TAX ALERT 18.08.2025 | Digest of Key Tax News

The full amount of penalties for violation of rules for settlement transactions has been restored

From August 01, 2025, the provisions on reduced fines for individual entrepreneurs who are single-tax payers and not registered as VAT payers for violations related to settlement transactions have ceased to apply.

These provisions were set out in Section II “Final Provisions” of the Law of Ukraine “On the Use of Payment Transaction Registers in Trade, Public Catering and Services”.

The preferential regime was applied from August 01, 2023, to July 31, 2025, to the above-mentioned subjects engaged in the sale of goods (except for excisable goods, technically complex household appliances, medicines, medical products, and jewellery made of precious metals and stones) or providing services.

As a result, the financial liability for offences involving certain rules for conducting settlement transactions through cash registers, payment terminals or settlement books was significantly lower than provided by the general rules of the law.

From August 01, 2025, after the exemption is cancelled, the following penalties will apply to the specified violations:

• 100% of the value of goods (works, services) sold in violation — for the first violation;
• 150% — for each subsequent violation.

Amendments to the list of mandatory details for primary documents have been proposed

On August 08, 2025, the Ministry of Economy, Environment and Agriculture of Ukraine published the draft law “On Amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” on its website. It is currently at the public discussion stage.

This draft law, in particular, proposes to make certain clarifications regarding the mandatory details for primary documents. Thus, it is envisaged to allow in the primary document for the provision of services to indicate only the position and surname of the person responsible for carrying out such an operation on the part of the service provider, without indicating the details of the responsible person on the part of the service recipient.

This provision will not be applicable for construction contracts, contracts for design and research work and/or contracts for which payment is made from public funds, and contracts for the hire (lease) of state and municipal property, or unless otherwise expressly provided in the contract under which the services are provided.

We note that a properly drawn up primary document, in particular, confirms the reality of a business transaction and is therefore an important tool for companies in determining tax and monetary obligations, as well as serving as a means of proof, for example in disputes with tax authorities.

The review of the Supreme Court’s practice on the taxation of electronic communications service providers under the simplified tax system has been published

On August 01, 2025, the Supreme Court published the review of the case law of the Administrative Court of Cassation within the Supreme Court on the taxation of electronic communications service providers under the simplified tax system for the period from September 2019 to May 2025.

 It sets out the legal positions of the Supreme Court in this context, in particular, regarding:

•  Proving the obligation to switch to the general tax system. In its judgement dated May 30, 2022, in case No. 826/5951/17, the Supreme Administrative Court of Cassation noted that the receipt of funds from network customers is not conclusive evidence of the provision of telecommunications services. In the absence of evidence of the taxpayer’s use of equipment, stationss and line structures intended for the creation of telecommunications networks, the controlling authority’s arguments regarding the obligation to switch to the general tax system are unfounded.
  
• Impossibility of a licensed software service provider to be on the simplified tax system. The judgement of the Supreme Administrative Court of Cassation dated February 14, 2024, in case No. 803/990/18, formulated a legal position according to which business entities that provide communication services requiring licensing cannot be single-tax payers.

• The legality of applying the simplified tax system in the presence of a licence to provide technical maintenance and operation of networks and software services. The judgement of the Supreme Administrative Court of Cassation dated September 08, 2020, in case No. 805/8974/13-a, noted that the mere existence of a licence to provide technical maintenance and operation services for television networks (telecommunications networks) does not indicate that such services are provided. A taxpayer who has a licence but does not carry out the relevant licensed activity is entitled to apply the simplified tax system.

• Securing a claim in disputes concerning the exclusion of a provider from the register of single-tax payers. In its judgement dated April 10, 2025, in case No. 380/23272/24, the Supreme Administrative Court of Cassation ruled that the cancellation of a single-tax payer’s registration may lead, in particular, to the suspension of activities, the termination of contractual relations, and the dismissal of employees, which would make it difficult or impossible to resume operations. That is why the method of securing the claim by suspending the decision to cancel the registration of a single-tax payer corresponds to its subject matter and is aimed at preserving the actual situation until the case is considered on its merits.

The review of the Supreme Court’s practice on tax issues for the first half of 2025

On August 13, 2025, the Supreme Court published the review of the court practice of the Cassation Administrative Court within the Supreme Court for the first half of 2025, a significant part of which is devoted to the legal positions of the judicial chamber for cases concerning taxes, fees and other compulsory payments. It highlights legal positions on issues such as:

• Validity of a loan agreement with a non-resident. In the judgement dated April 17, 2025, in case No. 520/7077/2020, it was noted that the absence of registration of a loan agreement with a non-resident with the National Bank of Ukraine is not a ground for declaring it invalid and cannot be a ground for including the amount of the debt in taxable income. Also, the taxpayer has the right to submit documents in court proceedings that are of a supporting nature and are not primary documents, even if they were not submitted during the audit.
  
• Determination of permanent establishment of a foreign company in Ukraine. In its judgement dated March 20, 2025, in case No. 280/4264/21, the court examined the issue of recognising the permanent establishment of a non-resident in Ukraine due to the activities of individuals in Ukraine who are related parties to the non-resident. The court concluded that the activities of such persons in relation to the actual disposal of all assets of the non-resident as directors, shareholders and beneficial owners, and the conclusion of agreements that are part of the main activities of the non-resident company, lead to the creation of a permanent establishment in Ukraine.

•  Reduction of tax liabilities by the supplier in case of loss of VAT payer status by the buyer. In the judgement dated May 22, 2025, in case No. 320/5548/23, is stated that if the buyer’s registration as a VAT payer was suspended due to the transition to a special simplified tax system, then it lost the opportunity to register an adjustment calculation to tax invoices due to the return of the advance payment by the supplier. In such a case, the supplier loses the right to reduce its tax liabilities.

This review also provided other decisions of the Supreme Court on issues of value added tax, single tax, single social contribution and financial liability.