4.2 Problems of formation and use of the special fund of the Budget by institutions of higher education of Ukraine

Most higher education institutions are non-profit organizations. Therefore, if the amount of funds that were transferred free of charge by the business entity of the higher education institution exceeds the business entity’s limit of 4 % of taxable income of the previous reporting year, the taxpayer will not be able to reduce the object of income tax by this amount.

It should be noted that the TCU has rules with an increased cost limit, the amount of which can be reduced by the object of income tax. Thus, according to the rules of paragraphs 140.5.14 TCU financial result of the tax (reporting) period is increased by the amount of funds or value of goods, works performed, services provided free of charge (transferred) during the reporting (tax) year to the subjects of physical culture and sports, namely children and youth sports schools, Olympic training centers, schools of higher sportsmanship, centers of physical culture and sports for persons with disabilities, sports federations of Olympic sports, which are non-profit organizations included in the Register of non-profit institutions and organizations, on the date of such transfer, transfer of goods, works, services in the amount exceeding 8 percent of the taxable profit of the previous reporting year.

This raises the question: why do the funds transferred to the subjects of physical culture and sports fall under the increased limit? Investing funds in higher education is no less important in the development of our country, because it stimulates the training of professionals who will later work in Ukraine.

It should also be noted that it is the «high-income» businesses that have the opportunity to invest money in education, and it is unclear why these taxpayers are at a disadvantage compared to «low-income» income taxpayers. Unlike the latter, «high-income» businesses have the opportunity to reduce the object of income tax not by the full amount of the transferred funds for education, but only by a certain percentage of the amount of taxable income of the previous reporting year.

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