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Changes in the tax and customs rules have come into force

20/04/22

On April 16, 2022, the Law of Ukraine came into force (draft law No. 7234). The Law further clarifies changes in tax rules  and customs formalities, which were introduced in connection with martial law. Below we describe the main aspects of this Law.

Simplified tax system (“STS”)

  • corporate income tax (“CIT”) payers which are switching to STS, after return to the general tax system will be able to utilise the following tax assets available at the moment of transition to STS: 
    • tax losses
    • CIT overpayments
    • advance payments for dividends
    • interest in excess of the limit (para. 140.2) which increased the financial result and remained unaccounted for in the decrease of the financial result
  • the amount of income generated while applying STS should not be taken into account for CIT reporting, except for the purpose of: transfer pricing, the possibility of non-applying the tax differences, and the determination of the tax period
  • STS taxpayers applying the tax rate of 2% can now include taxpayers:
    • with any revenue amounts (previously limited to UAH 10 billion)
    • retail distributors of excisable goods
    • enterprises providing centralized water supply and sewerage services and extracting ground and surface water.

 

Other tax changes

  • special rules are introduced for confirming tax reporting data for taxpayers that were operating in the combat zone and are unable to provide primary documents:
    • such taxpayers must report the inability to provide documents to the tax authorities, indicating: (1) the circumstances that led to the loss and / or inability to extract the primary documents, (2) reporting periods, and (3) a general list of these documents. In the event of further loss of documents previously listed as impossible to extract, taxpayers must also notify the tax authorities
    • the burden of proving the possibility of providing the documents rests with the tax authorities, who have the right to issue a reasoned decision on the possibility of provision of the documents within one month after receiving the relevant notification from the taxpayer. The taxpayer can challenge such a decision of the tax authorities within the administrative and court proceedings
    • tax reporting data cannot be questioned only due to the lack of primary documents. The notification submitted by the taxpayer is the basis for accounting of expenses and tax assets  for CIT purposes, as well as input VAT 
    • field audits are prohibited in respect  of the reporting periods specified in the relevant notifications, including after the end of martial law if  the documents are lost
    • the possibility of updating tax reporting data for the tax periods specified in the notifications is limited
  • for the period of martial law import and supply of certain goods (metal plates, reinforced glass, optical and communication equipment, unmanned aerial vehicles, armored vehicles, etc.) exempt from VAT and customs duty provided the final recipient of those goods are law enforcement agencies, the Ministry of Defense of Ukraine, Armed Forces of Ukraine and other military formations, voluntary formations of territorial communities. Import and supply of armored vehicles are also exempt from excise tax
  • only free provision / transfer of goods / services for the benefit of the Armed Forces and other bodies is not treated as supply for VAT purposes
  • provision of charitable assistance to residents and displaced individuals from combat areas does not affect the status of a non-profit organization
  • adjustment for the CIT purposes of CIT in accordance with para. 140.5.9 of the Tax Code of Ukraine on free provision of funds and goods to charitable organizations also does not apply to provision of humanitarian aid
  • from March 1, 2022 and until the end of martial law for electricity suppliers, excise tax liabilities arise upon receipt of payment for electricity (after the end of martial law the same rules will apply to the electricity sold during martial law)
  • If violations are identified during tax audit of  VAT refund, the tax audit report is considered delivered to the taxpayer after the tax authorities upload it to the electronic cabinet of the taxpayer. The deadlines for the appeal have been suspended
  • until the end of martial law, the State Tax Service supervises pricing by conducting audits and sending materials to the authorized bodies
  • a new reason for the actual tax audits (permitted during martial law) was added: availability of information from the government agencies or consumer complaints about violations of pricing legislation.

Simplification of customs formalities

  • the Cabinet of Ministers of Ukraine is now empowered to establish the specifics of veterinary and phytosanitary control of goods, state control of non-food products and control over compliance with food legislation during martial law
  • customs formalities can be performed using qualified electronic signature or through an integrated electronic identification system
  • for the period of martial law, the measures of documentary control over international road transport are abolished. At the same time, the possibility of such control is introduced not only at checkpoints, but also in multimodal terminals
  • the possibility of releasing goods and vehicles on the basis of a customs declaration type "EA" without presenting to the customs authority has been extended until November 7, 2023
  • exports of goods and vehicles can be carried out without presenting to the customs authority on the basis of a customs declaration, completed in the usual manner, until November 7, 2023.

Contact us

Slava Vlasov

Slava Vlasov

Partner, Leader, Tax and Legal Services, PwC Ukraine

Tel: +380 44 354 04 04

Alexey Katasonov

Alexey Katasonov

Managing Partner, Attorneys Association "PwC Legal in Ukraine"

Tel: +380 44 354 0404

Maksym  Dudnyk

Maksym Dudnyk

Director, Tax Consulting and M&A, PwC Ukraine

Tel: +380 44 354 0404

Vita Miroshnychenko

Vita Miroshnychenko

Senior Manager, Head of Customs and International Trade practice, PwC Ukraine

Tel: +380 44 354 0404

Inna Andrushchenko

Inna Andrushchenko

Manager, Indirect Taxes, PwC Ukraine

Tel: +380 44 354 04 04

Yuliya Shyshko

Yuliya Shyshko

Manager, Indirect Taxes, PwC Ukraine

Tel: +380 44 354 0404

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