There will be no gap
Tax returns to be based on accounting books and recordsA couple of weeks ago Ukraine marked Accountant’s Day. Government officials greeted these professionals, whose occupation is so important for the Ukrainian economy, and stressed that they are now faced with especially important tasks in connection with Ukraine’s integration into the international community of nations. One of the priorities on the agenda is the need to introduce international accounting standards in Ukrainian businesses. Liudmyla Lovinska, head of the finance ministry’s accounting procedures department, says this task is determined by the reorientation of Ukraine’s economy to market mechanisms.
Ukraine has already developed and adopted 31 international bookkeeping standards. In October 2006 the bill “On Strategic Trends in the Development of Accounting and Bookkeeping in Ukraine” was ratified After consultations with international experts, an action plan on their practical realization, particularly in the legislative sphere, was approved.
Officials who congratulated accountants on their day said that Ukraine’s Ministry of Finance has prepared an accounting and bookkeeping bill to ammend “certain pertinent legislative acts” to allow our country to join the European Union; it has been approved by the Cabinet of Ministers and forwarded to the Verkhovna Rada of Ukraine. Among other things, it envisages changes to the “Law on Accounting and Financial Reports in Ukraine” in regard to businesses that are issuers of securities listed by stock market organizers, and procedures for drawing up financial and consolidated financial reports in accordance with international standards. In order to adjust accounting procedures to those of the tax legislation, tax returns are to be filled out in keeping with accounting books and records.
Recommendations have been adopted to help explain the pertinent legal procedures in regard to accountants’ reports dealing with the tax rate and gross expenditure fluctuations, along with registers for systematizing data relating to books and records, in order to determine company income tax, disbursements, and financial results. Lovinska believes that the proposed forms will introduce order into this complicated process and make it transparent for both businesses and the State Tax Administration.
The expert adds that the section “Company Income Tax” in the draft Tax Code is also built on accounting and bookkeeping procedural principles of filling out income tax reports on the basis of accounting data. Thus, the authors appear to have accomplished a unification of the taxation norm by means of a tax on company revenues and a value added tax, based on the principle of “first-event” with accounting principles and methods in the terminology section, as well as methods for evaluating assets (nonrepayable material assets, non-material assets, and reserves) in order to accrue amortization and reserve increment (depletion) costs. The procedures for calculating exchange rate fluctuations, as well as criteria for recognizing tax credits and tax obligation, are also being unified. In other words, the draft Tax Code takes into account the diversity of the evaluation, accounting, and procedural methods provided for by accounting standards.
Lovinska emphasizes that the work of reforming Ukrainian accounting standards within the framework of adapting Ukraine’s legislation to that of the European Union will raise the professional level of the accounting community, speed up the process of Ukraine’s integration into Europe, and help form a favorable investment climate.
