PAYMENT OF ADVERTISEMENTS IN THE FACEBOOK FROM THE CORPORATE BUSINESS CARD: HOW TO CORRECT EXPENSES?
The company (working on a common system) has placed an advertising account on Facebook. Periodically, a responsible employee conducts payment for advertising services via the Internet using a corporate card (replenishes an account). How can an enterprise confirm advertising expenses and reflect them in accounting?
The function of paying for advertising on Facebook through a bank account, unfortunately, is not yet available to Ukrainian enterprises. Ukrainian advertiser can pay for advertising on Facebook through international payment systems Visa, Mastercard. Considering this, the company paid for its advertising on Facebook from the corporate payment card (PDA) through an accountable person (apparently, through an employee appointed as responsible for advertising on Facebook).
Now settlements with non-residents using a corporate payment card are no longer a problem. Since 04.04.2019, there are no restrictions on transactions from accounts of business entities using PDAs. After updating the rules of currency regulation in accordance with clause 2 p. 109 of Regulation No.5 legal entities with KPK are allowed to make settlements on one foreign trade agreement (contract) on one transaction day, the operation for which does not exceed the equivalent of UAH 150 thousand.
The main thing is that your set daily limit for debiting funds in an advertising account does not exceed 150 thousand in terms of hryvnia.
Depending on the settings of your advertising account on Facebook, replenishment / withdrawal of money on account of paying for an enterprise advertisement from a corporate payment card will occur either in advance, or on the basis of invoices.
The amounts written off from the corporate payment card during non-cash settlements are considered issued as a report. Moreover, including non-cash payments via the Internet (i.e., by specifying card details), if the PDA details were lit in an electronic payment or bank statement for non-cash (via the Internet) calculations.
In this case, the trustee of the business entity that used the PDA for settlements must submit an advance report for the funds spent from the card, attaching a printout of the confirming electronic document. Non-cash amounts for advertising with a PDA will be considered spent on business needs. In this case, the advance report must be submitted within the time specified in paragraphs. “B” pp 170.9.2 of the TCU, – until the end of 5 banking days, following the day in which the payment of advertising on Facebook. That is, from the date of the calculations using the PDA.
Although there is a ZIR 103.17, where the tax authorities believe that the advance report can be submitted before the expiration of 10 banking days (ie, according to clause “6” ppt 170.9.3 of the TCU).
But even if the employee does not provide documents on payment from the PDA, the tax authorities explain (see ZIR 109.21), the accounting department should still accept such a report, and if necessary, the accountant can take an extract from the bank on the flow of funds in the account and thereby confirm fact of withdrawal of funds from the current account of the company. Having received an extract from the bank about the money spent with the PDA, you need to find translations in it in favor of Facebook.
To quickly find them and not to confuse with other payments in the statement, you can go to the Facebook advertising account and find in it in the “Billing” section the control number for advertising-related transactions in favor of Facebook. And look in the statement payments with this control number.
Considering that at the time of the report, services may not actually be received, and the employee is only asked to pay for the company’s advertising services, then in confirmation of his task (replenishment of an advertising account on Facebook / account payment using the PDA), the employee only needs to attach a screenshot about the report payment, confirming either the transfer of money to the advertising account of the company on Facebook, or payment of the invoice. This will be enough to prove that the payment is made in the interests of the company, and not in the personal interests of the employee.
Documents for advertising expenses
To confirm the expenditure of funds when a legal entity purchases services (including advertising) on foreign Internet sites with their payment using an electronic means of payment (including PDA), as explained by the tax authorities (see the letter of the SFSU dated 13.06.2018 No. 2584/6 / 99-99-15-01-01-15 / IPC), you must have:
1) an extract from the bank that issued the payment card, from which money was debited as payment for advertising;
2) the relevant document, receipt, sales or cash voucher, ticket, ticket, etc., provided by the service provider.
With an extract of the bank on the CCP, from which funds were written off in favor of Facebook, as we have said, the company will have no problems. But the second document from Facebook in confirmation of the advertising services provided during a certain period, the company can receive only a receipt. It provides detailed information about the transactions carried out on the Facebook account of the company, which determines: the amount spent on advertising, the reason for the invoice (for switching to the appropriate page or clicks on your banner, etc.), the results of the activities carried out.
You can find such a receipt by logging into your Facebook advertising account in the “Billing” section. There you can download receipts for individual debits of money or for all debits for advertising for a certain period.
Working directly with Facebook, you will not receive a full-fledged act on the provided advertising services. And taking into account the attitude of the tax authorities to the primary organization, it is better for the enterprise to arm itself with additional documents containing information about the operations carried out.
Such documents may be:
– The order of the head of the advertising on Facebook, which are indicated;
– the purpose of advertising and the list of advertised goods / services;
– The employee responsible for conducting advertising on Facebook (for creating an advertising account of the company, setting it up and replenishing it with cash using a PDA);
2) documents on advertising on Facebook, in particular:
– photo reports, screenprints placed on Facebook advertising, which would allow to identify the goods / services advertised by the company and, accordingly, the information provided about them as advertising;
– a report of the responsible employee on the ongoing promotional activities, compiled on the basis of printed receipts from Facebook on the results of promotional events;
3) documents confirming expenses and the provision of advertising services to the enterprise. This, as we have already said, is the advance report of the responsible officer on payments made in favor of Facebook from the PDA, bank statements from the card account, receipts on transactions printed from Facebook on the advertising account for the reporting period, and also drawn up based on the results of the reporting period on the basis of such receipts , self-act with all the requisites for the primary document.
