, the notion of the taxpayer's gross revenues shall include revenues received from (accrued on) sales, and that of gross costs shall include the amount of expenses involved in the acquisition (production) of such non-productive assets (regardless of depreciation) and their improvement.
8.2. Definition of fixed assets and groups thereof
8.2.1. The notion "fixed assets" shall be understood as tangible assets intended by the taxpayer for the use in a taxpayer's production activity within a period in excess of 365 calendar days from the date of launching these tangible assets into operation, the cost of which exceeds UAH 1,000 and gradually lowers due to depreciation and obsolescence.
( The Paragraph changed and amended according to Laws of Ukraine #349-IV of December 24, 2002; #1957-IV of July 01, 2004 )
Expenses for the acquisition of any tangibles, whose value does not exceed UAH 1,000 and which are intended for the utilisation in business activities of the taxpayer, shall be included into the gross expenses of the taxpayer according to the generally applicable procedure and taken into account for the purposes of the application of item 5.9 of Article 5 of this Law.
( The Paragraph in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
8.2.2. Fixed assets shall be subdivided into the following groups:
- Group 1: Buildings and premises, their components and transmitting devices [sic], including dwelling buildings and their components (flats and sanitary facilities, the value of the capital improvement of the land);
( The Paragraph changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
- Group 2: Motor transport, spare parts, furniture, household electronic, optical and engineering devices and tools;
( The Paragraph changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
- Group 3: Any other fixed assets not included in Groups 1, 2 and 4.
( The Paragraph changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
- Group 4 shall be understood as computers and other machinery for the automatic information processing, reading or printing devices linked to them, other information systems, computer software, telephone sets (including cellular phones), microphones and walkie-talkie sets, whose value exceeds the value of low-value goods (articles);
( The Paragraph added to Sub-item 8.2.2 of Item 8.2 of Article 8 according to Law of Ukraine #349-IV of December 24, 2002; in the wording of Law of Ukraine #2505-IV of March 25, 2005 )
The term "software" shall have the meaning defined in the copyright and related rights protection legislation.
( The Paragraph added to Sub-item 8.2.2 of Item 8.2 of Article 8 according to Law of Ukraine #2505-IV of March 25, 2005 )
8.3. Procedures of definition and accrual of allocation for depreciation
8.3.1. The amount of depreciation charges of the reporting period shall be determined as the sum of depreciation charges accrued for each of the calendar quarters being part of such a reporting period (hereinafter referred to as the 'calculation quarters').
The sum of depreciation charges of the quarter, in whose respect calculations are made (calculation quarter), shall be determined by way of applying the depreciation norms specified by item 8.6 of this article to the book value of groups of fixed assets as of the beginning of such a calculation quarter.
Sums of depreciation charges shall not be subject to the extraction to the budget; also, they may not serve as a basis for the accrual of any taxes and dues (statutory fees).
( Sub-item 8.3.1 added to the Item according to Law of Ukraine #568-XIV of April 6, 1999; in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.3.2. The book value of the fixed-asset group (an individual fixed-asset object of Group 1) as of the beginning of the calculation quarter shall be determined according to the following formula:
B(a) = B(a-1) + L(a-1) - V(a-1) - A(a-1), where:
B(a) is the book value of the group (an individual fixed-asset object of Group 1) as of the beginning of the calculation quarter;
B(a-1) is the book value of the group (an individual fixed-asset object of Group 1) as of the beginning of the quarter preceding the calculation quarter;
L(a-1) is the amount of expenses incurred to purchase fixed assets, perform the major overhaul, the rehabilitation, modernisation and other improvements of fixed assets subject to the depreciation during the quarter preceding the calculation quarter;
V(a-1) is the book value of the decommissioned fixed assets (an individual fixed-asset object of Group 1) during the quarter preceding the calculation quarter;
A(a-1) is the sum of depreciation charges accrued during the quarter preceding the calculation quarter.
( Sub-item 8.3.2 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.3.3. Taxpayers under all forms of ownership shall have the right to annually adjust the book costs of the [above] groups of fixed and intangible assets to the indexation coefficient obtained using this formula:
Ki = [I(a-1) - 10] : 100
where:
- I(a-1) indicates the year's inflation index, by the results of which this indexation is carried out.
No indexation shall be performed if the Ki value is not over 1.
( The Paragraph deleted according to Law of Ukraine #349-IV of December 24, 2002 )
Taxpayers using the indexation coefficient shall be under the obligation to declare capital revenues in amounts equal to the difference between the book cost of the given group of fixed (intangible) assets, determined at the beginning of the given accounting period using the indexation coefficient, and that of this group of assets prior to this indexation.
( The Paragraph deleted according to Law of Ukraine #349-IV of December 24, 2002 )
Said capital revenues shall be referred to gross revenues in each accounting quarter of the tax year, in amounts equal to one-fourth percent of the annual amortization rate with regard to the given group of fixed (intangible) assets against the amount of capital revenues of this group of fixed (intangible) assets.
( The Paragraph deleted according to Law of Ukraine #349-IV of December 24, 2002 )
When using the accelerated depreciation method, as per Sub-item 8.6.2 hereunder, no indexation coefficient shall be applied.
8.3.4. The book cost of fixed assets referred to Group 1 shall be accounted per building, structure or structural component thereof and per Group 1 as the sum total of book costs of separate objects of this group.
8.3.5. The book cost of fixed assets referred to Groups 2, 3 and 4 shall be accounted per aggregate balance sheet value of the given group of fixed assets regardless of when these assets were launched into operation. No separated accounting shall be made with regard to any objects included in Group 2, 3 or 4 of the fixed assets.
( Sub-item  8.3.5.  of  Item  8.3.  of  Article  8 changed and amended
according to Law of Ukraine #1957-IV of July 01, 2004 )
8.3.6. Book cost accounting procedures with regard to the above groups of fixed assets shall be adopted by the Ministry of Finance of Ukraine.
8.3.7. Amortization of a separate object included in Group 1 of fixed assets shall be carried out before its book cost reaches 100 tax-free minimum citizens' incomes. The residual cost of this object shall be referred to gross costs as per results of the given accounting period, while its value shall be zero.
8.3.8. Group 2, 3 and 4 fixed assets shall be subject to amortization before the groups' book cost reaches zero value.
8.3.9. Linear depreciation method shall be applied to intangible assets, whereby each type of intangible assets is amortized by equal portions proceeding from its primary cost, taking into account indexation as per Sub-item 8.3.3 of this Article 8, within a time-limit determined by the taxpayer at his/their own discretion, proceeding from the term of beneficial use of these intangible assets or the taxpayer's term, but not in excess of 10 years of continuous operation.
Allocation for depreciation shall be carried out before the intangible assets' residual cost shows zero value.
8.4. Procedures of increasing and decreasing the book cost of fixed assets' groups
8.4.1. When purchasing fixed assets, the book cost of the corresponding group shall increase by the amount spent as their acquisition cost, taking into account transportation and insurance charges and other expenses involved in this acquisition, less VAT paid provided the company income taxpayer is registered as VAT payer.
8.4.2. In the case of taxpayers producing fixed assets for their own production needs, the book cost of the given group of fixed assets shall increase by the amount of all production costs involved in the creation of these fixed assets and launching them into operation, as well as expenses sustained when making such fixed assets using other finance sources, less VAT paid provided the company income tax payer is registered as VAT payer.
8.4.3. When selling certain objects of Group 1 fixed assets, thus inactivated them, Group 1 book cost shall decrease by the amount of book cost of these objects.
The excess amount of proceeds from the sale of certain Group 1 over the book cost of these tangible and intangible assets shall be referred to that taxpayer's gross revenues, and the excess amount of book cost over the proceeds shall be referred to that taxpayer's gross costs.
8.4.4. When selling Group 2, 3 and 4 fixed assets, the book cost of each group shall decrease by the acquisition cost of these assets (e.g., production costs, those of works and services received by a taxpayer as per swap deals). If the total amount of fixed assets equals or surpasses the book cost of the corresponding group, its [the latter's] book cost shall be considered to have zero value, with the excess amount referred to that taxpayer's gross revenues in the given accounting period.
8.4.5. In case of the decommissioning of a particular fixed-asset object of Group 1 or its transfer into non-production assets by decision of the taxpayer, the book value of such an object shall equal zero for the depreciation purposes. In this case, no depreciation charges shall accrue.
The same procedure shall apply to the decommissioning of fixed assets as a result of the alienation thereof by a court decision.
The re-inclusion of such objects into fixed assets shall be undertaken according to the procedure specified by sub-item 8.4.2 of this article.
( Sub-item 8.4.5. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.4.6. In case of the decommissioning of particular assets of groups 2, 3, and 4 for any reason (except for the sale thereof), the book value of such groups shall not change.
The re-commissioning of such fixed assets after the repair, rehabilitation and retrofitting thereof shall increase the group balance only by the amount of expenses related to such works.
( Sub-item 8.4.6. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.4.7. If by the start of the accounting quarter Group 2, 3 and 4 fixed assets turn out to have no material value, their book cost shall be referred to that taxpayer's gross costs in this accounting period. This Sub-item 8.4.7. shall not apply when a taxpayer determines depreciation charges with regard to the amount of improvements in the fixed assets held on operational leasing terms.
8.4.8. In case of the liquidation of fixed assets by a decision of the taxpayer or if the fixed assets (a part thereof) are destroyed, stolen or subject to liquidation for reasons being beyond control of the taxpayer, or if the taxpayer is compelled to abandon the utilisation of such fixed assets because of the circumstances of the threat or imminence of the replacement, destruction or liquidation thereof, the taxpayer shall do the following within the reporting period, when such circumstances came into existence:
a) increase the gross expenses by the book value of a particular object of fixed assets of Group 1; at that, the value of such an object shall be made equivalent to zero;
b) not change the book value of groups 2, 3 and 4 in respect of fixed assets of these groups.
( Sub-item 8.4.8. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.4.9. If an insurance organisation or another legal entity or individual found guilty of inflicting damages compensates the taxpayer for losses related to the emergence of circumstances described in sub-item 8.4.8 of this item, the taxpayer shall do the following within the tax period of such compensation:
a) increase the gross revenues by the amount of the compensation for fixed assets of Group 1 (a particular object of fixed assets of Group 1);
b) reduce the book value of the relevant fixed-asset group by the compensation amount for fixed assets of groups 2, 3 and 4.
( Sub-item 8.4.9. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.4.10. In case of the liquidation of a particular fixed-asset object of Group 1 by a decision of the taxpayer and in case of the availability of appropriate documents related to the destruction, dismantling or transformation otherwise thereof, as a result of which such an object cannot be utilised in the future for the initially intended purposes, the book value of such a particular object of fixed assets of Group 1 shall be included into the gross expenses.
( Sub-item 8.4.10. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.4.11. For the purposes of this item:
- operations involving the contribution of fixed and intangible assets into the authorised fund of another entity shall be considered equivalent to the sale of fixed and intangible assets;
- operations involving the inclusion of fixed and intangible assets into the authorised fund of such another entity with the subsequent allocation to appropriate groups shall be considered equivalent to the acquisition of fixed and intangible assets
( Sub-item 8.4.11. added to the Item according to Law of Ukraine #349-IV of December 24, 2002 )
8.5. Procedures of accounting of leased fixed assets
8.5.1. The book cost of the given group of fixed assets shall not be decreased by the cost of the taxpayer's fixed assets in operational leasehold.
