Tax accounting of interest paid to a related party as a non-resident on a loan (credit) has certain subtleties that distinguish it from similar for two residents.
Tax accounting of interest paid to a related party to a non-resident on a loan (credit) has certain subtleties that distinguish it from similar for two residents — this is due to the fact that accounting for “domestic” loan is governed exclusively by N(S)AR, while for a foreign loan the differences defined in Art. 140 of the Tax Code of Ukraine (TCU).
WHAT IS THE DIFFERENCE?
The difference is the amount by which the financial result before corporate income tax increases or decreases depending on the circumstances specified by the TCU.
UNDER WHICH CONDITIONS DOES THERE BE A DIFFERENCE?
If the amount of debt to non-residents related parties is more than 3.5 times higher than your equity, the interest difference specified in paragraph 140.2 of Art. 140 TCU.
HOW TO CALCULATE THE DIFFERENCE?
Without giving too complicated and incomprehensible wording from the TCU, we suggest using the following formula:
Sr = Si – Tl, where
Sr – the amount of increase in financial result before tax,
Si – the amount of interest in the reporting period.
Tl – tax limit;
Tl = 0,5 * (Fr+C+A), where
Fr – financial result before tax for the reporting period,
С – financial expenses of the reporting period,
A – depreciation deductions for the reporting period.
Interest that exceeds the tax limit and increases the pre-tax financial result in future reporting tax periods reduces the pre-tax financial result by 5% of the unaccounted interest amount annually.
Link to the article: https://blog.liga.net/user/astupak/article/37713
