Amendments to the tax Code of Ukraine and their effect on tax audits
On the 5th of August a Law “On amendments to the tax Code of Ukraine and some other regulatory acts of Ukraine related to improvement of some provisions of the Tax Code of Ukraine” was published. The document introduces significant amendments to regulation of tax legal relations and affects practically all chapters of the Tax Code. Even simple listing of all these amendments would tire anyone so we would like to highlight only some innovations.
Tax authorities gained back their right to demand explanations from taxpayers. They already had such right (Subsection 3 of Article 11 of the Law “On State Tax Service of Ukraine”) but during adoption of the Tax Code the President vetoed similar provision. At the time he thought that such right of tax authorities contradicts provisions of Article 63 of the Constitution of Ukraine in accordance with which nobody must face liability for refusal to testify regarding oneself or close relatives. This time he changed his mind but there is no need to be afraid of this innovation. Indeed there is not liability for refusal to testify. Trivial administrative liability under article 163-3 of the Code of Administrative Offences for non-fulfillment of lawful requests cannot be applied since disposition of this article refers to provisions of the law “On the Tax Service in Ukraine” which lost its validity. Thus, tax authorities can demand explanations but it is up to you whether to provide them or not.
List of grounds for audit conduction denial was extended. From now on besides cases of audit assignment non-provision it will be possible to deny conduction of an audit in cases when copy of order for an audit and/or official identification stipulated by audit assignment were not provided. The requirement about provision of the order also existed before but non-compliance with the requirements resulted in no consequences. The requirement about provision of official identification was absent at all even though lawyers, including our legal experts who recommended setting of such requirement.
Tax authorities regained control over presence of documents on state registration. It is a weird decision due to the fact that not that long ago issuance of state registration certificates was canceled. It is unclear which document will be used for confirmation of registration – certificate or an extract from the Unified State Register. It is quite possible that tax inspectors will demand an extract. And it is possible that is will have to be for the day of audit conduction.
List of grounds for filing of requests about provision of information was also extended. From now on it will be possible to file such requests in cases when tax returns of taxpayers include unreliable data, during counter verification as well as in cases when there is a complaint about non-provision of tax invoice to a buyer or violation of regulations regarding its filling out. Now on the one hand practically all (“practically” due to the fact that a provision about cases that are provided by the Tax Code was kept) grounds for requests are included in one article and on the other hand the term provided to respond to such requests is still unclear: in accordance with Article 78 of the Tax Code it equals to 10 days, in accordance with Subsection 73.3 of the Tax Code it equals to one month. Based on the presumption of legality of taxpayer’s decisions one can uphold the more extensive term.
This comment was written by legal experts of law firm “Pravova Dopomoga” within practice of Taxation.
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