8.5.2. The book cost of the given group of fixed assets shall be reduced by the cost of fixed assets in financial leasehold, in keeping with procedures prescribed for the sale of fixed assets. In such cases the lessee shall increase the book cost of the relevant group of fixed assets in accordance with procedures envisaged for the acquisition of fixed assets.
8.6. Depreciation rates
8.6.1. The depreciation rates shall be set as percentage of the book value of each group of fixed assets as of the beginning of the reporting (tax) period at the following levels (for a tax quarter):
Group 1 - 2 per cent;
Group 2 - 10 per cent;
Group 3 - 6 per cent;
Group 4 - 15 per cent.
The taxpayer may decide to apply different depreciation rates, which do not exceed the rates specified in this sub-item.
Such a decision shall:
- be made by the taxpayer before the commencement of the tax reporting year and may not be altered during such a year;
- be communicated to the tax authority together with the submission of returns for the first quarter of such a tax reporting year.
In case of taxpayers declared to be monopolists by law, the depreciation rates shall not be an obligatory component of tariffs and other types of prices for their services.
( Sub-item 8.6.1. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
( Sub-item 8.6.2. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
8.6.2. Each taxpayer may at his/their own discretion resolve to apply accelerated depreciation to Group 3 fixed assets if acquired after this Law comes into effect, using these rates (per calendar year):
' 1st year of operation: fifteen percent;
' 2nd year of operation: thirty percent;
' 3rd year of operation: twenty percent;
' 4th year of operation: fifteen percent;
' 5th year of operation: ten percent;
' 6th year of operation: five percent;
' 7th year of operation: five percent.
Such [unilateral] decisions shall not be made by taxpayers manufacturing products (doing works, rendering services) subject to tariffs regulated by the government or by taxpayers recognised as market monopolists in keeping with legally set procedures.
Accounting such fixed assets shall be done separately, with regard to each such object. Allocation for depreciation shall be accrued on the book cost of such objects, equal to their primary value multiplied by the amount of expenses involved in their improvement, in keeping with procedures stipulated by Sub-items 8.3.2 and 8.7.1 of this Article 8.
8.6.3. Temporarily, till 01 January 2009, an annual 20 per cent norm of the accelerated depreciation of fixed assets of Group 3 shall be set for subjects of space activities.
At that, the fixed assets of Group 3 shall be depreciated until the book value of the group becomes equal to zero.
( The Sub-item added to the Article according to Law of Ukraine #1559-III of March 16, 2000 )
8.6.4. The annual 20 per cent quota of the accelerated depreciation of fixed assets of groups 3 and 4 shall be instituted for technology parks, their participants and joint ventures in case of the implementation of technological park projects registered under the procedure prescribed by the Law of Ukraine "On Special Regime of Innovation Activities of Technology Parks".
At that, the group 3 fixed assets shall be depreciated, until the book value of the group comes to zero.
( Sub-item 8.6.4 added to Item 8.6 of Article 8 acccording to  Law  of
Ukraine #3333-IV of January 12, 2006 )
8.6.5. Industrial companies shall be vested with the rate to use the annual 25 per cent allowance for the accelerated depreciation of Group 3 fixed assets.
At that, the depreciation of Group 3 fixed assets shall be carried out until the book value of the group reaches zero.
( Item 8.6 of Article 8 has been amended by adding Sub-item 8.6.5 according to Law of Ukraine #694-VI of December 18, 2008 - the Law has been recognized as unconstitutional on the basis of Decision of the Constitutional Court of Ukraine #18-rp/2009 of July 14, 2009 )
8.7. Operating and major repair, renovation, modernization, reequipment, and other improvements of fixed assets.
8.7.1. During the reporting period, taxpayers shall have the right to include any expenses related to the improvement of fixed assets subject to the depreciation, including the expenses for the improvement of the leased fixed assets, into the gross expenses in an amount not exceeding 10 per cent of the aggregate book value of all groups of fixed assets as of the beginning of such a reporting period.
( The Paragraph changed  and  amended  according  to  Law  of  Ukraine #1957-IV of July 01, 2004 )
The expenses above the said amount shall be allocated in proportion to actual expenses of the taxpayer for the improvement of fixed assets of groups 2, 3 and 4 or particular objects of fixed assets of group 1, and increase the book value of fixed assets of the relevant groups or particular objects of fixed assets of group 1 as of the beginning of the reporting quarter.
( The Paragraph in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
Fixed assets of any group shall be decommissioned on the basis of an executive order of a chief executive of the taxpayer or in case of the forced alienation or confiscation thereof by law.
The performance of any work related to the improvement of the fixed assets without the availability of the documents mentioned above shall not be construed as the evidence of the decommissioning of such fixed assets.
( Sub-item 8.7.1. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
8.8. Depreciation of expenses on the improvement of fixed assets held on operational leasing terms.
8.8.1. If an operational leasing (lease) contract makes it incumbent upon the lessee or allows the lessee to improve the operational leasing (lease) object, a portion of such improvements within the expenses, which exceed the fixed assets improvement amount ascertained under sub-item 8.7.1 of item 8.7 of this article, shall be included by such a lessee into the book value:
- of the relevant group of fixed assets, if the group of fixed assets, to which such a leasing (lease) object belongs, is accounted for on the lessee's balance sheet;
- of the fixed asset group created by such a lessee, if the group of fixed assets, to which such a leasing (lease) object belongs, is not accounted for on the lessee's balance sheet.
At that, the lessee shall disregard the book value of the operational leasing (lease) object, at which it is accounted for in the lessee's balance sheet.
( Sub-item 8.8.1. of Item 8.8. of Article 8 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
8.8.2. In case of the lessee's having returned the operational leasing (lease) object to the lessor because of the expiry of the leasing (lease) contract, or in case of the destruction, theft or demolition of the operational leasing (lease) object, the said lessee shall abide by rules set forth in sub-item 8.4.8 of item 8.4 of this article for the replacement of fixed assets. At that, the lessor shall not modify the book value of fixed assets or the gross revenues (gross expenses) by the amount of expenses incurred by the lessee for the improvement of such an object.
( Sub-item 8.8.2. added to the Item according to Law of Ukraine #349-IV of December 24, 2002 )
8.9 Accounting for operations with land and its capital improvements
8.9.1. The taxpayer shall keep separate accounts for the operations of the sale or purchase of land as a particular property. Expenses for such acquisition shall not be included into the gross expenses of the tax reporting period or into the group of fixed assets for depreciation purposes. If such a particular piece of property is sold at a later stage, the taxpayer shall include the positive difference between the income obtained as a result of such sale and the expenses related to the purchase of such a particular piece of property increased by the indexation coefficient specified in sub-item 8.3.3 of item 8.3 of this article into the gross revenues.
If expenses (taking into account the indexation) incurred in connection with the acquisition of such a piece of property exceed the income obtained as a result of the sale thereof, the loss from such a transaction shall not be included into the gross expenses and must be covered at the expense of the taxpayer.
8.9.2. In case of the sale of land obtained as property as a result of the privatisation, the taxpayer shall include the positive difference between the income obtained as a result of such sale and the assessed value of such land determined according to the established methodology of the pecuniary valuation of lands taking into account the coefficients of its functional utilisation as of the time of such sale into the gross revenues.
8.9.3. If a real estate object is acquired by the taxpayer together with the land, which is located beneath such an object or is a pre-requisite for ensuring the functional utilisation of such a real-estate object according to provisions of the law, the aggregate value of such a fixed asset and such land shall be subject to the depreciation at rates specified by this article for fixed assets of group 1.
In this case, provisions of sub-items 8.9.1 to 8.9.2 and 8.9.4 of this item shall not apply.
8.9.4. However, if the land as a particular piece of property is sold or alienated otherwise, the book value of a particular object of fixed assets of group 1, where the value of capital improvements of the quality of such land was reflected, shall be attributed to gross expenses of such a taxpayer as a result of the tax period of such sale
( Item 8.9. added to the Item according to Law of Ukraine #349-IV of December 24, 2002 )
( Article 8 changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
Article 9. Amortization of Expenses Involved in the Extraction of Mineral Wealth
9.1. Any expenses involved in prospecting (supplementary exploration) and development of any deposits (wells) of mineral wealth (except for the expenses envisaged in the Sub-item 5.2.16 of the Item 5.2 of the Article 5 of the Law hereunder) shall be referred to the separate group of taxpayer's expenses on whose balance these deposits (wells) are placed and subject to amortization.
( The Item in the wording of Law of Ukraine #2712-III of September 20, 2001 - comes into force as from January 01, 2001 )
9.2. The list of expenses referred to the separate group of taxpayer's expenses shall be determined by the Cabinet of Ministers of Ukraine.
( The Item in the wording of Law of Ukraine #2712-III of September 20, 2001 - comes into force as from January 01, 2001 )
9.3. Accounting of the book cost of expenses involved in the extraction of mineral wealth shall be carried out separately, with regard to each deposit (quarry, pit, borehole). Such accounting procedures shall be established by the Cabinet of Ministers of Ukraine.
9.4. The amount of allocation for depreciation of expenses on extraction of mineral wealth (except for wells used for development of oil and gas deposits) shall be calculated for the given accounting period using this formula:
( The Paragraph 1, Item 9.4 changed and amended according to Law of Ukraine #2712-III of September 20, 2001 - comes into force as from January 01, 2001 )
S(a) = B(a) ' O(a) : O(t)
where:
- S(a) means the amount [sum] of allocation for depreciation during the accounting period;
- B(a) means the book cost of the group [of fixed assets] as of the beginning of the accounting period, equal to the book cost of this group at the start of the quarter preceding the accounting period, multiplied by the amount of expenses on the prospecting (supplementary exploration) and equipment of deposits (boreholes/wells) that were sustained during the previous period;
- O(a) means the amount (actual size) of natural wealth factually extracted during the accounting period;
- O(t) means the total rated value (actual size) of natural wealth yielded at the certain deposit and determined by the procedure approved by the Cabinet of Ministers of Ukraine.
( The Paragraph in the wording of Law of Ukraine #2712-III of September 20, 2001 - comes into force as from January 01, 2001 )
Taxpayers under all forms of ownership shall have the right to annually adjust the book cost of expenses involved in the extraction of mineral wealth to the indexation coefficient obtained using this formula:
Ki = [I(a-1) - 10] : 100
where:
- I(a-1) means the indexation coefficient by the results of which indexation is carried out.
No indexation shall be performed if the Ki value is not over 1.
Taxpayers using the indexation coefficient shall be under the obligations to declare capital revenues in amounts equal to the difference between the book cost of expenses involved in the extraction of mineral wealth, as of the start of the accounting year, using this indexation coefficient, and that of such expenses prior to this indexation.
Said capital revenues shall be referred to that taxpayer's gross revenues in each accounting period of the fiscal year, in an amount obtained as the result of adding the amount of capital revenue to the coefficient:
O(ay) : O(t) : 4
where:
- O(ay) means the amount (actual size) of natural wealth actually extracted throughout the year preceding the accounting period;
- O (t) means the total rated value (actual size) of natural wealth yielded by the given deposit.
( Item 9.4. changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
9.5. Depreciation rates for wells used for development of oil and gas deposits shall be determined in terms of percentage with regard to their balance sheet value in the following amount (per calendar year):
1st year of operation - ten percent;
2nd year of operation - eighteen percent;
3rd year of operation - fourteen percent;
4th year of operation - twelve percent;
5th year of operation - nine percent;
6th year of operation - seven percent;
7th year of operation - seven percent;
8th year of operation - seven percent;
9th year of operation - seven percent;
10th year of operation - six percent;
11th year of operation - three percent.
