TAX ALERT 01.12.24 | Digest of Key Tax News

Adoption of the draft law on stimulating the development of the digital economy in Ukraine

On December 4, 2024, the Verkhovna Rada of Ukraine adopted draft law No. 9319, dated May 23, 2023, “On amendments to the Tax Code of Ukraine and certain other legislative acts regarding the stimulation of the development of the digital economy in Ukraine”.
The draft law, in particular, provides an opportunity for tax agents who have obtained the status of Diia City residents to pay personal income tax (PIT) at a 5% rate for periods of non-compliance with the requirements regarding the average number of employees and gig specialists (specified in paragraph 3 of part 1 of Article 5 of the Law of Ukraine “On stimulating the development of the digital economy in Ukraine”) until December 31 of the calendar year following the calendar year in which they acquired the resident status.
If such tax agents continue to fail to meet the requirement for the average number of employees after the stated period, they will be obliged to independently calculate and pay, at their own expense, PIT at the rate of 18% on the income of Diia City resident specialists, paid during the tax periods when the tax agent did not meet the specified requirement and paid PIT at the rate of 5%.
In addition, the draft law proposes postponing the start of military levy payments by individual entrepreneurs in groups 1, 2, and 4, as well as third-group single-taxpayers, from October 1, 2024, to January 1, 2025.

The draft law on VAT exemption for operations involving the import of certain defense-related goods to Ukraine has been adopted

On December 17, 2024, the Verkhovna Rada of Ukraine passed the draft law of Ukraine No. 12266 dated November 29, 2024, “On amendments to the Tax Code of Ukraine and other laws of Ukraine regarding the exemption from value-added tax for operations involving the import of certain defense-related goods to the customs territory of Ukraine”.
The draft law introduces VAT exemptions for operations involving the import of specific defense-related goods to Ukraine until the termination or cancellation of martial law. These goods include, in particular, components for aerial, ground, and maritime unmanned systems, remotely operated weapon systems, certain mechanized demining machines, etc.
Also among the changes proposed are:

• Extension until January 1, 2026, of the existing VAT exemption for operations involving the import of unmanned aerial vehicles (drones) and other goods specified in paragraph 9-24 of Section XXI of the Customs Code of Ukraine.
• Extension until December 31 of the year in which martial law is terminated or canceled in Ukraine of the provisions of subparagraphs 12 and 13-2 of subsection 2 of Section XX of the Tax Code of Ukraine regarding VAT exemption for certain operations in the cinematography sector.
• Clarification of the procedure for calculating the sales price of a used vehicle to determine the VAT tax base when supplying such a vehicle purchased from individuals not registered as VAT payers.

The end of the moratorium on documentary audits of single taxpayers

As of December 1, 2024, the moratorium on documentary audits for single taxpayers in groups 1 and 2 has been lifted.
It is worth recalling that the resumption of such audits was stipulated by the adoption of the Law of Ukraine No. 3453-IX, dated November 9, 2023, “On amendments to the Tax Сode of Ukraine and other laws of Ukraine regarding the lifting of the moratorium on tax audits”.
Additionally, it should be noted that taking into account the postponed timelines, tax authorities will be able to audit periods approximately from July 2018.

A review of Supreme Court practice in administrative cases for October 2024 has been published

On December 10, 2024, the Cassation Administrative Court within the Supreme Court published a review of current judicial practice for October 2024.
In the mentioned review, the Supreme Court highlighted positions, in particular regarding:

• The consequences for a taxpayer conducting operations with an unregistered cash register. It was noted, among other things, that documents issued by such an unregistered cash register are legally invalid and hold no legal effect.
• The conditions for granting budget subsidies to agricultural producers.
• The consequences of a tax authority’s failure to follow procedures during an unscheduled documentary off-site audit.
• The validity of a tax demand issued before the taxpayer submitted a revised declaration to reduce the tax liability. The court concluded that the submission of a revised declaration to reduce tax liabilities (specifically regarding land tax) does not affect the legality of the contested tax demand as of the date it was issued and does not serve as a basis for its cancellation.