Do individual tax consultations still release taxpayers from liability?

On January 1, 2021, the changes to the Tax Code of Ukraine introduced by the Law of Ukraine #466-IX (hereinafter “the Law”) concerning exemption from liability of a taxpayer acting based on an individual tax consultation entered into force.

Anna Sokur – Junior Associate at GOLAW

Key question

The Law eliminates para. 53 of Art. 53 of the Tax Code, which previously provided that the taxpayer, acting according to an individual tax consultation (hereinafter “ITC”) granted to this taxpayer, shall be exempted from liability.

These provisions of the Law caused discussions among the lawyers and businesses as to the loss of the whole sense of ITC for taxpayers.

However, such conclusions are not wholly correct. Let’s figure out from what do ITC release the taxpayer after January 1st, 2021?

Right answer

According to the clarifications of the State Tax Service, the abovementioned provisions are moved to para. 112.8 of Art. 112 of the Tax Code and will remain in force. However, this finding is also incorrect, since the wording and the substance of the norms were slightly changed.

It is highly important to understand that on January 1st, 2021, among other novelties, the concept of “guilt” as an element of a tax offence, as well as the notion of “exonerating circumstances” entered into force.

Para. 112.8.2 of Art. 112 of the Tax Code as of January 1, 2021, provides for the exemption from the financial liability if the wrongdoing was committed by the person, who acted in accordance with an ITC. Obviously, such ITC shall  have individual character, be granted in writing or as an electronic document, and be registered with the unified register of ITC.

Thus, the actual legislative changes are that taxpayers will be exempt only from the financial liability. In contrast, the previous version provided for exemption from any liability, including the financial liability.

In other words, a taxpayer acting according to the ITC, and committing a tax offence, is not subject to financial liability as provided in the Tax Code. Still, the tax has to be paid, and, in addition, a taxpayer can be subject to the administrative or criminal liability for a tax offence.

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