Taxpayers shall have right during the accounting year to include in gross expenses any expenses related to the repair, reconstruction, modernization and maintenance of wells used for development of oil and gas deposits in the amount, which does not exceed 10 percent of the balance sheet value of the separate well.
The expenses exceeding the said amount shall be included into the relevant fixed-asset group.
( The Paragraph in the wording of Law of Ukraine #349-IV of December 24, 2002 )
No indexation of balance cost of wells used for development of oil and gas deposits shall be performed.
( The Item 9.5 in the wording of Law of Ukraine #2712-III of September 20, 2001 - comes into force as from January 01, 2001 )
9.6. In the event that work aimed at prospecting (supplementary exploration) of deposits of natural wealth yields no results or if the given taxpayer resolves to abandon further prospecting or developing such deposits due to its cost inefficiency, expenses involved in such prospecting (supplementary explorations) may be referred to gross production (turnover) costs in the current tax period, with the balance cost of this group of expenses involved in the extraction of mineral wealth having zero value.

Article 10. Tax Rate
10.1. Taxpayers' revenues, including [those of] enterprises under individual ownership, shall be taxable at 25% per taxation object.
( Item 10.1. changed according to Law of Ukraine #349-IV of
December  24, 2002 - the changes come into force as from  January  01,
2004 )
( The Paragraph 2 invalidated by Law of Ukraine #934-XIV of July 14, 1999 )
For the mining and metallurgical complex enterprises participating in the economic experiment carried out from 01 July 1999 till 01 January 2002, the profit tax rate amounting to 30 per cent of the existing rate shall be set temporarily and the difference in revenues due to changes in the rate shall be used to replenish working capital of enterprises.
10.2. Taxation of gambling revenues.
( Sub-item 10.2.1. of Item 10.2. has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
( Sub-item 10.2.2. of Item 10.2. has been deleted on the basis of Law of Ukraine #1957-IV of July 01, 2004 )
10.2.3. Government lottery gains shall be tax-exempt. Government lottery shall be understood as a drawing of lots with a prize pool of at least 50% of the amount of revenues received, along with deductions to the State Fund of Ukraine worth at least the tax rate instituted by item 10.1 of this article, which applies to the income left after allocations to the prize pool.
( The Paragraph in the wording of Law of Ukraine #1969-III of September 21, 2000; changed and amended according to Laws of Ukraine #349-IV of December 24, 2002; #1957-IV of July 01, 2004 )
The Ministry of Finance of Ukraine shall specify requirements to the procedure of the financial control of activities related to issuing and drawing lotteries as well as specify requirements for the authorised capital of operators, which cannot be lower than those put forward by the National Bank of Ukraine for banks operating on the whole territory of Ukraine. The profit tax provided for in item 10.1 of this article, shall not be levied on the amount of the excess of revenues over expenses related to issuing and drawing the state lotteries.
( The Paragraph in the wording of Law of Ukraine #1969-III of September 21, 2000 )

Article 11. Accounting Rules
11.1 The following tax periods shall be used for the purposes hereof: calendar quarter, six months, three quarters, and year.
The tax period shall start with the first calendar day of the tax period and end with the last calendar day of the tax period, except for the agricultural product manufacturers as defined in Article 14 of this Law, whose annual tax period starts on 01 July of the current reporting (budget) year.
( Paragraph 2 of Item 11.1 of Article 11 changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )
The tax period for state-owned enterprises "Artek International Children Centre" and "Moloda Hvardiya Ukrainian Children Centre" shall be one year.
( Item 11.1 has been amended by adding a new Paragraph according to Law of Ukraine #906-VI of February 3, 2009 )
If the entity is registered by the tax authority as a payer of this tax amid the tax period, the first tax reporting period shall start with the date of the commencement of such registration, and end with the last calendar day of the next tax period.
If the taxpayer is liquidated (also before the expiry of the first tax reporting period), the period (ending with the day of such liquidation), on which the date of such liquidation falls, shall be deemed to be the last tax period.
( Item 11.1. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
11.2. Date of increasing gross costs
11.2.1. The date of increasing gross production (turnover) costs shall be a date during the accounting period in which any of the previous events took place, or
- The date of drawing from a taxpayer's bank account the amount payable for goods (works, services), or when buying any of these for cash, the date of such payment made by the taxpayer's cash department, or
- The date on which a taxpayer receives goods - and re works (services), the date of actual receipt of the results thereof.
11.2.2. With regard to taxpayers acquiring works (goods, services) using credit or debit cards or commercial checks, the date of increasing gross costs shall be the date of drawing up an appropriate bill (purchase receipt).
11.2.3. The date of the increase in gross expenses in case of its engaging into transactions with entities being:
a) non-residents;
b) residents paying the said tax at a rate lower than indicated in Article 10 hereof (except for taxpayers listed in item 7.2 of Article 7 hereof) or paying this tax as a part of the universal or fixed tax, or relieved of the payment of this tax, or not being the subjects of this tax by law,
shall be the date of the receipt registration of goods (and in case of the importation thereof, the receipt of work (services) accompanying or being ancillary to such importation of goods), or, in case of the work (services), the date of the actual receipt thereof from such entities regardless of the fact of the payment therefor (including the partial or advance payment).
When entering into a contract with a taxpayer, any entity listed in paragraph 'b' of this sub-item must indicate on request of the taxpayer in such a contract that such entity enjoys the status of the payer of this tax on general conditions provided for hereby. If such entity does not indicate this status in such a contract or if goods (services) are provided without entering into contracts in writing, then it shall be deemed for the purposes of determining the date of the increase in the buyer's gross expenses that such goods (services) were provided by entities relieved from this tax. If an entity without the status of the payer of this tax on general conditions provided for hereby specifies in the contract that it is such a taxpayer, it shall be deemed that such entity deliberately evades the taxation in the amount of the advance payment (downpayment) received thereby. In this case the taxpayer purchasing goods (services) shall not be liable for increasing the gross expenses as of the date of the downpayment (advance payment) for goods (services) on the basis of the false information about the taxpayer status provided in the contract.
( Sub-item 11.2.3. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
11.2.4. Gross expenses of ship-building enterprises incurred thereby in connection with the performance of contracts for the manufacture (construction) of sea-going and river-going vessels shall be included into the gross expenses during the tax period of the date of increase in the gross income as envisaged by item 11.3.7 of item 11.3 of Article 11 hereof.
( Sub-item 11.2.4 added to Item 11.2 of Article 11 according to Law of Ukraine #2505-IV of March 25, 2005 )
11.3. Date of increasing gross revenues
11.3.1. The date of increasing gross revenues shall be the date on which any of the previous events occurred in the given accounting period, or
- The date on which the buyer's (customer's) funds were entered on the taxpayer's bank account as payment for goods (works, services) to be sold; when selling goods (works, services) for cash, this date shall be the date on which such amount was received by the taxpayer's cash department - and in the absence of a cash department, the date of collection of this amount in cash by the taxpayer's serving bank, or
- The date of shipment of goods, and in the case of works (services), the date on which their results became actually available to the taxpayer.
11.3.2. When trading in products (foreign exchange values) or works (services) using vending machines or other such equipment that does not require the presence of cash registers to be supervised by an authorized individual, the date of increasing gross revenues shall be the date of cash withdrawal from such vending machines or other equipment.
The rules of such collection shall be established by the National Bank of Ukraine.
In cases when such products (works, services) are dispensed by vending machines using slugs, cards or other substitutes of the hryvnia, the date of increasing gross revenues shall be the date of sale of such slugs, cards or other substitutes of the hryvnia.
11.3.3. When such goods (works, services) are sold using credit or debit cards, traveler's, commercial, personal or other checks, the date of increasing gross revenues shall be the date of drawing up appropriate bills (purchase receipts).
( Sub-item 11.3.4. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
11.3.4. In the case of barters (swap deals), the date of increasing gross revenues shall be [the date of] any of the following events that happened previously, or
- The date of shipment; in the case of works (services), this shall be the date on which their results become actually available to the given taxpayer, or
- The date of receipt of goods; in the case of works (services), the date on which the taxpayer actually receives their results.
11.3.5. When selling goods (works, services) with payments financed by the budget, the date of increasing gross revenues shall be the date of remittance of such budget funds on the taxpayer's current account or the date on which an appropriate compensation in any other form is received, including reductions in the taxpayer's budget liabilities.
( Sub-item 11.3.5 changed and amended according to Laws of Ukraine #639/97-VR of November 18, 1997, #2921-III (2921-14) of January 10, 2002 )
11.3.6. The date of the accrual of the interest (commissions) within time frames specified by the loan (deposit) contract shall be the date of the increase in the gross income of the creditor from the exercise of the credit and deposit transactions.
The date of the accrual of the income during the relevant reporting period under the consolidated mortgage debt (reduced by the amount of the mortgage assets management and service fee) shall be the date of the increase in the gross income of the participatory mortgage certificate holder under transactions with such a mortgage certificate.
If the debtor delays the payment of the interest or commissions, the creditor shall settle such a debt in accordance with item 12.1 of Article 12 of this Law.
At that, the accrual method shall not be applied for determining the tax liability of the creditor under such a loan (deposit) until the complete repayment of the debt by the debtor or the full or partial debt write-off as the creditor's expenses in accordance with the procedure prescribed by this Law.
( Sub-item 11.3.6. of Item 11.3. of Article 11 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
11.3.7. The amounts of advance payments and downpayment received by the ship-building enterprises from parties ordering the sea and river going vessels shall be included into the gross income of such enterprises as of the date of signing the protocol of handing over the sea and river going vessels to the contracting party, subject to the utilisation of the said funds for designated purposes in accordance with the procedure specified by the Cabinet of Ministers of Ukraine.
( Sub-item 11.3.7 added to Item 11.3 of Article 11  according  to  Law
of Ukraine #2505-IV of March 25, 2005 )
Article 12. Bad Debts
12.1. Procedures of regulation of doubtful and bad debts
12.1.1 A taxpayer selling goods (work, services) shall have the right to increase the gross expenses of the reporting period by the value of the shipped goods (performed work, provided services) in the current tax period or tax periods preceding the reporting period in cases, when the buyer of such goods (work, services) delays the payment of their value (the provision of other types of the compensation for their value) without concurring this with such a taxpayer. This right to increase the gross expenses shall arise, if any of the following events occurs during such a reporting period:
a) the taxpayer submits a claim (application) to the court for the collection of the debt from such a buyer or for instituting the proceedings of its bankruptcy, or the collection of the property pledged by it;
b) the said delay of payment (provision of other compensation type) exceeds 90 calendar days, and the selling taxpayer receives from the buyer its notice of acceptance of the claim sent to it earlier according to the procedure of the pre-court dispute settlement, or fails to receive a reply to such a claim within time frames specified by the legislation;
c) on request of the seller, the notary executes the note of execution for the collection of the debt from the buyer or the collection of the pledged property (except for the tax debt).
