State Fiscal Service of Ukraine emphasizes the marketing nature of bonuses again
On 28 December 2015 the State Fiscal Service of Ukraine (hereinafter – the SFS) issued Letter No.27874/6/99-99-19-03-02-15 (hereinafter – the Letter), in which it confirmed its recent stance regarding the marketing nature of motivational and incentive payments.
It should be recalled that Arzinger’s newsletter dated 23.11.2015 contains an analysis of tax authorities’ conclusions stated in the SFS Letter No.22983/6/99-95-42-01-15 dated 29.10.2015. In particular, we refer to the peremptory conclusions made by the SFS, according to which motivational payments are payments for buyers’ marketing services.
In the new letter, the tax authority takes it a step further and states that remunerations to buyers for their particular performance, e.g. for having met the agreed purchase target or even for having no overdue debt to sellers shall be regarded as payment for marketing services with the appropriate taxation.
In connection with the above, in a number of cases we see no legal grounds for the tax authority’s conclusions, according to which a buyer’s purchase of a set (often – minimum) volume of goods from a seller may facilitate the sales of that seller’s goods in the market. However, the most controversial point is the classification of lack of overdue debt to a seller as a marketing service.
The mentioned fiscal interpretation of buyers’ obligations under contracts may result in similar conclusions of local tax authorities. Therefore, it is of vital importance that contractual provisions are worded transparently and clearly and that businesses have a clear-cut and coherent position on how to qualify particular types of remunerations.