Renewal of Taxpayers' Obligations, Tax Audits and VAT Refunds
Law No. 2260-IX "On Amendments to the Tax Code of Ukraine and other laws of Ukraine on the specifics of administration of taxes, fees and social security tax during martial law period and state of emergency" (formerly known as the draft law No. 7360 ") was adopted on May 12, 2022 and became effective on May 27, 2022, (Law).
This Law provides for the renewal of:
Tax obligations for taxpayers who are able to fulfill them, regarding compliance with the deadlines for registration of VAT invoices and adjustments to VAT invoices in the Unified Register of VAT Invoices, submission of VAT tax returns and payment of taxes (Tax Obligations);
Desk audits (in full) and some documentary audits, as well as
Renewal of Tax Obligations and Liabilities
Taxpayers are no more allowed to file tax returns and other documents in writing to tax authorities during the period of martial law, state of emergency;
The right of VAT payers to accrue VAT credit on the basis of primary accounting documents without registration of VAT invoices and / or adjustments to VAT invoices is possible only for the following tax periods: February, March, April, May of 2022;
VAT payers temporarily, until the termination or cancellation of martial law, do not have the right to submit adjustments to tax returns (submitted to correct self-identified errors in tax returns) for the reporting (tax) periods until February 2022 in order to reduce tax obligations and/or declare VAT refund;
In case of errors correction by the taxpayer in the tax periods until July 25, 2022 in compliance with the procedure for tax reports amendment as per the Tax Code of Ukraine (TCU), such taxpayer shall be exempt from accrual and payment of fines and penalties on condition that the errors resulting in non-payment of tax obligations were made in the reporting (tax) periods during martial law period;
Exemption from tax liabilities is provided for:
a taxpayer which is proved unable to fulfill its Tax Obligations on condition that the Tax Obligations fulfillment is done within six months after the termination of martial law in Ukraine,
a taxpayer which is proved unable to fulfill its Tax Obligations related to its branch, representative office, separate or other structural unit – for the period until the termination of martial law in Ukraine within the scope of activities carried out through such branches, representative offices, subdivisions,
a taxpayer which is proved able to comply in timely manner with Tax Obligations which deadlines were from 24 February 2022 until the effective date of the Law (but didn’t fulfill such Tax Obligations) – provided such taxpayer does:
registration of tax invoices and calculations of adjustments in the Unified Register of VAT Invoices (URVI) - by July 15, 2022,
filling tax returns – by July 20, 2022,
payment of taxes and fees – no later than July 31, 2022,
a taxpayer, including its branch, representative office, separate or other structural unit, that delayed fulfillment of its Tax Obligations, which deadline ended in the period starting from February 24, 2022 until the day of the renewal of taxpayer’s ability for the Tax Obligations fulfillment despite the renewal of the ability to fulfill such Tax Obligations – on condition such Tax Obligations are fulfilled within 60 calendar days from the first day of the month following the month of renewal of the ability of the taxpayer to fulfill the Tax Obligations,
a taxpayer of Unified Tax (group 3) at 2% rate of income (Special Regime) which delayed the fulfillment of Tax Obligations, the deadline for the fulfillment of which ended in the period from February 24, 2022, until the day the Special Regime became effective – subject to fulfilling the specified Obligations within 60 calendar days from the date of return of the taxpayer to the taxation system on which he was before the transition to the Special Regime.
VAT payers are obliged to ensure the registration of VAT invoices and adjustments to VAT invoices in the URVI, the deadline for registration of which ends during the above-mentioned periods, and to clarify (update) VAT credit declared by taxpayers on the basis of available primary (settlement) documents as well as VAT invoices and / or adjustments to VAT invoices registered in the URVI;
Procedure for confirmation of the possibility or impossibility of the taxpayer's fulfillment of Tax Obligations, and the list of documents for such confirmation must be adopted by the Ministry of Finance of Ukraine.
The following audits are resumed:
(i) desk audits in full,
(ii) documentary unscheduled audits:
at the request of the taxpayer, and/or
in connection with the procedure of reorganization, termination of a legal entity or entrepreneurial activities of the private entrepreneur, liquidation of a permanent establishment or a separate division of a legal entity, initiation of bankruptcy proceedings or filing an application for de-registration of a taxpayer, and/or
regarding legality of VAT refund and/or negative VAT value amounting to more than UAH 100,000, and/or
in relation to taxpayers that were alleged of violation of currency legislation in terms of compliance with the deadlines for the receipt of goods from import operations and/or foreign currency from export operations;
Desk audits of VAT tax returns and adjustments to VAT tax returns for reporting tax periods:
February, March, April, May of 2022 – start on 21 July 2022 and end no later than 20 September 2022,
June, July 2022 – start on August 21, 2022 and end no later than on October 20, 2022.
Submitted adjustments to VAT tax returns for reporting tax periods up to February 2022 shall be verified within the period specified for the reporting period on which the date of submission of such adjustment to VAT tax returns falls;
Documentary unscheduled audits shall be executed provided the following conditions can be met:
safe access to territories, premises and other property used for business activities and/or objects of taxation, or are used to generate income (profit), or related to other objects of taxation by such taxpayers,
safe access to documents, certificates of financial and economic activities, income received, expenses of taxpayers and other information related to the calculation and payment of taxes, fees, payments, compliance with the requirements of the law, the control over which is entrusted to tax authorities, as well as financial and statistical reporting,
conducting an inventory of fixed assets, inventory items, funds, withdrawing inventory balances, cash.
Documentary unscheduled audits that were started and not completed before February 24, 2022, resume and end within 60 days from the day following the day the Law became effective. Such audits shall last for the unused period.
Documentary unscheduled audits of tax returns or adjustments to tax returns (if they are submitted), to which VAT refund application was enclosed, shall start following the effective date of the Law and last within 60 calendar days following the deadline for conducting desk audit of the relevant tax return or adjustment to such tax return.
Law renews VAT refund;
VAT refund shall be executed according to the general procedure as per the TCU provided amended time periods of the relevant desk and documentary tax audits are used;
Approved amounts of VAT refund shall be paid back in chronological order as per the order of their entry in the Register of VAT Refund Applications;
Amounts of VAT accrued as VAT credit during purchase of goods that were later destroyed (lost) as a result of force majeure circumstances during the period of martial law shall not be subject to VAT refund but be used as VAT credit during next reporting (tax) period until full use.