( Item 12.1.1. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
12.1.2. The selling taxpayer must increase the gross revenues of the relevant tax period by the amount of the debt (a part thereof) earlier included thereby into the gross expenses under sub-item 12.1.1 of this item or reimbursed at the expense of provisions according to item 12.3 of this article, if any of the following events occurs during such a tax period:
a) the court does not satisfy the seller's claim (application) or satisfies it partly, or does not accept the claim (application) for the examination (consideration), or satisfies the buyer's claim (application) for declaring invalid the requests for the full or partial repayment of this debt;
b) the parties to the contract come to an agreement on a pre-court basis in respect of the extension of the debt repayment time frame or the write-off of the full or partial debt amount (except for the conclusion of an amicable settlement agreement within the scope of procedures of the restoration of the debtor's solvency or its declarat on bankrupt as required by law);
c) the seller, which did not receive any reply to the claim within time frames specified by the legislation or obtained from the buyer a reply accepting the submitted claim but did not receive any payment (other compensation by way of the debt repayment) within time frames indicated in such a claim, and did not apply to the court of law (court of commerce) for the collection of such debt or the institution of bankruptcy proceedings, or the collection of the property pledged thereby.
A fine shall accrue on the amount of the additional tax liability calculated as a result of such increase at a rate specified by law for the non-timely repayment of the tax liability. The said fine shall be calculated over a period starting on the first day of the tax period following the period of the increase in gross expenses under sub-item 12.1.1 of this item till the last day of the tax period of the increase in the gross income, and must be paid regardless of the actual value of the tax liability of the taxpayer in the relevant reporting period. The fine shall not accrue on the debt (a portion of the debt) written off or deferred as a result of concluding the amicable settlement agreement according to the bankruptcy legislation starting from the date of such amicable settlement agreement.
( It  shall  be  stated  that in 2005 the fine payable under paragraph
five of sub-item 12.1.2 of item 12.1 of Article 12 shall be charged on
the basis of the triple annual discount rate of the National  Bank  of
Ukraine applicable as of the date of the emergence of  the  additional
tax   liability  according  to  Laws  of Ukraine #2285-IVof December 23, 2004, #2505-IV of March 25, 2005 )
( It  shall  be  stated  that in 2006 the fine payable under paragraph
five of sub-item 12.1.2 of item 12.1 of Article 12 shall be charged on
the basis of the triple annual discount rate of the National  Bank  of
Ukraine applicable as of the date of the emergence of  the  additional
tax  liability  according  to  Law  of Ukraine #3235-IV of
December 20, 2005 )
If (taking into account the limitation period) such a seller refers the matter to the court in the future, it shall have the right to increase the gross expenses by the amount of the claimed debt.
( Item 12.1.2. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
12.1.3. When appealing such court ruling, in keeping with legally set procedures, the taxpayer shall not have to increase gross revenues, as per Sub-item 12.1.2 hereinabove, until the final ruling in the case.
12.1.4. The notice of the increase in gross expenses or gross revenues with the reference to appropriate provisions of sub-items 12.1.1 and 12.1.2 of this item shall be submitted by the selling taxpayer to the tax authority together with the return covering the reporting period, and other primary documents, which confirm the existence of the accounts receivable and payable.
( Sub-item 12.1.4 of Item 12.1  in  the  wording  of  Law  of  Ukraine#349-IV of December 24, 2002; changed and amended according
to Law of Ukraine #1957-IV of July 01, 2004 )
12.1.5. The buying taxpayer must increase the gross revenues by the non-repaid debt amount (a portion thereof) recognised in the course of the pre-court dispute settlement procedure, or by the court, or by the notary's note of execution in the tax period of the first of the following events:
a) either the 90th calendar day of the deadline for the repayment of such debt (a portion thereof) provided for by the contract or accepted claim;
b) or the 30th calendar day of the court decision recognising (collecting) such debt (a portion thereof), or the execution of the note of execution by the notary.
The time frames of paragraph 'a' of this sub-item shall also apply to cases, when the buyer failed to reply to a claim sent by the seller within time frames stipulated by the civil procedural legislation.
The time frames of paragraph 'b' of this sub-item shall apply regardless of the fact, whether the state bailiff or a person enjoying an equivalent status by law has started taking the measures focused on the forced debt collection.
The said increase in the gross revenues of the buyer shall not apply to the debt (a portion thereof) repaid by such a buyer before the onset of deadlines of paragraphs 'a' and 'b' of this sub-item.
If the buyer repays the amount of the recognised debt fully or partly (on its own or under the forced collection procedure) during subsequent tax periods, such a buyer shall increase the gross expenses by the amount of such debt (a portion thereof) as a result of the tax period of such repayment.
The debt earlier included into the gross expenses according to sub-item 12.1.1 of this item or reimbursed at the expense of provisions according to item 12.3 of this article, which is declared bad as a result of the insufficiency of assets of the buyer declared bankrupt according to the established procedure or as a result of the write-off thereof according to terms and conditions of the amicable settlement agreement concluded according to the bankruptcy legislation shall change the tax liabilities of neither the buyer nor the seller in connection with such recognition.
( Sub-item 12.1.5. in the wording of Law of Ukraine #349-IV of December 24, 2002 )
12.2. Specificities of covering bad debts by banks and nonbanking financial establishments
12.2.1. Any bank, as well as any non-bank financial institution established in accordance with provisions of the relevant laws, except for insurance companies and non-state pension funds (hereinafter referred to as 'financial institutions') must make provisions for the reimbursement of the possible loss under the principal debt (without the interest and commissions) under all types of loans (including the consolidated mortgage debt), as well as guarantees, sureties, purchased securities (including the fixed-yield mortgage certificates), other asset banking transactions, which are included into the scope of their business activities according to the legislation.
( Sub-item 12.2.1. changed and amended according to Law of Ukraine #349-IV of December 24, 2002; in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
12.2.2. With regard to the provisions of Sub-item 12.2.3 hereunder, such insurance reserves shall be formed by each financial institution independently, in an amount sufficing to cover the risk of nonreturn of the principal debt under such loans (other liabilities) as may be recognized nonstandard using methods established by the National Bank of Ukraine for banks, and by the specifically authorised executive agency in the field of the regulation of financial services markets for nonbanking financial institutions; also under loans, guarantees, sureties, purchased securities, other debt types recognized as bad debts by this Law.
(  Sub-item  12.2.2. changed and amended according  to Law of  Ukraine#349-IV of December 24, 2002 )
12.2.3. The amount of such insurance reserves as may be formed by increasing gross costs of such financial institutions shall not be in excess of:
- 10% of the debt liabilities with regard to commercial banks - particularly in terms of the joint debt under loans and guarantees actually given debtors (valued) on the last business day of the given tax period;
- Amount established by the laws on nonbanking financial institutions, but not in excess of 15% of the amount of debt liabilities, particularly in terms of the joint debt of such nonbanking financial institutions on the last business day of the tax period.
The amount of said liabilities shall not include debtors' liabilities arising from operations that are not part of the given financial institution's principal activities.
The notion "principal activities" shall be interpreted as operations defined by Article 47 of the Law of Ukraine On Banks and Banking Activities, and be relevant articles of the laws on nonbanking financial institutions.
( The Paragraph changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )(  Sub-item  12.2.3  of Item 12.2 of Article 12  changed  and  amendedaccording to Law of Ukraine #2505-IV of March 25, 2005 )
12.2.4. When reducing the aggregate amount of nonstandard or bad loans (other liabilities) as results of the given accounting period, due to their transfer to the standard category or referral to gross costs, using procedures set forth in Item 12.3 hereunder, or when reducing the amount of debt liabilities used as the basis for restrictions as per Sub-item 12.2.3 hereinabove, the excess amount of insurance reserve shall be used to increase the gross revenue of this financial institution as per results of this accounting period.
12.2.5. Procedures and sources of formation and operation of insurance reserves (funds) to insure individual deposits shall be established by a separate law.
12.3. Procedures of indemnification of bad debts at the expense of taxpayers' insurance reserves
12.3.1. The debt amount shall be attributed to the creditor's gross expenses, if the limitation period under the relevant contract with the debtor expired before this Law's becoming effective. Within the same period, the debtor shall increase its gross revenues by the same amount.
The debt, for which the creditor does not apply to the court for the forced collection thereof before the expiry of the limitation period, shall not be included into the creditor's gross expenses under sub-item 12.1.1 of item 12.1 of this article, and may not be reimbursed at the expense of its provisions.
( Paragraph  2 of Sub-item 12.3.1 of  Item 12.3 of Article 12  in  the
wording of Law of  Ukraine #1957-IV of July 01, 2004 )
The debt principal, which cannot be collected from the debtor by force as a result of the conclusion of an amicable settlement agreement within the framework of the procedure of restoring the debtor's solvency or declaring it bankrupt in accordance with the law, shall not be included into the gross expenses of the creditor under sub-item 12.1.1 of item 12.1 of this article, but may be reimbursed at the expense of its provisions made under this article.
( The Paragraph added to Sub-item 12.3.1. of Item 12.3. of Article 12 according to Law of Ukraine #1957-IV of July 01, 2004 )

( Sub-item 12.3.1 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
12.3.2. Bad debts under contracts envisaging the issue of a bill for the creditor's benefit, as the guarantee of the debtor's commitments, shall be reimbursed at the expense of that creditor's insurance reserve, provided the protested bill has remained unpaid for 30 calendar days from the date of the protest, and provided the payee of bill has commenced bankruptcy proceedings
In each such case, the promissor shall have his/their gross revenues increased by the cost of the protested bill in the accounting period in which ends the 30th day of protesting the bill.
12.3.3. Bad debts of taxpayers proclaimed bankrupt in due course of law shall be indemnified at the expense of the creditor's insurance reserve after the award proclaiming this debtor bankrupt. Funds received by the creditor after the liquidation proceedings and sale of the debtor's property shall be referred to that creditor's gross revenues in the accounting period in which such funds were received.
Creditors giving loans to debtors already involved in bankruptcy proceedings by the time of signing such loan agreements and having had every opportunity to know about these proceedings (except when such loans are given as part of the debtor recovery procedures and are secured by that debtor's corporate rights) shall have to reimburse bad debts using their own funds.
In each such case the gross revenues of a debtor proclaimed bankrupt in due course of law shall not be increased by the amount of said bad debts.
If the creditor cannot apply to the court for the institution of bankruptcy proceedings because the aggregate amount of indisputable claims of such a creditor to the debtor is less than 300 minimum salaries, the said claim amount shall be included into the gross expenses of the creditor according to the procedure specified in paragraph 'b' of sub -item 12.1.1 of item 12.1.
( The Paragraph added to the Sub-item according to Law of Ukraine #349-IV of December 24, 2002 )
12.3.4. Secured debts shall be redeemed in keeping with procedures set forth in the Law of Ukraine On Pledge.
The pledgee shall have the right to use the insurance reserve to make good that part of the debt which remains unredeemed due to insufficient proceeds the creditor receives from the sale of the debtor's property pledged, provided other legal actions of the creditor aimed at exacting the creditor's other property failed to cover the debt. Pledged property shall be sold only at public auctions. When alienating pledged property using other methods, the creditor shall cover losses by revenues left at the creditor's disposal after taxation.
Procedures of public auctions shall be established by the Cabinet of Ministers of Ukraine.
12.3.5. Bad debts arising from the debtor's inability to pay caused by acts of God or force-majeure circumstances shall be indemnified using the creditor's insurance reserve, in the presence of any of the documents listed below:
- Statement of the Chamber of Commerce and Industry of Ukraine attesting to force-majeure circumstances or acts of God on Ukraine's territory or
- Similar statements issued by authorized bodies of other countries and legalized by Ukraine's consular offices;
- Decree of the President of Ukraine instituting an emergency ecological situation in separate areas of Ukraine, approved by the Supreme Council of Ukraine, or a Resolution of the Council of Ministers of Ukraine designating disaster areas in case of flood, drought, fire and other calamities, including resolutions designating areas with crops damaged by the weather to an extent above 30% of the average yields in the past five calendar years.
