The Procedure for Recognizing the Impossibility of Fulfilling Tax Obligations During Martial Law

The Order of the Ministry of Finance of Ukraine No. 225 as of 29.07.2022 approved the Procedure for confirming the taxpayer's possibility or impossibility to fulfill the specified in the Tax Code obligations (Sub-paragraphs 69.1 Paragraph 69 of Sub-section 10 Section XX "Transitional provisions") before the termination or abolition of martial law (the Procedure).

It is about compliance with the payment terms of taxes and fees, submission of reports, including the reports provided for in Paragraph 46.2 of Article 46 of the Tax Code of Ukraine (the TCU), registration in the relevant registers of VAT or Excise tax invoices, adjustments to VAT or Excise tax invoices, submission of electronic documents containing data on actual fuel balances and volume of fuel or ethyl alcohol turnover, etc.

At the same time, separate annexes to the Procedure provide for:

• list of documents confirming the impossibility of the taxpayer - a legal entity, in particular, with respect to its branch, representative office, separate or other structural unit, paid to fulfill its tax obligations, including the tax agent’s duties; and
• list of documents confirming the impossibility of a taxpayer - a natural person, in particular a self-employed person, to temporarily fulfill his tax obligations, including the tax agent’s duties. (together The List of Documents).

What will be the grounds for the impossibility of fulfilling duties?

​The Procedure introduces separate grounds for legal entities and individuals regarding the impossibility of fulfilling tax obligations.​

For example, the grounds for the impossibility of tax payers - legal entities and their separate subdivisions - to fulfill their tax obligations (including the tax agents’ duties) are: (i) loss (destruction or deterioration) of primary documents, computer and other equipment as a result of hostilities actions, terrorist acts, sabotage caused by the military aggression of the Russian Federation; (ii) impossibility to use or export documents, computer and other equipment as a result of hostilities, terrorist acts, sabotage caused by the military aggression of the Russian Federation; (iii) the use or removal of documents, computer or other equipment associated with a risk to the life or health of an official of the taxpayer or impossible in connection with the establishment of prohibitions by authorized bodies of state power in accordance with the law in the conditions of martial law and/or limitations; (iv) the official is simultaneously one of the owners of the legal entity, provided that the absence of such a co-owner (shareholder, participant, founder) makes it impossible to make a decision on the appointment of another official on a permanent or temporary basis; and other grounds provided by the Procedure.

In turn, the grounds for the impossibility of a tax payer - a natural person, in particular a self-employed person, to fulfill tax obligations, in addition to the grounds established by Sub-paragraph 102.6.1 - 102.6.5 of Paragraph 102.6 of Article 102 of the TCU, are: (i) stay on the territory of the settlement, which is the tax address of such a payer and in which military (combat) actions are being conducted, which is surrounded (blocked) or temporarily occupied by the armed forces of the Russian Federation; (ii) inpatient treatment in health care institutions (including foreign ones) in connection with an injury (contusion, trauma, mutilation) connected with the performance of military service duties, or on leave in connection with an illness or for treatment after a serious injury according to the conclusion (resolution) of the military medical commission; (iii) conscription for military service during the general mobilization announced by the Decree of the President of Ukraine No. 65 “On General Mobilization” dated on February 24, 2022; (iv) the use or export of documents, computer or other equipment, associated with a risk to the life or health of the taxpayer or impossible due to the establishment by authorized bodies of state power in accordance with the law in the conditions of martial law, and/ or restrictions; and other grounds provided by the Procedure.

**What is the deadline for submitting an application to the State Tax Services (the STS) about the impossibility of performing duties?**​

In case of impossibility of the taxpayer to fulfill tax obligations, the taxpayer submits a statement about the lack of such possibility together with an exhaustive list of documents (copies of documents), information that is provided for in the List of Documents confirming the impossibility to the STS no later than September 30, 2022.

How to make the statement correctly?

It should be noted that there is no approved application form. It is served in any form. Herewith, the Paragraph 3 of the Procedure contains details that must be specified, namely:

• ​full name of the taxpayer according to registration documents or surname, first name, patronymic (if available) of the taxpayer;
• taxpayer code according to the Unified State Register of Enterprises and Organizations of Ukraine or tax number;
• registration number of the taxpayer's registration card or series (if available) and passport number (for individuals who, due to their religious beliefs, refuse to accept the registration number of the taxpayer's registration card and have notified the relevant supervisory body about it and have a mark in the passport);
• tax address of the taxpayer;
• name of the controlling body to which the application is submitted;
• the date of submission of the application;
• a clear and concise justification of the grounds for confirming the impossibility of the taxpayer's fulfillment of tax obligations with reference to documentary confirmation of the stated facts;
• a comprehensive list of attachments indicating the number of pages of each document, their full name and details (date, number, name of the body that issued the document);
• information about which tax obligations the taxpayer did not /cannot fulfill;
• information about tax periods during which it is impossible to fulfill tax obligations, or information about circumstances related to the conduct of military (combat) actions, terrorist acts, sabotage or other force majeure circumstances (force majeure circumstances) caused by military aggression of the Russian Federation, temporary occupation by the armed forces of the Russian Federation; and
• signatures of the taxpayer - a natural person or officials of the taxpayer, certified by the seal of the taxpayer (if available).

How will the STS consider the application?

​The STS considers submitted application and documents within 20 calendar days from the date of their receipt and makes an appropriate decision. If the supporting documents are not sufficient, the STS will send a preliminary decision to the payer with a proposal to provide, within 10 calendar days, specific additional documents to confirm the grounds specified in the application. Additional documents, justifications / explanations are considered by the STS within 20 calendar days from the day following the day of their receipt.

It should be noted that the STS, if necessary, can contact the competent authorities for additional confirmation of the circumstances stated in the taxpayer's application and relevant documents.

At the same time, the duty of proof regarding the possibility or impossibility of the taxpayer to fulfill his tax obligation in a timely manner rests with the STS.

The decision/preliminary decision is sent to the taxpayer in accordance with the procedure established by Article 42 of Chapter 1 of Section II of the TCU and may be appealed according to the TCU in an administrative or judicial procedure.