Legal optimization of income tax: what to turn?

The end of the year - it's time to think about what you can (and should) do to reduce the income tax payable. We propose to consider not only the methods that allow you to do this now to the detriment of the future, but also those that can reduce the tax liability for income tax without prejudice to tomorrow. At the same time, we will mainly optimize accounting accounting. Optimizations are different, and some of them are suitable only for low-income taxpayers. But there are also universal ways to reduce income tax liabilities, including high-income tax payers (as well as low-income “volunteers”).

For all:

Stock depreciation. Not even the right, but the obligation to assess the reserves at net realizable value establishes paragraph 25 of P (C) BU 9, if at the balance sheet date: their price has decreased, they have been damaged, they have become outdated or otherwise have lost the originally expected economic benefits.

The devaluation of inventories to net realizable value is carried out by decision of the manager, while drawing up an act of devaluation in accordance with clause 3.15. Methodical recommendations on accounting for reserves, approved by order of the Ministry of Finance of January 10, 2007, No. 2.

But the costs in terms of the cost of such stocks in the event of their sale will be lower. Manipulations with depreciation. We mean such tricks.

Change in depreciation method. You can play with all the methods of depreciation, provided for in accounting, paragraph 26 of P (C) BU 7, except for production. The fact is that in tax accounting its use is not allowed according to p. 138.3.1 NKU.
Low-income taxpayers may well “switch” to its use, if, in their estimation, this can increase depreciation costs.

It is necessary to change the methods of depreciation in such a way that with the use of the new depreciation method the amount of depreciation is obtained more than it was when using the previously provided method. In this regard, methods of accelerated reduction of residual value and the cumulative method are more “effective”.

Moreover, such a change can be carried out both with respect to new objects and those that were already in operation. In the second case, no corrections in the part of the previously accrued depreciation are needed: after all, changing the depreciation method is nothing more than a change in accounting estimates (the letter of the Ministry of Finance of 02.11.2009, No. 31-34000-20-23-5535 / 5708 ). But “turn” the change under discussion is not so simple: for this, you will have to make changes to the order on the accounting policy of the enterprise.

After all, the depreciation methods for fixed assets are recorded in such a document according to par. 5 p. 2.1 Methodological recommendations on the accounting policy of the enterprise, approved by order of the Ministry of Finance of 27.06.2013, the number 635.

Reducing the useful life of the object. The less such a period, the greater the amount of accrued depreciation. But when establishing / revising such a period, the following limiters must be considered.
Firstly, when determining the useful life (operation) of clause 24 P (C) BU 7, it shall consider:

- the expected use of the facility by the enterprise, taking into account its capacity or performance;

- physical and moral deterioration, which is provided for;

- legal or other restrictions on the use of the object and other factors.

Secondly, tax payers who apply the differences are obliged to take into account the minimum allowable depreciation periods for fixed assets established by p. 138.3.3 NKU. After all, even if such taxpayers set shorter periods for calculating depreciation in accounting, the financial result before tax will ultimately be affected by the amounts accrued in tax accounting. The reason is that the adjustment of the financial result, provided for by paragraphs. 138.1 and 138.2 of the GCC (cf. 046391400).

The establishment of a zero liquidation value of the object. Depreciation (even in tax, even in accounting) "eats" only the depreciable value of the object. It represents the difference between the original (or overvalued) and residual value of the object. Accordingly, the lower the residual value, the more will be depreciable (and the greater the amount will be allocated to expenses in the form of depreciation).
Liquidation value in accordance with clause 4 of P (C) of BU 7 is the amount of funds or the value of other assets that an enterprise expects to receive from the sale (liquidation) of non-current assets after the expiration of their useful life (operation), less costs associated with the sale ( liquidation).

If this is possible, the residual value of the object should be set to zero. Another thing that will not always. In particular, it is prohibited to establish a zero liquidation value when revaluing fixed assets whose liquidation value was zero (paragraph 17 P (C) BU 7), or if you use the depreciation method to reduce residual value (paragraph 26 P (C) BU 7) .

The accrual of the accelerated depreciation of objects of group 4. For applying the difference, it is possible to use the norms of clause 43 subdivision. 4 chap. XX NKU.

This item establishes the ability to accrue depreciation of Group 4 facilities using a minimum allowable period of 2 years. Non-applying low-income taxpayers can set the useful life of Group 4 facilities to two years in accounting and actually get the same result as high-profit taxpayers who used clause 43 subdiv. 4 chap. XX NKU.

But, thus increasing the cost of depreciation of objects in the short term (and thus reducing the financial result before tax), you are depriving yourself of the possibility of calculating the depreciation of such objects already 2 years after their commissioning.

Splitting up. We mean a separate account of the constituent parts of the object. Recall: an object of fixed assets can be considered not only an asset as a whole (a constructively isolated item intended to perform certain independent functions), but also a part of it (in accordance with clause 4 of P (C) BU 7).
As a result, some of these parts can be classified as low-value non-current tangible assets (hereinafter - MNMA). This, in turn, makes it possible to depreciate them with the methods of 100% and 50/50%, provided for by clause 27 P (S) BU 7. Particularly beneficial is the first of these methods, because it allows to include in the first month of using the object in the form of depreciation of its entire depreciable value.