In each such case, the debtor's gross revenues shall not be increased by the amount of liabilities arising from that creditor's inability to pay due to acts of God or force-majeure circumstances for the duration of said circumstances.
12.3.6. Outstanding debts of enterprises, institutions, and organizations whose property is immune from debt claims (or in the case of enterprises exempted from privatization) under the laws of Ukraine shall be indemnified using creditor's insurance reserves, provided said liabilities were not redeemed or otherwise made good for 30 calendar days from the date overdue by the State Budget of Ukraine or by relevant local budgets.

In each such case, the creditor, within time-limits defined by current legislation, shall be under the obligation to bring the matter before a court of law , claiming damages incurred by this loan. If the creditor fails to address a court of law within a legally set time-limit, or if the court of law dismisses the case, the creditor shall be under the obligation to increase his/their gross revenues by the amount of such bad debts in the appropriate accounting period.
12.3.7. Outstanding debts of individuals found by a court of law to be missing or deceased shall be reimbursed by the creditors insurance reserve, provided the court ruling pronouncing the debtor missing or dead is dated later than the date of the loan agreement.
In each such case, the creditor shall perform legal actions aimed at collecting bad debts from the individual's legacy within the limits and using the procedures established by the law.
12.3.8. Outstanding debts under contracts found by court completely or partially invalid because of the debtor shall be reimbursed from the creditor's insurance reserve provided the debtor fails to honor the liability for 30 days from the date of the court ruling proclaiming such contract wholly or partially invalid.
In each such case, the debtor's gross revenues shall be increased by the amount of such liabilities in the tax period in which the court ruling recognizes the contract wholly or partially invalid because of the debtor.
12.3.9. Outstanding debts under contracts or sections thereof, found legally invalid because of the debtor or because of both parties thereto shall be redeemed by the amount of the debt redeemed by the debtor, and if no such amount is provided for 30 calendar days, by the revenues left at the creditor's disposal after taxation.
In each such case, the debtor's gross revenues shall be increased by the amount of the debt in the tax period in which the court ruling recognizes such contract or a section thereof invalid because of the parties thereto.
12.3.10. Outstanding debts of individuals placed on wanted lists in keeping with procedures stipulated by the Criminal Procedural Code of Ukraine shall be indemnified from the creditor's insurance reserve, provided the debtor's whereabouts are not ascertained within 180 calendar days.
12.3.11. Outstanding debts of legal entities whose executives are placed on wanted lists in keeping with procedures established by the Criminal Procedural Code of Ukraine shall be indemnified from the creditor's insurance reserve, provided these executives are not located within 180 calendar days.
12.3.12. When all measures taken to collect bad debts, as per Item 12.3 of this Article 12, prove abortive, banks and nonbanking financial institutions shall refer such debts to gross costs inasmuch as they were no indemnified using insurance reserves formed in accordance with this Article 12.
12.4. Additional clauses
12.4.1. If the debtor wholly or partially redeems the bad debt previously referred by the creditor to that creditor's gross costs or indemnified using the insurance reserve, as per Items 12.1 and 12.3 hereinabove, the creditor shall increase his/their gross revenues by the amount of compensation received from the debtor and refer it to the tax period in which said debt was wholly or partially made good.
12.4.2. If, according to the opinion of the appropriate authorised agency defined under sub-item 12.3.5 of item 12.3 of this article, the force-majeure or act-of-God circumstances are of temporary nature and do not affect the debtor's ability to pay the debt after the end thereof, the creditor may submit a claim to the debtor for the payment of the said debt. If the debtor has failed to repay the said debt or the creditor has failed to submit a claim to court for the collection of such debt within the time frames prescribed by the legislation, then the gross income of the creditor and the debtor shall be increased by the amount of the said debt.
( Sub-item 12.4.2 of Item 12.4 of Article 12 changed and amended according to Law of Ukraine #2705-IV of June 23, 2005 )

12.4.3. If the debtor, being an individual, is proclaimed by court to be missing or dead and if this debtor [suddenly] makes an appearance, the creditor shall be under the obligation to take measures to collect the debt. Should such an individual pay a debt which the creditor previously referred to gross costs or had indemnified from the insurance reserve, the creditor shall increase gross revenues by the amount received from this debtor in the accounting period in which this redemption was made.
12.4.4. If a [court] ruling on the invalidity of a contract because of the debtor is canceled as provided by law, and if the creditor does not contest this ruling within a legally set time-limit, the creditor shall increase gross revenues by the amount of the liability previously referred to gross costs or indemnified from the insurance reserve, in the accounting period in which the period of limitation expired.
12.4.5. If an individual placed on wanted lists is detected [and apprehended] and pays a debt previously referred to the creditor's gross costs or indemnified at the cost of insurance reserve, the creditor shall increase gross revenues by the amount received from the debtor in the accounting period in which this debt was (partially) redeemed.
12.4.6. If an individual (individuals) found guilty of damage as per Civil Procedural Code of Ukraine pays (pay) such individual debts as may have been referred by the creditor to gross costs or indemnified from the insurance reserve, the creditor shall increase gross revenues by the amount received from the debtor(s) in the accounting period in which such liability was (partially) redeemed.
( Article 12 changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
Article 13. Taxation of Non-esidents
13.1. Any revenues received by non-residents from sources in Ukraine - e.g., from business activities (including such revenues recorded in non-residents' accounts in terms of the hryvnia) - shall be taxed in keeping with the procedures and at rates set forth in this Article 13.
For the purposes of this Article 13, revenues received by non-residents from sources in Ukraine shall be understood as:
(a) interest and discount income payable to the non-resident, including interest on debt commitments issued by the resident;
( The Sub-Item changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
(b) dividends that are paid (accrued) by the resident;
c) the royalty, freight and the income from services of 'engineering' type;
( The Sub-Item in the wording of Law of Ukraine #349-IV of December 24, 2002 )
(d) leasing charges that are paid (accrued ) by residents or permanent representations for the benefit of the non-resident lessor;
(e) proceeds from the sale of real estate [immovables] located in Ukraine and owned by the non-resident, including property of the non-resident's permanent representation;
(f) returns from transactions with securities or other corporate rights determined under this Law;
(g) revenues from joint business endeavours and from long-term contracts in the territory of Ukraine;
(h) remuneration (reward) for non-residents' (or their authorised persons') cultural, educational, religious, sports, and entertaining activities in the territory of Ukraine;
(i) brokerage, commission or agency fees received from residents or other resident's permanent representations in return for brokerage, commission or agency services rendered by non-residents or their permanent representations to residents in the territory of Ukraine;
(j) risk insurance or reinsurance premiums in Ukraine (including life insurance policies) or such risk insurance of residents outside Ukraine;
(k) revenues in the form of gambling gains (lottery prizes, except government lottery) and revenues from casinos and other gambling places (houses) located in the territory of Ukraine, also revenues from the organisation and operation of the gambling business and lotteries (except government lotteries);
(l) revenues as charitable contributions and donations for non-residents' benefit;
(m) other incomes from business activities done by non-residents (permanent representations thereof) in the territory of Ukraine, except revenues in the form of proceeds or other types of compensation of the cost of goods (works, services) transferred (executed, granted) to residents from non-residents (permanent representation), including the cost of services in terms of international communications or international data exchange.
13.2. A resident or a non-resident's permanent representation making any payments to the non-resident or a person authorised thereby from income sources in Ukraine, resulting from business activities (including such payments entered on the non-resident's accounts in terms of the hryvnia), except revenues indicated in Items 13.3 - 13.6, must retain the income on such revenues listed in item 13.1 of this article at a rate of 15 per cent of the amount thereof and at their expense, which should be paid to the budget at the time of such disbursement, unless otherwise provided by international agreements currently in effect [in Ukraine].
( Item 13.2, Article 13 changed and amended according to Law of Ukraine #977-XIV of July 15, 1999; #349-IV of December 24, 2002 )
13.3.
( Paragraph 1 deleted according to Law of Ukraine #349-IV of December 24, 2002 )
Residents paying incomes to non-residents (including such payments transferred to non-residents' hryvnia accounts), resulting from portfolio investments in interest-bearing or treasury bonds issued as resolved by these residents - specifically, by a special government or local self-administration authority (except external bonds of Ukraine) - shall be under the obligation to deduct during such payments and pay the tax in the amount of 30% of such revenues, less the tax levied under Item 13.2 hereinbefore.
Non-residents' revenues in the form of yields on interest-free (discount) bonds or treasury bonds shall be taxable at the rate specified in item 10.1 of Article 10 of this Law in keeping with procedures as stated below:
( The Paragraph changed and amended according to Laws of Ukraine #349-IV of December 24, 2002; #1957-IV of July 01, 2004 )

- taxation base shall be the revenue calculated as the difference between the par value of interest-free (discount) securities paid (accrued) by the issuer and their buying price on the primary and secondary stock markets;
- for the purposes of taxation control, purchase or sale of securities indicated in this Item 13.3 may be exercised on behalf and at the expense of the non-resident, but only by that non-resident's permanent representation or resident operating in behalf, at the expense, and under the authority of that non-resident;
- the said resident or permanent representation shall be responsible for complete and timely accrual and payment to the budget of taxes levied when paying incomes to the non-resident, resulting from possession of interest-bearing or interest-free (discount) securities. The central tax authority of Ukraine shall establish the procedures of filing tax commitments [obligations] and accounts on deductions and payment to the relevant budgets of taxes stipulated hereinabove by residents or non-residents' permanent representations.
Residents operating on the market of interest-bearing or interest-free (discount) bonds or treasury bonds on behalf, at the expense, and under the authority of non-residents, shall independently draw up reports on tax deductions and payments as per this Article 13 and submit them to the local tax authority.
13.4. Revenues received by non-residents as interest or yields on government securities sold (placed) by non-residents outside Ukraine, via authorised non-resident agents, or as interest paid to non-residents on loans (credits or external government loans) granted Ukraine, recorded in the State Budget of Ukraine or cost estimates of the National Bank of Ukraine, shall be tax-exempt.
13.5. The amount of the freight paid by the resident to a non-resident under the contracts of freight shall be taxed at the rate of 6 per cent at the source of payment of such income at the expense of such income.
( Paragraph 1 of Item 13.5 in the wording of Law of Ukraine #1957-IV of July 01, 2004 )
At that:
- the freight charge base rate shall be the taxation basis;
- the non-resident disbursing such revenues shall be authorised to collect this tax and pay it to the budget regardless of its being the payer of this tax, and its being a simplified taxation entity.
( Item 13.5 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
13.6. Insurers (other residents) making payments under insurance contracts or risk re-insurance (including the life insurance) to non-residents must tax the amounts of such insurance or re-insurance as follows:
in case of the conclusion of risk insurance or re-insurance contracts directly with non-resident insurers and re-insurers, whose financial reliability (stability) rating meets the requirements set by the specifically authorised executive agency in the field of the financial service markets regulation, (for instance via or through the mediation of re-insurance brokers who shall confirm in accordance with the procedure specified by the said authorised agency that the re-insurance has been procured from the re-insurer, whose financial reliability (stability) rating meets the requirements set by the said authorised agency), and in case of the conclusion of the re-insurance related to the statutory nuclear installation operator's third-party liability insurance in respect of the damage that can be caused as a result of the nuclear incident - at the rate of 0 per cent;
( Paragraph 2 of Item 13.6 of Article 13 in  the  wording  of  Law  of
Ukraine #398-V of November 30, 2006 )
in other cases at the rate of 12 per cent of the amount of such payments at own expense at the time of the transfer of such payments.
