With the Council’s support, a company receives acceptable explanation from the tax authority on the use of cash registers (RRO)
Complainee: Main Department of the STS in Kyiv City (MD STS)
Complaint in brief: The Council received a complaint from a company from Kyiv which specializes in onlinesales of air tickets and related services (reservation of seats in the cabin, booking services in VIP halls of airports, etc.). The enterprise provides services and receives payment for them only remotely (via the Internet), without any direct contact with customers. The company got concerned about tax authorities’ actions regarding a very broad interpretation of the legislation on the use of cash registers (Ukrainian abbreviation - RRO).
Although the RRO is essentially designed to handle cash, Ukrainian tax authorities often require their use in any other forms of payment, apart from classic (traditional) transfer to the seller's current bank account from the buyer's current bank account or through the bank's cash desk. For instance, there is a controversial position concerning the need to use the RRO when making payments through payment terminals.
The attitude of tax authorities to making payments through online payment systems (LIQPAY, PORTMONE, etc.) is also ambiguous.
In order to avoid risks in the future, the company asked the MD STS to clarify that it did not need to use the RRO when conducting its activities. However, the explanation received by the company left more questions than answers. Moreover, when reading it, there was a general impression that the tax authority still expected the company to use the RRO. Strongly disagreeing with this approach, the company lodged a complaint about the MD STS actions to the Council.
Actions taken: Having examined the complaint materials, the investigator of the Council came to the conclusion that the enterprise's concern with regard to the MD STS actions was truly substantiated. The received explanation was not clear enough and left room for interpretation. At the same time, from the Council’s point of view, the tax authority had all reasons to give a clear answer to the company that it was unnecessary and hardly possible to use the RRO in the model of the activity described. One should not ignore the fact that the complainant never physically contacts customers when selling services to them. For example, when the complainant acts as an intermediary in the sale of air tickets, tickets in the form of electronic documents are sent to the buyer's e-mail after receiving payment to the company's bank account from the buyer's credit card via the Internet. Services are provided directly by the air carrier itself without any participation of the сomplainant.
Under such a business model, in the Council’s opinion, there is no reason to require the company to use the RRO. This would lead to an uncommon situation contrary to the world practice in which the complainant and similar companies, when receiving funds to their bank accounts through online payment systems, would have to process such transactions using RPOs (as if they were receiving cash).
After that, in order to somehow comply with the law, they would have to send receipts printed with the help of the RRO, to the customers, for instance by mail or courier.
So far, in Ukraine the so-called “software RROs” which are intended to allow issuing receipts in the electronic form are being tested and are not introduced into industrial use. It should be taken into consideration that ticket buyers can be citizens or foreigners who are not present in Ukraine at the time of purchase of tickets and making payment for them (just imagine how costly and impractical it would be to send a Ukrainian receipt, let’s say, to Australia!).
In such a hypothetical scenario, many additional tricky questions would also arise (for example, what day should be considered as the day of payment if the non-resident buyer made online payment at night outside working hours of the company), to which there are no clear answers in the legislation and practice.
The Council decided to approach the STS of Ukraine with a request to examine the issue and provide the complainant with a new explanation instead of the one given by the MD STS earlier.
Results achieved: Following the results of consideration of the issue, the STS of Ukraine issued a new explanation, in which it analyzed the complainant’s issue in detail. The tax authority agreed with the Council's arguments partially. However, the final response to the complainant's specific circumstances was clear: "Given the example provided, if a consumer, using the Internet, has ordered goods (services) and received them via the Internet in electronic form, and the payment for these goods (services) was made using the EMP [electronic means of payment] using the following payment systems (Internet acquiring) [...], and there is no physical contact with the recipient of goods (services), such operations are carried out without the use of RRO”.
Although the provided explanation does not have the formal status of an “individual tax consultation” (which exempts from liability if it is followed), it nevertheless has become an important and valuable confirmation that the complainant has built its business model in line with the law. The complainant was satisfied with the explanation and thanked the Council for its support. The case was successfully closed.