Law No. 2260-IX: further amendments to the tax legislation for the period of martial law
On May 27, 2022, most provisions of the Law of Ukraine "On Amendments to the Tax Code of Ukraine and other laws of Ukraine on the peculiarities of tax administration of taxes, duties and single contribution for the period of martial, emergency law" of May 12, 2022, No. 2260-IX ("Law") entered into force.
The Law partially resumes taxpayers' obligations which performance was suspended for the period of martial law and lifts certain restrictions in terms of conducting tax audits.
Tax obligations and liability
1.1. General provisions
Taxpayers that are able to fulfill their tax obligations, which fell due within the period from February 24, 2022 to May 27, 2022, shall be exempt from liability provided they:
submit tax returns until July 20, 2022;
pay taxes and duties until 31 July 31, 2022.
Taxpayers that are able to fulfil their tax obligations shall be exempt from liability for their late performance, provided they are performed (i) within 60 calendar days from the first day of the month following the month of renewal of such opportunity or (ii) within 6 months after the martial law is terminated, depending on circumstances.
A special rule is provided for taxpayers who have switched to unified tax regime at a rate of 2%. They are released from liability for the period from February 24, 2022 until the date of transition to the unified tax, provided that they fulfill their tax obligations within 60 days from the date of transition to the tax system they previously applied.
Taxpayers who, by July 20, 2022, will adjust their own mistakes that led to understatement of tax liabilities during reporting periods for the period of martial law, are exempt from accrual and payment of penalties and default interest. However, until the termination or abolition of martial law the Law prohibits to reduce the tax liabilities and / or the amount of budgetary VAT refunds for the periods up to February 2022.
The right to recognize tax credit based on primary documents, which was provided to VAT payers earlier, shall be limited to the periods from February to May 2022 inclusive. For tax periods starting from June 2022, the tax credit will be formed based on registered tax invoices and adjustment calculations.
Taxpayers that are able to register tax invoices and adjustment calculations that were subject to registration in the period from February 24, 2022 to May 27, 2022, are released from liability if registration is made until July 15, 2022. The deadlines set out in paragraph 1.1 above apply to payment of VAT liabilities and submission of reports for this period. Apparently, special rules regarding the registration of tax invoices, payment of VAT liabilities and submission of tax reports shall apply to taxpayers who have switched to unified tax at a rate of 2%.
Provisions determining the procedure for conducting tax audits within the procedure of approving the amount of budgetary VAT refund shall be fully resumed from July 21, 2022, (see terms for such audits below). However, given only partial resumption of terms for the period of martial law (paragraph 2.1 below), the actual receipt of budgetary refund may be at question.
The Law stipulates that the amounts of VAT credit recognized upon purchase of goods, which were subsequently destroyed (lost) due to force majeure during martial law, cannot be included in the calculation of budgetary VAT refund but shall be carried forward to the next reporting (tax) period until full utilization.
2.1. Resumption of terms
The Law resumes a number of terms for tax purposes, namely
(i) deadlines for registration of tax invoices, adjustment calculations, submission of tax reports, payment of taxes and duties by taxpayers;
(ii) deadlines for off-site audits, drawing up of reports, submission and consideration of objections, charge of monetary obligations, approval, sending and appealing of tax notifications-decisions based on the results of off-site audits, accrual of interest;
(iii) deadlines for conducting factual and documentary unscheduled audits, drawing up of reports, submission and consideration of objections, additional documents and explanations, charge of monetary obligations, receiving, sending and appealing of tax notifications-decisions, administrative seizure of property based on factual audits.
2.2. Resumption of certain tax audits
The tax authorities restore the right to conduct all off-site audits. In addition, the right to conduct unscheduled documentary audits on the following grounds is restored:
(i) at the request of the taxpayer;
(ii) in the VAT refund procedure;
(iii) if termination / reorganization procedure has been initiated;
(iv) if violations of the terms of payment for export-import operations are detected.
Off-site tax audits of VAT tax returns and adjustment calculations for the reporting tax periods:
February-May 2022 inclusive shall start on the day following July 20, 2022 and end no later than September 20, 2022;
June-July 2022 inclusive shall start on the day following August 20, 2022 and end no later than October 20, 2022.
Documentary audits will be carried out provided safe access to the premises and documents is ensured and subject to possibility to conduct inventory. If the audit has started but cannot be completed due to safety reasons it shall be suspended.