( Paragraph 3 of Item 13.6 of Article 13 in  the  wording  of  Law  of
Ukraine #398-V of November 30, 2006 )
Residents making payments to non-residents from the advertising services provided on the territory of Ukraine shall pay the tax at a rate of 20 per cent of the amount of such payments at own expense.
( Item 13.6 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
( Item 13.7 deleted according to Law of Ukraine #349-IV of December 24, 2002 )
13.7. The revenues of non-residents received in the form of dividends added on the corporate rights emitted by the residents shall be taxed according to the following procedure:
a) the revenues of non-residents received in the form of dividends shall be taxed at a rate of 15 per cent of the calculated amount of the payment at the expense of such a payment, unless otherwise provided by the international treaties, which have become effective. The tax shall be paid either prior to, or at the moment of the dividend payment in case of their repatriation abroad, but not latter than the payment of the tax according to the results of the tax period, during which such dividends have been added;
b) the issuer of the corporate rights shall make the dividend payments to the non-resident on a pro-rata basis with its share in the authorised fund at the expense of the profit remaining at the disposal of such an issuer after the taxation;
c) the rules specified in sub-item 7.8.1, paragraph 1 of sub-item 7.8.2, sub-items 7.8.3-7.8.4 and 7.8.6 of item 7.8 of Article 7 hereof shall not apply to non-residents receiving the revenues in the form of dividends.
( Item 13.7, Article 13 in the wording of Law #977-XIV of July 15, 1999 )
13.8. Non-residents' revenues, when operating in Ukraine via permanent representations, shall be taxable on the general terms. For taxation purposes, such permanent representations shall be set on the same footing as taxpayers operating independently of such non-resi dents.
A non-resident operating in and outside Ukraine, without declaring incomes received via a permanent representation in Ukraine, shall be levied the income tax as per separate balance sheet composed by that non-resident in co-ordination with the tax authority at the permanent representation's place.
When a non-resident's incomes from sources in Ukraine cannot be determined by direct calculation, such incomes shall be ascertained by the tax authority as the difference between gross revenues and gross costs, applying 0.7 coefficient to the gross revenue thus obtained (accrued).
13.9. Residents providing agency, commission and other such services in terms of sale or purchase of goods (works, services) at the expense and for the benefit of non-residents (including contracts made with other residents on such non-residents' behalf) shall deduct and pay to the relevant budget the tax accrued on the incomes received by such non-residents in Ukraine, in keeping with taxation procedures bearing non-residents operating in Ukraine via permanent representations. In such cases such residents shall not require additional registration with tax authorities as payers of the income tax.
( The Paragraph deleted according to Law of Ukraine #393-XIV of January 14, 1999 )
The types of income tax indicated in this Article 13, except the repatriation tax as per Item 13.2 hereinbefore shall be considered part of the inland company income tax and their rates shall not be regulated by international treaties against double taxation regulating repatriation tax rates.
( Paragraph 2, Item 13.9, Article 13 shall not apply to incomes earned and expenses incurred as of July 1, 1997 according to Law of Ukraine #393-XIV of January 14, 1999 )( Article 13 in the wording of Law of Ukraine #639/97-VR of November 18, 1997 )
Article 14. Taxation of Agricultural Manufacturers
14.1. Enterprises specializing in agricultural output shall pay income tax in amounts and in keeping with procedures determined by this Law, as per results of the tax year.
Gross revenues and costs of agricultural manufacturers received and sustained during the tax year shall be subject to adjustment proceeding from the official inflation index from the month following the one in which such losses or revenues occurred till the end of the tax year.
The amount of accrued tax shall be reduced by the amount of land tax effective in agricultural production turnover.
( Paragraph 4 deleted according to Law of Ukraine #349-IV of December 24, 2002 )
If by the results of the tax year such enterprises show balance sheet losses, the latter shall be carried to reduced gross revenues of subsequent tax years, in keeping with procedures set forth in Article 6 hereinbefore.
14.2. Item 14.1 hereinabove shall not apply to enterprises specializing in the output and/or sales of products of ornamental gardening, wild plants, wild animals and birds, fish (except fish caught in rivers and isolated reservoirs), furs and fur garments, wines and spirits, beer, material for wine production (except such material meant for further treatment), which enterprises shall be taxed on the general terms.
( The Item changed and amended according to Law of Ukraine #639/97-VR of November 18, 1997 )
14.3. When selling goods directly involving agricultural technologies to agricultural producers on commercial credit terms, the creditor's gross revenues shall be increased in the taxation period in which the debt matures as per credit contract [loan agreement].
Should this commercial credit apply to goods, the expenses on which are referred to gross costs, the borrower's gross costs shall be increased as of the date of maturity under this commercial credit.
Should this commercial credit apply to goods, the expenses on which are subject to depreciation, as per Article 8 hereinbefore, the date of increasing the balance sheet value of the appropriate group of the fixed assets shall be the date on which the borrower makes the payment under this commercial credit.
( The Item added to the Article according to Law of Ukraine #639/97-VR of November 18, 1997 )
Article 15. Amending Procedures
Tax rates, preferences, exemptions, taxation objects, accrual procedures, terms and conditions of payments and remittances to the budget shall be instituted and altered only by way of changes in and amendments to this Law.
Article 16. Accrual Procedures and Terms of Payment
16.1. Taxpayers shall independently determine the amounts taxed and payable.
16.2. Income tax shall be accrued at the rate indicated in Article 10 hereinbefore, on revenues levied as per Item 3.1 hereinbefore, with due regard to the provisions of Items 7.12; 7.13; 7.14; 14.1;16.9, and Articles 6 and 13 hereinbefore.
( Item 16.2 changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
16.3. A taxpayer, who exercises business subject to patenting under the Law of Ukraine "On Patenting Certain Business Activities" (98/96-VR), must separately determine the tax on the profit from each specific type of such business activity and separately determine the tax on the profit from other activities. To this end, such taxpayers shall keep separate accounts for:
the gross income obtained from exercising the activities subject to patenting;
the gross expenses incurred in connection with the exercise of such activities;
the book value of commodities, materials, raw materials, components and semi-finished goods on stock, as non-finished goods and the stock of the finished products (hereinafter referred to as the "inventories"), which are used to exercise the activities subject to patenting. At that, the book value of such inventories shall not be used for the calculation of the increase (decrease) in the book value under item 6.9 of Article 5 hereof to determine the object of taxation from other activities;
depreciation charges, which have accrued on the relevant group of fixed assets sued to exercise the activities subject to patenting.
If the fixed assets are used both for exercising the patentable business activities and other business activities, then the method of the proportional distribution of the depreciation charges depending on the percentage of the income related to each business activity shall be used to determine the object of taxation for various business activities. According to this method, the gross income of the taxpayer obtained from a certain patentable business activity shall be reduced by a part of the total amount of depreciation charges accrued in the reporting period in line with the ratio of the income amount obtained from a certain patentable business activity to the total amount of the gross income. The same shall apply to the allocation of gross expenses simultaneously related to the patentable activities, and to other activities.
The tax on the profit obtained from business activities subject to patenting under the Law of Ukraine "On Patenting Certain Business Activities" (98/96-VR) shall be paid to the budget in the amount determined in accordance with this Law reduced by the cost of trade patents procured to exercise the business activity in question.
( Item 16.3 of Article 16 in the worrding of Law of  Ukraine  #2505-IV of March 25, 2005 )
16.4. The tax for the reporting period shall be paid by its payer to the relevant budget within the time frame prescribed by law for the quarterly tax period.
( The Paragraph in the wording of Law of Ukraine #349-IV of December 24, 2002 )
Within time frames prescribed by law, the taxpayers shall submit the tax return to the tax authority stating the profit of the reporting period calculated on a cumulative basis taking into account the negative value of the taxation object in previous tax periods (if any) according to item 6.1 of Article 6 hereof. At that, a simplified return shall be submitted by taxpayers for the reporting quarter, six months and three quarters; a full tax return shall be submitted as a result of the reporting year. Forms of returns for this tax shall be specified by the central tax authority in concurrence with the committee of the Supreme Council (Parliament) of Ukraine responsible for the pursuit of the taxation policy.
( The Paragraph in the wording of Law of Ukraine #349-IV of December 24, 2002 )
If the taxpayer deems it appropriate to explain certain results of its financial and business performance specified in the tax return for the tax in question, such a taxpayer may send such an explanation drawn up in an arbitrary format to the tax authority. The tax authority may not require the submission of reporting or accounting forms not directly envisaged hereby, including those compiled according to the accounting rules, other balance sheets or statements not required by this Law. The statistical and accounting statements shall be submitted to the state statistics bodies according to the law. Also, the accounting statements shall be submitted by enterprises to bodies, to whose management sphere they belong by law. The same rule shall apply to any taxes, dues (statutory fees) included into the taxation system. In connection with this, the taxpayer shall not be subject to the tax liability in case of the delayed or incomplete submission of accounting statements, or the failure to submit the same.
( The Paragraph in the wording of Law of Ukraine #349-IV of December 24, 2002 )
Enterprises specialising in agricultural products shall submit tax returns within periods specified by law for the annual reporting period, using the form adopted by the central tax authority of Ukraine.
( The Paragraph in the wording of Law of Ukraine #793/97-VR of December 30, 1997, changed and amended according to Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )
For taxation purposes, the category of enterprises specialising in agricultural products shall include enterprises with more than 50% of their gross income formed by proceeds from the sale of agricultural products over the accounting (tax) year.
Should these proceeds from the sale of agricultural period over the accounting (tax) year register less than 50% of their gross income, their income from the sale of products (works, services) other than agricultural products shall be taxable on the general terms.
( Item 16.5. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
16.5. Money orders for recalculation of tax payments to the budget shall be submitted by enterprises to banking establishments prior to the date due.
( Item 16.6. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
16.6. Taxpayers shall have the right not later than 10 days prior to the deadline, as per Item 16.4 hereinabove, submit documents to inland revenue authorities, sending them by registered mail. Any disputes between taxpayers and the postal service, arising from untimely deliveries shall be settled in due course of law. Procedures of such postal deliveries and turnover rates shall be established by the Cabinet of Ministers of Ukraine.
Inland revenue authorities shall not coordinate tax computations with taxpayers prior to tax payment, except in cases envisaged by Item 16.12 hereunder.
( Item 16.7. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
16.7. Over the accounting (tax) quarter, all taxpayers, except non-residents and agricultural producers, shall make advance payments to the budget for the first and second month of this quarter, as determined by Item 16.3 hereinbefore, using the progressive total method.
Such advance payments to the budget shall be made proceeding from the results of the first and second month of the accounting (tax) quarter, till the 20th day of the second and third months of this quarter, respectively.
Such advance payments shall be calculated by the taxpayers independently, without submitting tax returns. Notifications on the results of such calculations shall be forwarded to the tax authority within the time-limits prescribed for advance payments. No penalties shall be levied in retaliation for discrepancies between advance payments made and the amount of such payments computed proceeding from the results of the accounting quarter.
( Item 16.8. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
16.8. The amount of tax paid to the budget by nonresidents shall be determined in keeping with procedures set forth in Article 13 hereinbefore.
16.9. The amount of tax paid to the budget by taxpayers in the insurance business shall be determined in keeping with procedures set forth in Item 7.2 hereinabove.
16.10. Budget-sustained organizations shall pay income tax accrued on revenues received from business activities on a quarterly basis, using progressive total as of the start of the tax year.
Nonprofit organizations determined by Item 7.11 hereinbefore shall pay income tax on revenues from minor activities, on the general terms.
