Tax Code of Ukraine: 2017 edition

Tax Alert

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In 2017 a set of changes and amendments have been introduced into the Tax Code of Ukraine (Tax Code) based on the adoption of the two draft laws: Draft law No.5368 on improvement of the investment climate in Ukraine and Draft law No.5132 on ensuring of the balanced budget receipts in 2017. The key changes are outlined below.

General Provisions

  • The criteria for definition of the big taxpayers have been modified. The big taxpayers are legal entities and permanent establishments of the non-residents performing business activity and meet one of the below criteria:
    • the amount of payments made to the budget during four last calendar quarters exceeds UAH20 million (previously - UAH12 million)
    • the total income from all activities for the same period is more than UAH1 billion (previously - UAH500 million)
  • New definitions have been added to the Tax Code, particularly in connection with the introduction of such tools as the electronic cabinet of the taxpayer, and the distinction between the individual and general tax consultation
  • Taxpayers now are able to challenge not only the individual but also general tax consultations
  • The authorities (functions) of the State Fiscal Service of Ukraine (SFS) and the Ministry of Finance of Ukraine in terms of ensuring of the development and implementation of tax and customs policies have been separated, as well as the authorities of the SFS and the local tax inspections
  • Several changes were made into the provisions on transfer pricing (TP) - download our detailed review
  • Special criteria for the recognition of bad debts by banks have been introduced.

Taxes, Duties and Fees’ Administering

Electronic Administering

  • New provisions have been introduced with respect to the functioning of the electronic cabinet of the taxpayer and e-correspondence between the taxpayers and the controlling authorities

Reporting

  • The documents and information regarding TP developed/obtained during seven years preceding the date of liquidation of the taxpayer shall be transferred to the archive
  • Taxpayers submitting tax reports electronically shall submit annexes to the tax reports in the same form. Formally, before the introduction of this amendment, only those taxpayers who were obliged under the Tax Code to submit tax reports electronically were allowed to submit annexes to such tax reports electronically

Tax consultations

(Amendments to articles 52 and 53 of the Tax Code are applicable starting from 01.04.2017)

  • The term for issuing of the individual tax consultation by controlling authorities has been reduced to 25 calendar days starting from the day of receipt of the application (previously - 30 days), however such a term may be extended for not more than 10 calendar days
  • The individual tax consultation cannot be provided in electronic form, but only in verbal or written form
  • The unified database of individual tax consultations has been established. It shall be available on the official website of SFS
  • In the event of discrepancies, general tax consultation prevails over the individual tax consultation

Tax notification-decision, tax debt

  • New requisite of tax notification-decision has been added: the wording regarding a warning to prepare and register tax invoice / correction to tax invoice in Unified Register of Tax Invoices or to correct mistakes in requisites of the tax invoice
  • The tax claim shall not be sent to the taxpayer if the total amount of the tax debt does not exceed 60 non-taxable minimum income of the individual (previously - 20).

Information-analytical base for controlling authorities’ functioning

  • The information and supporting documents shall now be provided by the taxpayers at the request of the controlling authorities within 15 working days following the day of receipt of the request (previously - within a month), and in case of counter audits - within 10 working days.

Tax audits

  • In-office tax audits shall be carried out within the following time limits:
    • re tax return or adjustment tax return - during 30 days following the last day of the deadline for submission / day for the actual submission of the tax return
    • re other issues - based on statute of limitations stipulated in article 102 of the Tax Code (without changes: as a general rule - three years (seven years - for the purposes of TP control), subject to the other provisions of article 102 of the Tax Code)
  • The schedule of documentary scheduled tax audits for the current year shall be published on the official website of SFS before 25th December of the year preceding the year in which such audits will be conducted
  • The objections of the taxpayers against conclusions and data contained in the act (certificate) of the tax audit shall be considered by controlling authorities during seven working days (previously five working days)
  • Tax authorities shall send the notice on the time and place of the consideration of the objections to the tax audit act within four working days (previously two working days)
  • Statute of limitations (1095 days; 2555 days for TP control purposes) shall be applicable not only to the right of controlling authorities to determine the amount of tax obligations of the taxpayer, but also to the right to conduct tax audits

Repayment of tax debt of the taxpayers

  • In case the implementation of the measures to repay the tax debt by the taxpayer did not result in the repayment of the entire amount of the tax debt, an agreement on assignment of tax authorities as creditor with respect to receivables due to the taxpayer shall be concluded between such taxpayer and the tax authorities. If the taxpayer refuses to conclude such agreement, the tax authorities may file the claim to the court to force the taxpayer to conclude the agreement
  • The tax pledge shall be applicable if the amount of tax debt exceeds 60 non-taxable minimum income of individual (previously - 20)
  • Tax authorities may collect the tax debt without going to court in case the tax debt arising as a result of non-payment of a monetary obligation and / or fines meets the following requirements:
    • exceeds UAH 5 million
    • it is not paid within 90 calendar days following the day of its payment deadline
    • the state has no obligation to return erroneously and / or overpaid taxes to such taxpayer
  • The decision on instalment or deferred payment of tax liabilities or tax debt, as well as the postponement of payment of instalment (deferred) liabilities’ amounts exceeding UAH1 million shall be taken by the head of SFS in coordination with the Ministry of Finance of Ukraine. Instalment (deferred) payment in such cases shall be provided only if the taxpayer transfers as a collateral its property, the value of which is equal to or exceeds the above amount
  • SFS shall maintain the register of applications for instalment and deferred payment of tax liabilities or tax debt; information shall be updated daily and published on the official website of the SFS

Penalty

  • Provisions on penalty accrual are updated, the period and amounts of penalty depend on who, and under what circumstances, assessed tax liabilities:
Subject assessing the tax liabilities Period for penalty accrual Penalty amount (set as the percentage rate of NBU discount rate, applicable for each day of delay in the payment of tax liability including the payment day)
tax authorities as a result of tax audit starting from the first working day following the last day of the deadline during which the tax liability had to be paid 120 %
tax authorities in cases not connected with tax audit starting from the first working day following the last day of the deadline for payment of the tax liability 120 %
taxpayer or tax agent upon expiry of 90 calendar days following the last day of the deadline for payment of the tax liability 100%