What changes in calculations between pharmacies and consumers?

Yaroslav Furiaka, junior associate at Legal Alliance Company

Аптека.ua

On March 15^th, 2018 the Board of the National Bank of Ukraine adopted Resolution No. 25 “On Optimization of Circulation of Small Denomination Coins” (hereinafter – Resolution No. 25), which prescribes end of additional issue in circulation of small denomination coins of 1,2,5 and 25 kopecks from July 1^st, 2018. The coins will still remain in circulation till the Board of the National Bank adopts a new decision on their withdrawal.

Resolution No. 25 coming into effect has influenced all areas of commerce where cash settlements take place, including pharmacies. Rounding requirement does not apply to cashless settlements.

What exactly changes?

From July 1^st, 2018 all legal entities regardless of organization form and ownership and individual entrepreneurs must round general settlement amounts for goods (works and services) in accordance with the below rules (image).

Image

Source: NBU

Such rounding from now must take place in the bill and in the money issuance act or another document which is executed at the time of money return in case of goods return.

Rounding means mathematic action which is replacement of a number to increase or decrease with a corresponding accuracy. Accordingly, the price of each good in a bill does not change. Only the total price of the purchase is rounded.

For example, if the total amount in the bill is UAH 20.85, rounding will take place to increase the amount till UAH 20.90. If the bill amount is UAH 20.83, the total amount will be rounded to UAH 20.80.

It should be noted that new calculation rules are being introduced gradually: today only if neither a buyer nor a legal entity seller doesn’t have small denomination coins. As the NBU emphasizes, if the buyer has small denomination coins, he can continue paying with them, and if the seller has such coins, he can give change to buyer.

That is, total amount rounding is a right but not an obligation without time limits.

Accordingly, retail outlets selling different goods can continue setting prices which finish with 99 kopecks, for example, with a marketing purpose.

It should be noted that rounding is not a discount or mark-up, advertisement or stimulation of sale of goods (works, services), as it is directly prescribed by Resolution No. 25.

Now there are no explanation as for choosing a right way of carrying such transactions in financial accounting. Such explanations are expected to be provided in the near future by the Ministry of Finance of Ukraine and State Fiscal Service of Ukraine.

Do the rules of mark-up calculation change?

Resolution of the Cabinet of Ministers of Ukraine “On Measures for Stabilization of Prices for Medicines and Medical Products” No. 955 as of October 17^th, 2008 (hereinafter – Resolution No. 955) sets maximum trade (retail) mark-ups for some categories of pharmaceutical products. For example, for medicines included to the National List of Essential medicines – not more than 25% added to the procurement price, tax included.

Here it is important to emphasise that novelties as for rounding a total price in the bill do not influence the price of a good which is subject to regulation. Only the rules of settlement between buyer and seller as for the total amount of the transaction are changed.

Thus, according to the Law of Ukraine “On Prices and Pricing”, price is an equivalent of a good in pecuniary form.

Under the Procedure for Formation of Price for Medicines and Medical Products as for Which State Regulation is Introduced approved by Resolution of the Cabinet of Ministers No. 333 as of March 25^th, 2009, a procurement price of a good is determined as a sum of ex-factory price and supply and sales mark-up.

Thus, since trade (retail) mark-ups are added to the procurement price which remains unchanged both at cash and cashless settlement, the rules of such mark-ups calculation do not have to change because of possible rounding of total amounts in the bill.

How to apply new rules with the settlement transaction registrars?

In accordance with para 5 of Resolution No. 25, commercial entities must specify in a bill total amount of the purchase before and after rounding.

According to Order of the Ministry of Finance of Ukraine No. 13 as of January 21^st, 2016 (hereinafter – Order No. 13), form and content of the settlement documents do not contain such a requirement – only a total amount is provided.

At the same time para 5 of Section 1 of the Rules for Form and Content of Settlements Documents approved by Order No. 13 specifies that settlement documents printed by registrars of settlement transactions on paper can contains additional data on provisional total amount in the bill, change amount and other data, in particular information which is specified by technical requirements to specialized registrars of settlement transactions.

Also there are printed bills which contains information on the accumulated bonuses for purchase, wish of health and good day and even predictions for future.

That is commercial entities may supplement a settlement document with such a detail as a total amount after rounding, however this must be allowed by technical peculiarities of settlement transactions registrar.

Thus, given the novelty there is no need to recalculate prices for goods which are already in pharmacies for sale. However, because of absence of explanations as for financial accounting of the transactions we recommend setting prices for new batches of goods so that it is not needed to round amounts.

It should be noted that settlement transaction registrars should be re-programmed to specify total amounts in the settlement documents before and after rounding.

The abovementioned process which started with adoption of Resolution No. 25 is important world experience and continuous practice in the process of money circulation optimization.