16.11. Nonresidents operating in Ukraine via permanent representatives [agencies] shall keep books and records pursuant to Ukraine's legislation, and shall submit quarterly tax returns to inland revenue authorities at their representatives' places, as per incomes from sources in Ukraine, and income tax accruals using the form adopted by the central inland revenue authority.
In the event of termination of such permanent representatives [agencies] before the end of the accounting quarter, said documents shall be forwarded to the inland revenue authority within 15 calendar days from the date of termination.
16.12. Nonresidents' income tax shall be computed by taxpayers, subject to approval by the inland revenue authority at the permanent representative's place.
( The Paragraph changed according to Law of Ukraine #349-IV of December 24, 2002 )
Nonresidents shall receive annual letters of confirmation of tax payments from inland revenue authorities, which letters shall be in the Ukrainian language.
Annual audits of nonresidents shall be carried out as provided by law.
16.13. Taxpayers making appropriate payments shall be liable for [timely and correct] collection and remittance to the budget of citizens' income tax payments, those for the development of social facilities, as well as taxes indicated in Items 7.8; 10.2, and Article 13 hereinbefore.
Remittance of taxes indicated in Item 7.8 and Article 13 hereinbefore shall be carried out prior to and/or simultaneously with such payments.
Tax payments indicated in Item 10.2 hereinbefore shall be remitted within three business days from the date of such payments.
( Paragraph 4 deleted according to Law of Ukraine #349-IV of December 24, 2002 )
The amount of relevant payments shall be the source of payment of said taxes.
16.14. Tax payments shall not be made by persons other than taxpayers.
16.15. Procedures of execution and presentation of tax returns, statements of revenues of enterprises, and accruals shall be adopted by the central inland revenue authority.
16.16. Excessive tax payments to the budget accrued for the accounting period using progressive total as of the start of the year shall be taken on account of subsequent payments or refunded to taxpayer not later than ten working days from the date of written applications submitted by the taxpayers concerned.
Article 17.
( Article 17 shall be suspended for the year 2003 by Law of Ukraine #380-IV (380-15) of December 26, 2002 )

( Article 17 shall be suspended for the year 2002 by Law of Ukraine #2905-III of December 20, 2001 )

( Article 17 shall be suspended for the year 2001 by Law of Ukraine #2120-III of December 07, 2000 )

( Article 17 shall be suspended for the year 2000 as regards the inclusion of the profit tax amounts solely in the budget of the local community by Law of Ukraine #1458-III of February 17, 2000 )
Crediting the Tax to the Budget
The tax shall be credited to budgets according to the Budgetary Code of Ukraine.
( Article 17 in the wording of Law of Ukraine #349-IV of December 24, 2002 )
Article 18. Special Rules
18.1. If an international treaty ratified by the Supreme Council of Ukraine contains rules other than those laid down in this Law, the rules of the international treaty shall have precedence.
18.2. When making contracts with nonresidents, said contracts shall contain no tax clauses obligating enterprises paying income tax to assume such nonresidents' income tax liabilities.
18.3. When making contracts envisaging payments for goods (works, services) for the benefit of non-residents with the offshore status, or when making payments via such non-residents or their bank accounts, regardless of whether these payments (in the pecuniary or other forms) are made directly or through other residents or non-residents, the taxpayer's expenses on such goods (works, services) shall be included in that taxpayer's gross costs, in the amount equal to 85% of the cost of these goods (works, services).
( Item 18.3. changed and amended according to Law of Ukraine #349-IV of December 24, 2002 )
The rule of this item shall start being applied from the calendar quarter following the quarter of the official publication of the offshore zone list specified by the Cabinet of Ministers of Ukraine.
( Paragraph  2  in the wording of Law of Ukraine #349-IV of
December 24, 2002 )
For the purposes of this item, the term "non-residents with the offshore status" shall be taken to denote the non-residents located on territories of offshore zones, except for non-residents located on territories of offshore zones, who provided the taxpayer with an excerpt from the incorporation documents legalised by the appropriate consular institution of Ukraine and confirming the normal (non-offshore) status of such a non-resident. In case of contracts defined in paragraph one of this item, the taxpayer must refer to the availability of such an excerpt in its explanation attached to the tax return.
( Paragraph 3 added to the Item according to Law of Ukraine #349-IV of December 24, 2002 )
Article 19. Prevention of Double Taxation
19.1. Income tax amounts received from foreign sources as payments by foreign business entities shall be set off when paying income tax in Ukraine, provided such amounts are accrued in keeping with the rules set by this Law.
19.2. The amount of income tax payable from foreign sources during the accounting period shall not exceed the amount levied on such taxpayers in Ukraine.
19.3 The following taxes paid in other countries shall not be accepted on account of tax liabilities [in Ukraine]:
- Capital (wealth) and capital increment tax;
- Postage;
- Sales tax;
- Other indirect taxes, regardless of whether they are qualified as income tax or otherwise, in accordance with national legislation;
- Amounts paid as passive income tax (or on dividends, interest, insurance, royalty).
19.4. Amounts paid as taxes outside Ukraine shall be accepted on account of income tax liabilities in Ukraine in the presence of written confirmation issued by an inland revenue authority of the given foreign country, and provided Ukraine is a party to an international treaty against double taxation which was ratified by the Supreme Council of Ukraine.
Article 20. Taxpayers' Liabilities
20.1 Taxpayers shall be liable for timely and correct accrual and payments of the tax in strict accordance with [current] tax legislation according to the procedure and in amounts specified by law.
( The Item changed and amended according to Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )( The Item deleted according to Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )
20.2. Taxpayers that fail to produce income tax returns, computations, and documents attesting to timely payments of the tax for the appropriate accounting periods at the time of inspection by inland revenue authorities shall be levied penalties in the amount of ten tax-free minimum citizens' incomes for the first such disclosure. If within the next 12 tax months a taxpayer is found to have so transgressed for a second or more times, the penalty shall amount to ten tax-free minimum citizens' incomes multiplied by the number of such transgressions. The date from which this 12-month period shall be counted shall be the month in which the latest transgression was detected.
( The Item deleted according to Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )
20.3. Taxpayers failing to submit or untimely submitting to inland revenue authorities tax returns and/or payment orders for recalculation of remittances to the budget shall be meted out penalties in the amount of ten tax-free minimum citizens' incomes for each time in default.
If such nonpresentation or untimely prevention results from inadequate postal services, the taxpayer at issue shall have the right to appeal such financial sanctions to a court of law.
( The Item deleted according to Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )
20.4. Taxpayers guilty of concealing or understating tax payments shall pay such sums as are determined by inland revenue authorities plus a penalty in the amount of 30% of the additionally accrued tax (tax in default), and accrued proceeding from 120% discount rate of the National Bank of Ukraine effective on the date of such payment, covering the entire sum in default (less the amount of the penalty) and for the entire term.
Penalties set forth in this Item shall not apply to taxpayers disclosing understatements prior to inspection by the inland revenue authority and notifying this authority in writing, along with payment of the outstanding amount and the penalty accrued at 120% NBU discount rate effective on the date of such payment, covering the entire outstanding amount for the entire term.
( The Item deleted according to Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )
20.5. If the inspecting inland revenue authority discovers arithmetic or clerical errors causing such understatement, not to exceed 5% of the total amount of liability for the accounting period under study, the official in charge of this inland revenue authority may resolve not to mete out any penalties. Such decision made by such executive shall be final and subject to no appeal. However, such decisions shall not relieve the taxpayer of any penalty liabilities if levied as per Item 20.4 hereinabove.
( The Item deleted according to Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )
20.6. The amount of such tax in default and financial sanctions [penalties] shall be paid by the taxpayer independently, within 10 working days from the date of receipt of a tax authority warrant levying these penalties, signed by the official in charge of this authority. In such cases penalties shall be accrued on the entire period in default, including the last working day preceding that date on which such tax in default and penalties are actually paid.
In the event a taxpayer refuses to accept an inspection report composed by the tax authority or challenges, in keeping with legally set procedures, certain points therein, or disagrees with any of the findings thereunder, the payment of such tax in default and the attendant penalties shall be suspended until a decision is made in the case following such challenge. If the tax authority's findings are sustained, the taxpayer shall be under the obligation to pay the tax in default and the attendant penalties before submitting tax computations for the period including the date on which the decision in the case was made. The penalties shall be accrued on the proved tax in default covering the entire period in default, including the last day before the tax in default and the attendant penalties are actually paid.
( The Item deleted according to Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )
20.7 Officials guilty of transgressions of the tax laws shall be brought to account in accordance with legislation.

Article 21. Other Clauses
21.1. The amounts of under/overstated revenues and penalties shall be exacted for the entire period in default.
21.2. Upon expiry of the specified periods for the payment of the tax to budgets, the amounts failed to be transferred shall be collected with charging a fine according to the law.
( The Item in the wording of Law of Ukraine #2181-III of December 21, 2000 - shall become effective from April 01, 2001 )
21.3. Excessive tax payments to the budget resulting from erroneous calculation or the taxpayer's breaches of set payment procedures shall be refunded from this budget within ten business days from the date on which the inland revenue authority receives an appropriate statement from this taxpayer - or shall be taken on account of subsequent payments to this budget, if the taxpayer so decides, provided this happens within the period of limitation set by the law.
Submitted, a statement requesting return of the excessive tax amount shall interrupt the period of limitation.
21.4. Excessive tax remittances to the budget resulting from erroneous calculation (recalculation) on the part of the inland revenue authority shall be refunded by this budget, with due regard to the amounts paid as financial sanctions or shall be left on account of subsequent payments to this budget, as per statement submitted by the taxpayer concerned, provided this happens before the end of the period of limitation. Starting on the date of remittance and ending on the date of refunding (set-off) the amount shall be subject to 120% NBU discount rate effective on the date of refunding (set-off).
21.5. Acts of the central inland revenue authority shall be binding on each and every taxpayer only when issued in cases directly stipulated by this Law and registered with the Ministry of Justice of Ukraine.
Article 22. Closing Provisos
22.1. The Law of Ukraine On Changes in the Law of Ukraine "On Company Income Tax" shall come into effect on July 1, 1997.
( Item 22.2. has been deleted according to Law of Ukraine #349-IV of December 24, 2002 )
22.2. It shall be established that in the year 2005 the allocation of any expenses envisaged by paragraph one of sub-item 8.7.1 of item 8.7 of Article 8 of the Law and related to the improvement of fixed assets of groups 2 to 4 subject to the depreciation, including the expenses for the improvement of the leased fixed assets shall take place in an amount not exceeding 10 per cent of the total book value of fixed assets of groups 2 to 4 as of the beginning of the reporting period; in case of group 1 fixed assets, the gross expenses shall include the expenses, which do not exceed 10 per cent of the book value of the object being repaired as of the beginning of the reporting period.
( Item 22.2 of Article 22 in the wording of Law of Ukraine #2505-IV of March 25, 2005 )( Item 22.3. has been deleted according to Law of Ukraine #1957-IV of July 01, 2004 )( Item 22.4. has been deleted according to Law of Ukraine #1957-IV of July 01, 2004 )
22.5. Until such time as legislative acts are brought in conformity with this Law, they shall apply inasmuch as they do not contradict this Law.
