TAX ALERT 20/08/2024 | digest of main tax news

Suggested alternatives to the draft law on taxation during martial law

On August 1, 2024, alternative draft laws 11416-1 and No. 11416-2 were registered in the Verkhovna Rada of Ukraine as alternatives to draft law No. 11416, a detailed review of which was provided by GOLAW in the article.
Draft laws No. 11416-1 and 11416-2 are similar in content and include some identical changes aimed at reducing the tax burden on businesses, specifically:

• establishing the presumption of innocence for taxpayers in cases of tax offences;
• introducing automatic registration of tax invoices if no tax offence is identified within 30 days of the invoice’s rejection;
• granting taxpayers the right to conduct an inventory during an audit at the request of the tax authorities.

Here to be noted that draft law No. 11416 suggests imposing an obligation on taxpayers to conduct an inventory at the request of tax authorities in the presence of the officials of the latter. The consequence of refusing officials will be the imposition of an administrative seizure on the taxpayer’s property.
Draft law No. 11416-1 further suggests setting a moratorium for the period of martial law on changing tax rates along with the procedure for their payment, expanding the list of taxable items, changing the procedure and deadlines for submitting reports, and changing other elements of taxes defined by the Tax Code of Ukraine.
The draft law No. 11416-2 does not include the aforementioned moratorium but suggests establishing directions and proportions for the targeted use of the military levy.
Unlike the draft law No. 11416, none of its alternatives suggests increasing the tax burden on taxpayers.

The Cabinet of Ministers of Ukraine revoked the resolution on the grounds for conducting documentary audits on the accuracy of VAT budget reimbursement calculations

On August 6, 2024, the Cabinet of Ministers of Ukraine, by Resolution No. 887, revoked its resolutions dated December 27, 2010, No. 1238, and October 26, 2016, No. 838, which approved the list of grounds for conducting unscheduled on-site documentary audits to determine the accuracy of VAT budget reimbursement calculations.
Currently, the provisions of the Tax Code of Ukraine remain in effect, according to which a documentary unscheduled audit is conducted if the taxpayer has claimed a VAT refund from the budget, provided there are grounds for an audit as defined by this Code, and/or if the VAT credit in the tax return exceeds 100,000 UAH. However, neither the Tax Code of Ukraine nor other legislative acts, following the revocation of the above-mentioned resolutions, contain specifically defined grounds for conducting such audits.

Updated schedule for documentary audits of taxpayers for 2024

The State Tax Service has updated all sections of the schedule for documentary audits of taxpayers for 2024 (as of July 31, 2024).
Specifically, 19 companies have been added to the sections on audits of legal entities and financial institutions (Sections I and II). Additionally, one individual will also be audited. The list of legal entities to be audited for personal income tax, military levy, and unified social contribution has been supplemented with 18 companies.

Suggested criteria for unconditional registration of tax invoices

On August 1, 2024, the State Tax Service of Ukraine published a draft resolution of the Cabinet of Ministers of Ukraine “On Amendments to the Procedure for Suspending the Registration of Tax Invoices/Adjustment Calculations in the Unified Register of Tax Invoices.”
The draft resolution defines the criteria for the unconditional registration of tax invoices/adjustment calculations for transactions subject to the export guarantee regime and clarifies the mechanism for conducting automated monitoring for such transactions.
The introduction of these changes is a prerequisite for the subsequent implementation by the Cabinet of Ministers of Ukraine of the export guarantee regime for certain types of agricultural products, as specified by the Law of Ukraine “On Foreign Economic Activity” in accordance with the requirements of Law No. 3706.

Suggested changes to the procedure of the documentary audit materials review

On August 8, 2024, the State Tax Service of Ukraine published a draft order of the Ministry of Finance of Ukraine “On Approval of Amendments to the Procedure for Documenting the Results of Documentary Audits of Compliance with the Tax, Currency, and Other Legislation of Ukraine by Taxpayers”.
The suggested changes in the draft order align the Procedure with the provisions of the Tax Code of Ukraine. Specifically, the procedure for reviewing documentary audit materials via video conference is regulated.
It is stipulated that to join a video conference, the taxpayers must include their tax identification number or, if applicable, their passport series and number (for individuals) in the username. During the video conference, identity verification will occur through the presentation of an identification document and a power of attorney (for a representative of the taxpayer). If the taxpayer fails to connect to the video conference or cannot be identified, the tax authorities will review the audit materials in the taxpayer’s absence.
The review of audit materials via video conference will be recorded using video recording equipment, and the meeting minutes will include the identifier (link) of the video conference recording.

New position of the Supreme Court regarding the right of non-resident’s representative offices to file an administrative lawsuit

In the ruling dated July 25, 2024 in case No. 640/31489/21, the chamber for consideration of cases regarding taxes, fees and other mandatory payments of the Cassation Administrative Court changed the established practice of the Supreme Court.
According to the new position, the representative office does not have the right to file an administrative lawsuit, and the proper claimant is the non-resident parent company. Therefore, by the aforementioned ruling, the representative office’s claim for cancellation of tax notices-decisions was left without consideration.
Here to be noted that previously the representative offices of non-residents were often plaintiffs in administrative cases, in particular, tax disputes, and their procedural legal capacity was not questioned.

Supreme Court ruling on the possibility of classification of diesel fuel tanks as excise warehouses

The Cassation Administrative Court within the Supreme Court, in its ruling dated July 16, 2024, in case No. 460/52841/22, concluded that diesel fuel tanks, which are part of production technology equipment and technically cannot be used as standalone units, are not considered excise warehouses. Therefore, their registration in the electronic administration system for fuel and ethyl alcohol sales is not required.