STS suggests to improve procedures for the tax debt repayment

State Tax Service of Ukraine is working to improve the tax debt repayment procedure, which will prevent violators from applying gaps in current legislation in the absence of rule on the extension of tax lien for a period of administrative and / or judicial appeal.

For example, Main Directorate of the STS in Kyiv region, according to audit results of the Additional Liability Company “Uzyn tsukrovyy zavod”, established violations in alcohol production and its storage without a license, resulting in an act and tax decisions totaling more than 172.5 million UAH of monetary obligation. As a result of the taxpayer’s appeal against tax notifications-decisions in court, decision of the Administrative Cassation Court within the Supreme Court satisfied a cassation appeal of Main Directorate of the STS in Kyiv region. Decision of the courts of previous instances was cancelled and a new court decision was adopted, which denied appeals of the ALC “Uzyn tsukrovyy zavod” on the cancellation of tax notifications-decisions.

Subject to the provisions of Paragraph 57.3 Article 57 of the Tax Code of Ukraine within 10 working days from the date of promulgation of the Supreme Court’s decision, payer has a right to pay amount of certain monetary obligation voluntarily. Otherwise, such obligation will acquire the tax debt status and its collection will be carried out in manner prescribed by the TCU.

However, to avoid liability for the non-payment of agreed amounts of monetary obligation, including at the expense of payer’s property, using provisions of the TCU and gaps in current legislation in the absence of rules on extension of the tax lien right for a period of administrative and / or judicial appeal, simultaneously with the Supreme Court’s decision on the merits, the payer, represented by a founder, transferred real estate ownership to another enterprise, where he / she is also the founder.

To solve this issue, the State Tax Service suggested to make certain legislative changes, particularly to introduce:

- application of tax lien to taxpayers in the amount of such surcharges based on the results of control and verification work, if the taxpayer appeals against them in administrative and / or judicial proceedings;

- tax lien is not removed (cancelled) for the entire period of appeal;

- in the case of confirmation of legality of decisions made by the STS and its bodies, the mortgaged property is used as a source of repayment of such accrued amounts in case of payer’s non-payment voluntarily according to Article 57 of the TCU;

- in the case of decisions in the taxpayer’s favor, such tax lien is removed (cancelled);

- during the appeal of tax notifications-decisions the mortgaged property is not confiscated by the STS and its bodies – it remains in the taxpayer’s property.

Draft Law of Ukraine “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine on Ensuring Balance of Budget Revenues” (Register № 5600 as of 02.06.2021, adopted by the Verkhovna Rada of Ukraine on 01.07.2021 in the first reading) in terms of improving the taxpayer’s tax debt repayment procedure provides for provision of tax collateral on accrued amounts of monetary liabilities as a result of control and verification work.

State Tax Service emphasizes that these and other changes are aimed at practical implementation of the basic principles of tax system, which is a guarantee of filling budget’s revenue side for the welfare of all citizens and the state as a whole.

With regard to the debtor company ALC “Uzyn tsukrovyy zavod”, the supervisory authority is currently preparing materials to apply to the court with a claim to invalidate agreements concluded by the company and cancel the records of state registration, as well as appeal to the law enforcement agencies to assess actions of officials of the debtor company within provisions of the Criminal Code of Ukraine.

Communicate with the State Tax Service remotely using the “InfoTAX” service