Taxation in the real estate development contracts





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08.12.2009 15:25
We found that a document confirming the execution of orders, is a report developer. Nevertheless, for the purposes of accounting and taxation in the real estate development operations of the main document certifying the fact of rendering services to the customer, will act works performed. This document is a key in accordance with the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" dated 07.16.1999, № 996-XIV (Article 9), and also because of the tax legislation, for example paragraphs. 11.3.1 Law of Ukraine "On taxation of income of enterprises" in its version of 05.22.1997, № 283/97-VR (hereinafter - the Law of the profits) and pp. 7.3.1 Law of Ukraine "On Value Added Tax" from 03.04.97, № 168/97-VR (hereinafter - the Law on VAT).

As we noted above, by its nature developer operations can be attributed to the mediation. Taxation of brokering is regulated pp.7.9.1 Act of profits, it also provides a list of treaties such as mediation: "concession contracts, commissions, consignment, asset management, storage, and other civil-legal agreements that do not involve transfer of ownership of such property. The attractiveness of this scheme is obvious: when using a general rule of "first event" at the time of receipt of funds from the customer is not applicable (because there is no transfer of ownership of such funds to the developer), and the object of taxation arises only in the amount of fees a developer. To this end, the contract must be approved Land Development entitled the developer to take on the customer's cash resources with contractors (subcontractors), whereas for him, such funds will be in transit. In our opinion, the developer is expedient to open a special bank account for the accumulation of transit funds. This would allow, in particular, to share the cash flows, provide the customer as much information about cash flows (up to copies of bank statements), and also include the expense of their service costs on cash and settlement services for such account. Transfer of property development company to the customer real estate, built and delivered by an act of contractors (as well as the transfer of funds already received from the sale of such real property) also did not cause the object of taxation for the developer in accordance with sub. 7.9.2 Law on profits.

With regard to VAT, the VAT exemption regime developer operations are regulated by special "intermediary" rules of Art. 2 and Par. 3 paragraph 4.7 of the Law on VAT: "If the taxpayer (hereinafter - the attorney) is active on the acquisition of goods (works, services) on behalf of and at the expense of another person (hereinafter - the principal), the date of increase of the tax credit is the date of such attorney funds transfer (delivery in the management of securities, other documents attesting to the debt) to the seller of such goods (works, services) or supply of other types of compensation for the value of such goods (works, services), and the date of the increase in tax obligations is the date of transfer of such products (results of works, services) to the principal. "

Obviously, in this case, the developer only for the purposes of VAT exemption can act (in the terminology of the Law on VAT) as an attorney, which organizes the construction works on behalf of the customer, which in turn (in terms of the Act and solely for the purposes of VAT exemption ) is the principal.

In the case of following this analogy, the tax account for VAT should be conducted as follows. When entering into contracts with contractors and other organizations, real estate development company displays the tax credit on the date of transfer of such contractors or performers. When transferring the results of works (services) to the customer, it increases the amount of tax liabilities, and the customer has the right to display a tax credit (subject to availability of the tax bill) (paragraph 3 paragraph 4.7 of the Law on VAT).

Should pay attention to the case of contractors (executor, who involved the developer) is a defaulter of VAT. The problem is that sec. 3 paragraph 4.7 of the Law on VAT is regulated only the procedure and the time the tax liability and tax credits have an attorney (the person carrying out activities in the acquisition of goods, works and services on behalf and at the expense of another person - the principal), but the base charge for the transfer of services law is not defined. Begs the fiscal conclusion: in this case, tax liability with an intermediary is, but the tax credit otsutstvuet3. This opinion was expressed in the letter, the Tax Administration from 21.07.2004 № 13597/7/15-2417-05: «In the case where the company (broker) assumes the services under the commission agreement to purchase services from third parties - non-payers of VAT, the date of tax liability is the date of transfer of such services to the principal. In this case, the right to a tax credit for businesses (the commission) is not because the services are purchased from third parties - non-paying VAT. "
4Poskolku not get a tax invoice from the contractor / performer.



Consider the example of a map in the accounting and tax business transactions developer.


Example. The estimated project cost associated with the construction of an office building is 150 million UAH. Reward Development Company - 1 200 000 UAH. Including VAT - 200 000 UAH. The price of the facility - 150 million UAH. Including VAT - 25 000 000 UAH.
Customer remitted advance payment of 100% of the total contract.
Consider the records of such transactions with developers (see Table).
Таблица



п/п
Contents of a business transaction
Correspondence of accounts
Sum, UAH.
Tax records, UAH.
Am
Km
WA
BP
1
Received funds from the customer to do work on a special account developer
313
685
150 000 000
2
Listed advance for the services of a developer
311
681
1 200 000
1 000 000
3
Increased tax liability for VAT
the amount of the advance
643
641
200 000
4
Transferred to the payment of design and survey organizations for survey work and the development of design estimates
377
313
6 000 000
5
Increased tax credit for VAT (when the tax bills)
641
644
1 000 000
6
Received project documentation
025
6 000 000
7
The payment is for work on the construction site for the commencement of works
377
313
24 000 000
8
Increased tax credit for VAT (when the tax bills)
641
644
4 000 000
9
Debit the results of
025
24 000 000
10
Payment is made for civil works under the contract (including construction materials)
377
313
120 000 000
11
Increased tax credit for VAT (when the tax bills)
641
644
20 000 000
12
Signed with the General Contractor acceptance certificate (obtained constructed building)
025
120 000 000
13
Transferred under the act finished object to the customer
025
150 000 000
14
Increased tax liability for the transfer object to the customer
643
641
25 000 000
15
Signed the report developer. Displayed credit outstanding compensation developer
685
377
150 000 000
16
Signed acceptance certificate developer
with the customer
681
361
1 200 000
17
Accrued income from the sale of brokerage
361
703
1 200 000
703
643
200 000
18
Set off against arrears of tax calculations on the VAT
644
643
25 000 000
Note: For simplicity, we do not give the scheme of operations related to domestic economic activity of the developer, but only related to the execution order.
In conclusion, I would like to emphasize that given the uncertainty and inconsistency at the legislative framework in respect of treaties development, management should independently develop a clear strategy for its activities, argue it and be ready to defend their point of view in the tax audit.
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