( Paragraph 2 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 3 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 4 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 5 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 6 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 7 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 8 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 9 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 10 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 11 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 12 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 13 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 14 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 15 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 16 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Paragraph 17 of Item 22.5 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
(   Item 22.5 of Article  22 changed and amended according to Laws  of
Ukraine  #639/97-VR of  Novemeber  18, 1997,  #793/97-VR of December 30, 1997; #403-XIV of January 15,
1999; #515-XIV of March 18, 1999; #722-XIV   of
June  3,  1999;   #971-XIV  of  July  15,  1999;  #973-XIV  of  July  15,  1999;  #1278-XIV of December 3,
1999, #1375-XIV of January 13, 2000, #1606-IIIof March 23, 2000, #1608-III of March  23, 2000, #1715-III of May 11, 2000, #1749-III of  June  1,  2000,#2199-III of December 21, 2000, #2323-III  of
March 22, 2001, #2355-III  of  April  5,  2001,  #2744-III of October 4, 2001,  #3118-III  of  March  7,
2002, #40-IV of June 4, 2002, #380-IV of December
26,  2002,  #1344-IV  of  November  27,  2003,   #1702-IV of May 11, 2004,  #2285-IV  of  December  23,
2004 )
22.6. The President of Ukraine shall be recommended to have currently effective normative acts issued by the President of Ukraine brought in conformity with this Law.
22.7. Such penalties as may be levied on taxpayers guilty of transgressing normative acts of the Cabinet of Ministers of Ukraine or the central inland revenue authority, issued within the time-limits set forth hereinabove and in cases directly stipulated by this Law shall apply to such taxpayers as per results of the accounting period following the on in which said acts were made public.
Programmed checks of taxpayers' observance of this Law shall be carried out in keeping with legally set procedures, beginning on February 1, 1998.
22.8. The balance sheet value of fixed assets which, as per Article 8 hereinbefore, belong to Group 1; 2, and 3 launched into operation before this Law comes into effect shall be assessed at the level of their residual cost, as of the date on which this Law is enacted, and shall be included in the appropriate group of the fixed assets, subject to further depreciation.
22.9. The book cost of intangible assets made effective before the enactment of this Law shall be determined at the level of their initial balance sheet value, as of the date on which this Law comes into effect, subject to further depreciation.
22.10. The book cost of expenses involved in the extraction of mineral wealth, as per Article 9 hereinbefore, and referred to the taxpayer's balance before the enactment of this Law shall be determined as their residual cost, as of the date on which this Law comes into effect, subject to further depreciation.
22.11. With regard to deposits partially mastered by the time of enactment of this Law, he total rated value of output shall be determined in terms of the residual mineral wealth contained therein, as of the date on which this Law comes into effect.
22.12. The norms of Item 12.1 hereinbefore shall not apply to liabilities arising from delays in payments for goods (works, services) provided (forwarded, rendered) before the enactment of this Law.
The procedure of the bad debt settlement by banks at the expense of provisions specified in Article 12 of the Law of Ukraine "On Corporate Profit Tax" shall be applied for the taxation purposes in respect of the debt attributed to provisions of the creditor since 01 July 1997.
( The Paragraph added to Item 22.12. according to Law of Ukraine #1957-IV of July 01, 2004 )
22.13. In 2008, the taxable persons must submit a tax return as a result of eleven months of the year 2008 compiled according to the rules set for the full tax period taking account of the increase (decrease) in materiel inventories for eleven months of the year 2008, the amounts of depreciation charges for three quarters of the current year and two thirds of depreciation charges of the fourth quarter of the year in question, and pay the tax liability accrued under the said return within time frames prescribed by law for the monthly tax period.
( Item 22.13 of Article 22 in the wording of Laws of Ukraine #398-V of November 30, 2006, #107-VI of December 28, 2007, #309-VI of June 3, 2008 )( Item 22.14. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
22.14. The date of increasing taxpayers gross revenues with regard to goods (works, services) forwarded (provided, rendered) before the enactment of this Law, still to be paid for by their buyers, shall be the date of remittance to the taxpayer's clearing account, except taxpayer using procedures whereby proceeds from the sale of goods (works, services) are determined as per costs of goods (works, services) forwarded (provided, rendered), in accordance with instruments executed by the buyer.
Taxpayers' expenses referred to gross costs under this Law, borne before July 1, 1997, and not referred to the par value of products (works, services) sold as of July 1, 1997, proceedings from the remainder of finished products at warehouses and goods (works, services) shipped off (completed, rendered), and in the case of sales organisations, proceeding from the in-stock balance, including marketing margins and not paid for by sellers before July 1, 1997, shall be referred to gross costs as of the date of sale of such goods (works, services).
Other production (turnover) costs borne before July 1, 1997, shall be referred to gross costs of the accounting (taxation) periods of 1997.
Procedures of referring taxpayers' expenses indicated in Paragraphs 2 and 3 hereinabove to gross costs shall be determined by the Ministry of Finance of Ukraine, bearing in mind the requirements set forth in this Law.
( Item 22.15. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
22.15. The date of increasing gross revenues and costs with regard to loans provided by banks before the enactment of this Law shall be the date of payment of interest on such loans to the creditors.
22.16. Taxes on incomes resulting from the possession of government securities and local bonds shall be accrued on such government securities and local bonds purchased by taxpayers after the enactment of this Law.
( Item 22.17. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
22.17. Article 14 hereinbefore shall apply to agricultural manufacturers as of 1998.
Enterprises specialising in agricultural products shall not pay the company income tax determined as per business results over a period from July 1, 1997, till December 31, 1997.
The said enterprises shall submit their tax returns, covering the said period, before April 1, 1998.
22.18. Item 5.7 of this Law shall come into effect after the enactment of relevant laws. Item 6.3 shall apply beginning on January 1, 1999.
( Item 22.18. changed and and amended according to Law of Ukraine #1957-IV of July 01, 2004 )( Item 22.19. deleted according to Law of Ukraine #349-IV of December 24, 2002 )
22.19. Switch rates as per accounting periods until the enactment of this Law shall be charged off without being further recorded in balance sheets, accounting reports or tax returns";
22.20. Due to compulsory official registration of nonresidents' permanent representatives (agencies) as taxpayers, no such registration shall be required after this Law comes into effect, including such registration with the Ministry of External Economic Contacts and Trade of Ukraine or other bodies of state authority.
( Item 22.21 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
( Item 22.22 of Article 22 has been deleted according to Law of Ukraine #349-IV of December 24, 2002 )
22.23. For a period from January 1, 1999 to January 1, 2002 a taxpayer's gross revenue shall not include funds accrued (received) as part of the selling price for electric and heat power being a target addition to current rates for electric and heat power aimed to finance the final construction phase of power units at power stations and combined heat and power plants of Ukraine, the list of which is to be determined by the Cabinet of Ministers of Ukraine.
The said funds shall be entered on a special account and used exclusively to finalize the construction of such power units.
The State Tax Administration of Ukraine shall prescribe the accounting and reporting procedures with respect to funds aimed to finance the final construction phase of power units at power stations and combined heat and power plants of Ukraine, the list of which is to be determined by the Cabinet of Ministers of Ukraine.
In the event of non-target use of the said funds they shall be referred to a taxpayer's gross revenue and taxed under a general rule.
( Item 22.24 deleted according to Law of Ukraine #568-XIV of April 6, 1999. Item 22.25 deemed to be 22.24 )
22.24 In the period from 01 January 1999 till 01 January 2009, the profit tax period for subjects of space activities of Ukraine shall be equivalent to the tax reporting year.
( Item 22.24 added to the Article 22 according to Law of Ukraine #1559-III of March 16, 2000 )
22.25 It shall be established that for the period specified by the Law of Ukraine "On Introducing Changes in the Law of Ukraine "On Housing Construction Experiment on the Basis of Kyivmiskbud Holding Company", the funds paid in by the taxpayers to accounts of participants of the bank management funds, or under pension deposit contracts shall be included in the taxpayer's gross expenses in an amount not to exceed 10 per cent of the gross income of the taxpayer in question during the reporting period.
( The Item added to the Article according to Law of Ukraine #1694-III of April 20, 2000; in the wording of Law of Ukraine #3045-III of February 07, 2002; changed and amended according to Law of Ukraine #1957-IV of July 01, 2004 )( Item 22.26. of Article 22 has been deleted according to Law of Ukraine #1957-IV of July 01, 2004 )( Item 22.27. of Article 22 has been deleted according to Law of Ukraine #349-IV of December 24, 2002 )( Item 22.28 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
22.29. It shall be established that the tax on the profit of enterprises, which implement investment projects in Turkmenistan, shall be levied taking into consideration the specific features of Article 1 of the Law of Ukraine "On Ensuring the Investment Projects Implementation in Turkmenistan.
( The Item added to the Article according to Law of Ukraine #43-IV of July 04, 2002 )( Item 22.30 of Article 22 has been deleted according to Law of Ukraine #2505-IV of March 25, 2005 )
22.30.1. A tax reporting year shall be deemed to be a tax period for them.
22.30.2. The object of taxation determined as a result of the tax reporting year shall be reduced by the amount of funds re-invested by the enterprise into the development of own manufacturing facilities. A decision on undertaking such re-investment must be made by the deadline for the annual tax return submission to the relevant tax agency. If the founders of the enterprise reverse the decision on the re-investment or reduce the amount thereof during the next tax year, the enterprise must acknowledge profit in the amount of the announced re-investment or the amount of the reduction therein, add its amount to the taxable profit amount of the current tax period, and pay the fine according to the procedure and in amounts envisaged by the current legislation.
( Item 22.30 added to Article 22 according to Law of Ukraine #1624-IV of March 18, 2004 )
22.31. It shall be established that for the validity period of the debt repayment under the Law of Ukraine "On Measures Aimed at ensuring the Stable Operation of Fuel and Energy Sector Enterprises", the procedure of the taxation of the profit of settlement participants defined by the said Law shall be determined taking into account the specific features instituted by the Law of Ukraine "On Measures Aimed at ensuring the Stable Operation of Fuel and Energy Sector Enterprises".
Provisions of Article 12 of this Law shall not apply to the debt subject to the write-off mechanism on conditions specified by the Law of Ukraine "On Measures Aimed at ensuring the Stable Operation of Fuel and Energy Sector Enterprises".
The taxation of the profit of technology parks, their participants and joint ventures in case of the implementation of technological park projects registered under the procedure prescribed by the Law of Ukraine "On Special Regime of Innovation Activities of Technology Parks" shall take place taking into account the provisions of the Law of Ukraine "On Special Regime of Innovation Activities of Technology Parks.
( Paragraph 3 added to Item 22.31 of Article 22 according to Law of Ukraine #3333-IV of January 12, 2006 )

( The Item added to Article 22 according to Law  of  Ukraine  #2711-IV of June 23, 2005 )
22.31-1. It shall be established that during the period of the holding of the finals of the 2012 European Football Championship in Ukraine the income (profit) obtained by the UEFA as a result of activities in Ukraine, including the fees from sales of commercial rights shall not be taxed.
( Article 22 has been amended by adding Item 22.31-1 according to Law of Ukraine #1474-VI of June 5, 2009 )
22.32. The Cabinet of Ministers of Ukraine shall:
- Consider proposals re specificities of taxation of innovating projects and before October 1, 1997, shall have submitted appropriate proposals to the Supreme Council of Ukraine;
- Within one month have made appropriate decisions to secure implementation of this Law inasmuch as such authority is vested in it by this Law;
- Submit to the Supreme Council of Ukraine proposals on how best to bring Ukraine's legislative acts in conformity with this Law;
- Within one month have brought decisions of the Government in conformity with this Law.

Leonid Kuchma, President of Ukraine

City of Kyiv, December 28, 1994