Such a self-act will be the primary document containing information about the operation – Facebook advertising service, suitable for both accounting and tax purposes (paragraph 44.1 of the TCU).
Expenses for advertising on Facebook are normal advertising expenses. Therefore, they should be included in the costs of the reporting period as part of the distribution costs (paragraph 19 of P (C) BU 16) and charged to account 93. You should do this in your case during the period of formation of Facebook advertising receipts for the reporting period the basis of compiled according to the data of such self-act receipts.
All companies, regardless of their level of profitability, take into account advertising costs according to accounting rules – focusing on accounting financial result.
The only thing is that if a highly profitable enterprise obtains FEA services, its financial result can be adjusted for tax differences on:
– pp 140.5.2 NKU – the amount of excess of the contractual (contractual) value of the acquired services over the price, determined according to the “arm’s length” principle, when performing controlled transactions in the cases specified in art. 39 NKU;
– pp 140.5.4 of the TCU – in the amount of 30% of the cost of services (except for operations recognized as controlled in accordance with Article 39 of the TCU) purchased from non-residents (including non-residents – related persons) registered in the states (in the territories) specified in .P. 220.127.116.11 NKU
However, when working with a non-Facebook resident, such differences are not at risk to a highly profitable enterprise. Firstly, Facebook operations are unlikely to be controlled, and secondly, Facebook is registered in such a territory that does not register under Sec. 18.104.22.168 NKU.
Since payments for advertising on Facebook were made by the responsible person using the PDA and in the interests of the company, and Facebook is a non-resident not registered in Ukraine, the company will have to accrue tax liabilities for VAT as an agent. And all because the place of delivery of advertising services is the place in which the recipient of services (advertiser) is registered as a business entity (Sec. “B” p. 186.3 of the TCU).
In this case, the contractual cost of services is taken as the basis for calculating VAT (clause 190.2 of the TCU).
At the same time, the cost of services expressed in foreign currency is converted into the national currency at the exchange rate of the National Bank of Ukraine, effective on the date of the BUT.
VAT liabilities from services of a non-resident with a place of delivery on the territory of Ukraine are charged according to the rules prescribed in clause 187.8 of the TCU: as of the date of withdrawal of funds from the bank account of the payer as payment for services or as of the date of execution of the document confirming that the services were provided by the non-resident.
Depending on the settings of the advertising account on Facebook relating to the replenishment / withdrawal of money from the PDA on account of payment for the company’s advertising (either in advance or on the basis of invoices), the company must accrue BUT by the date of the first event – the write-off of money or the last day of the month for an unpaid invoice. Confirmation of debiting funds from the card account will be a bank statement.
So, based on the date of withdrawal of funds from the card account recorded in the bank statement, the company should accrue BUT to services from non-residents if the first event is payment for advertising services, recalculated in UAH at the rate of NBU on the same date.
The amount of accrued VAT-liabilities must be shown in the tax invoice (NN), drawn up for such an operation (paragraph 208.2 of the TCU). Such NN, registered in ERNN, will be the basis for the reflection of the tax credit (paragraph 208.2 of the GCC, p. “In” p. 198.1, p. 198.2 of the GCC). And if NN is registered in the ERNN in a timely manner, then both BUT and NK are reflected in the same reporting period, which falls on the period of prepayment for advertising services (in the VAT declaration we simultaneously fill in pages 6 and 13).
Note! But VAT on advertising services received from Facebook, threaten non-payers of VAT. In this case, non-payers of VAT do not make up a tax invoice, but must submit a special Calculation (paragraph 208.4 of the TCU).
Income tax nonresident
As provided ppt 141.4.6 of the TCU, residents who make payments to non-residents for the production and / or distribution of advertising, during such payments are required to pay tax at a rate of 20% of the amount of such payments at their own expense.
The amount of income from which to pay the tax is determined at the rate of the NBU, which is valid on the date of payment of such income (ЗІР 102.18). Moreover, as explained by the tax authorities (see WID 102.18), the exemption (reduction) of the tax on non-resident income from the services provided by advertising cannot be obtained.
And if you delay and / or do not pay the tax, your company expects a fine under Art. 127 of the TCU (at least 25% of the amount of tax payable / paid to the budget).
Thus, if an enterprise, through an attorney, pays with the help of a PDA for advertising to a non-resident, at the same time, an enterprise must pay a tax on non-resident income at a rate of 20% of the amount paid for advertising.
In the income tax declaration, the amount of the “advertising” tax is indicated in lines 23-25, as well as in line 21 of table 1 of the Mo application.
We want to warn that, in the opinion of the tax authorities, the same fate awaits ordinary individuals (falling within the definition of residents from paragraphs 14.1.213 of the TCU) who pay non-resident Facebook advertising revenue for placing their advertisements.
Аuthor: Kristina Vorozhbitova