Legislative news digest: LEGAL HOTLINE 15.03.2018

THE SYSTEM FOR MONITORING AND BLOCKING OF TAX INVOICES WILL WORK AGAIN SOON

On March 7, 2018, the Resolution of the Cabinet of Ministers of Ukraine No. 117 of February 21, 2018 “On Approval of the Procedures for Terminating the Registration of Tax Invoices/Settlement Adjustments in the Unified Register of Tax Invoices” was officially published in the “Uriadovy Kurier” newspaper. Thus, the new system for monitoring and blocking of tax invoices is to start working on March 23, 2018.

Let us recall that the said Resolution of the Cabinet of Ministers of Ukraine approved:

• The procedure for terminating the registration of a tax invoice/settlement adjustment in the Unified Register of Tax Invoices;
• The procedure for work of commissions, which make decisions on the registration of tax invoices/settlement adjustments in the Unified Register of Tax Invoices, or denial of such registration;
• The procedure for reviewing complaints against decisions of commissions, which make decisions on the registration of tax invoices/settlement adjustments in the Unified Register of Tax Invoices, or on denial of such registration.

An important novelty of the new system is that not only the economic transaction, but also the taxpayer’s status will be important in determining whether a tax invoice/settlement adjustment should be terminated. From now on, the monitoring will be conducted based on the criteria of the taxpayer’s riskiness, the criteria of the riskiness of conducting transactions, and the indicators of the taxpayer’s positive tax history. The above criteria and indicators are not approved yet.

THE REGULATION ON THE REGISTRATION OF VAT PAYERS WILL BE CHANGED

The Ministry of Justice of Ukraine has registered the Order of the Ministry of Finance of Ukraine of January 16, 2018 “On Approval of Changes to the Regulation on the Registration of Payers of the Value Added Tax”, which, in particular, provides for the following changes:

• It is determined that in the event a legal entity established as a result of transformation fails to submit to the controlling authority an application for registration or re-registration in accordance with the procedure stipulated by this Regulation within 10 working days following the date of completion of its transformation, after the expiry of this time limit the controlling authority will make a decision on the cancellation of registration of this legal entity that was suspended as a result of its transformation;
• It is stipulated that a decision on the cancellation of registration of a VAT payer can be made not only by the head of the controlling authority, but also by their deputy or an authorised person.

The Order will come into force on the day of its official publication.

MANDATORY VIDEO RECORDING DURING INSPECTIONS CONDUCTED BY THE SSFSCP

According to the Resolution of the Cabinet of Ministers of Ukraine No. 1104 of December 18, 2017, the moratorium on inspections conducted by the state controlling authorities does not apply, in particular, to the State Service of Ukraine for Food Safety and Consumer Protection (SSFSCP) and its territorial bodies. Thus, the said controlling authority will conduct inspections according to the approved plan.

Please note that as from January 1, 2018, recording the processes of scheduled and/or unscheduled measures of state control (supervision) with the use of video-recording means is mandatory when the SSFSCP and its territorial bodies exercise state control (supervision) in the sphere of economic activities. This is enshrined in the recently promulgated Order of the SSFSCP No. 1207 of December 21, 2017, which aims to prevent corruption during inspections and contribute to the proper recording of the process of inspections.

THE SUPREME COURT EXPRESSED ITS OPINION ON NON-CREDIBILITY OF ECONOMIC TRANSACTIONS

Until recently, the position of courts as regards non-credibility of economic transactions between enterprises and their counterparties, in relation to which there is a guilty verdict rendered by a court against their officials under Article 205 of the Criminal Code of Ukraine (fictitious enterprise), was rather explicit: the status of a fictitious enterprise is incompatible with legal entrepreneurial activities. This legal position was formed by the Supreme Court of Ukraine as early as in 2015 (in the case No. 826/15034/14) and supported by the new Supreme Court in 2018 (in the case No. 2а-7075/12/2670).

However, at the end of February 2018, in the case No. 802/1853/16-a the Supreme Court expressed a relatively new position aimed to protect taxpayers’ interests. The Supreme Court concluded that the very fact of existence of verdicts rendered on the basis of agreements in criminal proceedings does not give grounds for the automatic opinion that economic transactions are non-credible. As a result, it is necessary to check the validity of each tax offense and carry out a comprehensive study of all components of economic transactions, while taking into account the circumstances established in the verdicts that have entered into legal effect.