Financing of Representative Office Activities: Features of Taxation and AccountingJournal: Oblik i finansi (Vol.1, No. 84)
Publication Date: 2019-06-20
Authors : Olha Hrytsai;
Page : 19-25
Keywords : representation; target financing; accounting of target financing; taxation; recognition of income & expenses;
The organization of economic activities in the form of representation of a foreign entity has a number of advantages that positively affect the activities of both parties. However, the management of such organizations is quite complicated due to the nuances in accounting and taxation. The purpose of the article is to substantiate the method of accounting for target financing of representative offices and taxation, taking into account the specifics of their activity. The features of target financing of non-resident representative offices were investigated. It was proved that the funds received by the representative office from non-residents is targeted financing, because they are used with a specific purpose for solving the tasks stipulated by the provision on representation at the time of registration. Non-profit and permanent representative offices were exuded depending on the conduct of their economic activities. The specifics of the taxation of the activities of representative offices on income tax and value added tax were considered. Accounting methods for targeted financing of representative offices were disclosed. Special attention is paid to the peculiarities of the formation of income and expenses of non-resident representative offices. The basis for financing the activities of representative offices is an approved cost estimate. Funds of target financing and earmarked revenues should be used in accordance with the approved estimates to confirm their target nature. The amounts received by the representative office from a non-resident are included in income. The amount of funds received from target financing should be equal to the amount of expenses of the representative office. The conditions for the targeted use of earmarked funding are restrictive on the expenditure of these funds. According to the results of the study, the improvement of analytical accounting of target financing and target income of the representative office was recommended by the author.
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