Adjustments in terms of accrued depreciation, provided for in paragraphs. 138.1 and 138.2 of the TCU, MNMA do not apply. Tax authorities agree with this (category 102.05 ЗІР).

Repair or improvement? The answer to this question depends on how the cost of the event will be reflected in the account. Either they will immediately fall into the expenses of the reporting period (when carrying out repairs), or they will increase the expenses of the period gradually in the form of depreciation (when carrying out improvements).

As you know, in the short term, the first option is more profitable. Therefore, if it is possible to classify the work as a repair, it is desirable to do so. But perhaps this is not always the case. In particular, p. 31 of Methodological Recommendations No. 561 gives examples of improvements that, as a result, cannot be repaired.

The decision on the nature and characteristics of the work being carried out is taken by the head of the enterprise, taking into account the results of the analysis of the existing situation and the materiality of such expenses.

If the object that was repaired is non-productive, then the cost-effective payers (and low-income “volunteers”) will not be affected by the financial result before tax. This is because the last paragraph of Section 138.1 of the GCC provides for a corresponding “increasing” difference.

Revenues will show later. This is another option to reduce the financial result before tax, because this indicator is also affected by income. In what cases will it be possible to show the income "later"?

Revenue (revenue) from the sale of products (goods, other assets) is recognized if all the conditions listed in paragraph 8 of P (C) BU 15. are present. In order to postpone the reflection of income, you can manipulate the transfer of risks and benefits associated with the ownership of products (commodity, other asset). Revenue is recognized only after the transfer of such risks and benefits, but the shipment of goods is not always identical to their transfer. That is, it makes sense to "play" the conditions in the relevant agreements.

It is possible to postpone the next reporting period and income from the provision of works / services, but note that this will not work with a long-term contract for the provision of services. Under such a contract it is necessary to assess the degree of completeness of the operation of the provision of services. At the same time, the “options for maneuver” are provided by the methods themselves of such an assessment, provided for in paragraph 11 of paragraph (C) BU 15. These methods give different results depending on the period in which the main costs of providing the service are incurred.

For low-income.

There are some “tricks” that can benefit only low-income tax payers who, at their own request, do not subscribe to the differences provided by the GCC. And the matter is precisely in the differences, because they “smooth out” the impact on the financial result before taxation of such operations.

Reducing the usefulness of fixed assets. To assess whether there are indications of a possible impairment of an asset, an enterprise pursuant to paragraph 5 of P (C) BU 28 should be at the date of the annual balance sheet. A list of such signs can be found in paragraph 6 of this Regulation. Losses from a decrease in the utility of fixed assets, as evidenced by paragraph 31 of P (C) of BU 7, are included in expenses of the reporting period. At the same time, the financial result is reduced through subaccount 793 “Result of other activities”.

For highly profitable income tax payers and low-income “volunteers”, this effect on the financial result is “leveled” by the adjustment provided for in par. 3 p. 138.1 of the TCU. The financial result before tax in accordance with this paragraph is increased by the amount of markdowns and losses from a decrease in the usefulness of fixed assets included in expenses of the reporting period in accordance with NP (S) BU or IFRS.

In the VAT accounting, the decrease in the utility of the assets will not be reflected in any way (which is confirmed by the SFSU in the letter No. 26145/6 / 99-99-15-03-02-15 dated December 2, 2016). Revaluation of depreciated "zero" objects. If a fully depreciated object continues to serve you faithfully, para. 2 p. 17 P (C) BU 7 allows you to conduct its additional evaluation. At the same time, the revalued residual value of the object is determined by adding the fair value of this object to its initial (revalued) value (equal to zero) without changing the amount of its depreciation.

As a result, it may be possible to additionally attribute such amounts to expenses as depreciation (but minus the liquidation value of the object, which in this case is mandatory).

But high-income payers (and low-income "volunteers") should take into account the requirements of par. 2 pp 138.3.1 NKU. It states that in order to calculate depreciation in accordance with clause 138.3 of the TCU, the value of fixed assets is determined without taking into account their revaluation (devaluation, revaluation), conducted in accordance with P (C) CU. So, their similar revaluation (in the context of optimization of income tax) does not “warm”.

However, if you decide to sell a fully depreciated object, then even think about forgetting about its additional valuation before selling. No one has the right to forbid you from holding it.

VAT payers do not have to worry about the minimum tax base. After all, for fixed assets, it corresponds to the book value of the object (in accordance with paragraph 188.1 of the TCU), and in our case it is zero.

Cost criterion for OS / MNMA. If in tax accounting 14.1.138 NKU establishes a clear cost criterion for the separation of fixed assets from MNMA, then in accounting the solution to this issue is given to the merchant. To establish the cost characteristics of items that are part of MNMA, businesses accounting allows ppt 5.2.7 P (C) BU 7.

By setting the value criterion at the highest possible level, you thereby have the opportunity to increase depreciation costs. Since with this approach more non-current assets will fall into MNMA (and not fixed assets), then they can be depreciated using the super-profitable method of 100% depreciation value in the month of commissioning of the object.

In this case, please note: the change in the discussed criterion of clause 2.6 of Methodological Recommendations No. 635 is interpreted as a change in accounting estimates. Accordingly, to classify in a new way only those objects that were put into operation after making changes in the administrative document on the accounting policy of the enterprise.