The Ministry of Finance of Ukraine Has Approved the Order on Regular Amendments to the Criteria for Blocking Tax Invoices (TI)/Settlement Adjustments (SA)

The Ministry of Finance of Ukraine Has Approved the Order on Regular Amendments to the Criteria for Blocking Tax Invoices (TI)/Settlement Adjustments (SA)

On November 13, 2017, the Ministry of Finance of Ukraine approved the Order No. 926 of November 09, 2017, which yet again complicated the situation with tax invoice registration. The amendments relate to the introduction of a new criterion, which will allow covering yet more VAT payers, who will fall into the zone of TI blocking risk.

Thus, Clause 6 of the Criteria is supplemented by:

• Subclause 3 – Settlement adjustment drawn up by the supplier of goods/services for the tax invoice drawn up for the recipient VAT payer, if one expects more than 2X change in the cost of goods/services and/or change of the nomenclature of goods/services (for the codes of goods under the UKT ZED – changing the first four digits of the code, and for the codes of services under the State Classifier of Products and Services – changing the first two digits of the code);
• Paragraph 1 – The required amount of balance established for comparing the volume of delivery of goods with the volume of purchases: more than 75% of the total balance for payers with the D index value of more than 0.03; more than 60% – from 0.02 to 0.03; more than 50% – from 0.015 to 0.02; more than 40% – from 0.01 to 0.015, more than 30% – from 0.005 to 0.01, and more than 20% – to 0.005.

With regard to Subclause 3, it is clear that there can be any reason for changing the value of the product/service or the UKT ZED code, such as a commonplace technical error. However, given that the draft Order does not yet provide a list of documents to explain the introduction of such changes, it is difficult to say, what exactly the SFS will expect from the payer in this case. In our opinion, one will have to confirm the credibility of the economic operation with primary documents, as well as prepare a substantiated explanation for introducing such changes.

In addition to the new criterion for stopping TI/SA, the Order gives the Commission the right not to consider information provided by the payer if it is established that the table contains invalid data or other information that may indicate the riskiness of the payer’s operation. The Order does not specify, what unreliability criteria for such information one should be guided by. In case the data of the payer’s table has already been automatically taken into account by the monitoring system, such data will not be considered after the Commission makes an appropriate decision. Unfortunately, the new Order does not contain any comments on the possibility to submit corrected data or appeal against their non-consideration by the Commission.

Some positive amendments have also been introduced. Thus, automatic taking into account of the payer’s data table is also stipulated for tax invoices suspended based on the following signs:

• D and P index values calculated based on the procedure specified in Subclause 4 of Clause 5 of these Criteria are as follows: D>0.02, P
• The volume of supplied goods/services indicated in the TI/SA drawn up from January 1, 2017 in the Register and specified in the data in accordance with the annex to these Criteria is more than 25% of the total volume of supplies for the relevant period.

Taking into account the content of the second sign for the automatic consideration of the table data, it is possible to predict that Subclause 1 of Clause 6 of the Criteria on compatibility of the volume of delivery with the volume of purchases should have been changed not only in part of determining the balance.

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