Main innovations provided by the Law of Ukraine № 2260 as of 12.05.2022
On 12.05.2022, the Verkhovna Rada of Ukraine adopted the Law of Ukraine "On amendments to the Tax Code of Ukraine and other Laws of Ukraine on the tax control peculiarities and administration of taxes, levis and single contribution during the martial law, state of emergency" (draft law № 7360, hereinafter – Law № 2260).
Main changes made to the Tax Code of Ukraine (hereinafter – Code):
1. Peculiarities of tax credit formation are specified (Paragraph 322 Sub-section 2 Section XX of the Code) for a period of the martial law, in particular, for the reporting (tax) periods of February, March, April, May 2022 for the purchase of products / services for which suppliers have not registered tax invoices and / or adjustment calculations to them in the Unified Register of Tax Invoices.
Particularly, taxpayers for the reporting tax periods of February – May 2022:
- include in tax credit of the reporting (tax) period amount of the value added tax paid (accrued) as a part of cost of purchased products / services on the basis of primary (settlement) documents available to the payer, drawn up (received) by the taxpayer for the purchase of products / services according to the Law of Ukraine "On accounting and financial reporting in Ukraine";
- recipients of services supplied by non-residents with place of supply located in the customs territory of Ukraine, in case of accrual by such recipient of value added tax services as a part of tax liabilities specified in tax declaration for relevant reporting (tax) period, such taxpayers have a right to include such tax amounts in tax credit of the relevant reporting (tax) period on the basis of primary (settlement) documents available to the taxpayer, drawn up (received) by the taxpayer for the purchase of services, according to the Law of Ukraine "On accounting and financial reporting in Ukraine";
- tax credit, which was formed during this period on the basis of primary (settlement) documents, must be confirmed by registered in the Unified Register of Tax Invoices tax invoices / adjustment calculations and clarified (adjusted) by submitting clarifying calculations to submitted for these periods VAT declarations.
2.1 Amended version of Sub-paragraph 69.1 Paragraph 69 Sub-section 10 of the Code determines that during the martial law, if the taxpayer does not have opportunity to timely register tax invoices / adjustment calculations in the Unified Register of Tax Invoices, submit tax reporting and pay taxes and levies, such taxpayers are exempted from fines with mandatory performance of such duties for six months after termination or abolition of the martial law in Ukraine.
A similar rule on exemption from financial liability is provided for the taxpayer in respect of a branch, representative office, separate or other structural unit.
In case the taxpayer is not able to fulfill tax obligation for registration of tax invoices / adjustment calculations in the Unified Register of Tax Invoices in relation to his / her branch, representative office, separate or other structural subdivision, submission of tax reporting and payment of taxes and levies, such taxpayer is released from liability, but only within activities carried out through such branches, representative offices, separate or other structural units for a period before the end of martial law.
2.2 Tax liabilities for taxpayers, who have opportunity, are renewed in a timely manner:
- to register tax invoices / adjustment calculations in the Unified Register of Tax Invoices,
- to submit tax reporting,
- pay taxes and levies;
Accordingly, such payers are released from liability for late performance of such obligations, deadline for which falls on a period from 24.02.2022 to the date of entry into force of the Law, subject to:
- registration of tax invoices / adjustment calculations for the supply of products / services carried out in a period of February – May 2022 until 15.07.2022 (registration of tax invoices / adjustment calculations in the Unified Register of Tax Invoices must be done for tax credit reflected in the VAT tax declaration for the reporting (tax) periods February – May 2022 on the basis of primary (settlement) documents).
- submission of tax reporting, including reporting provided for in Paragraph 46.2 Article 46 of this Code is by 20.07.2022.
- payment of taxes and levies not later than 31.07.2022.
After expiration of these terms and non-fulfillment of the by taxpayers’ tax obligation, such taxpayers will be subject to penalties determined by the Code.
2.3 Taxpayers, including in respect of their branch, representative office, separate or other structural unit, whose ability to perform their tax obligations deadline for which falls on a period from 24.02.2022 has renewed, until the date of renewal of the taxpayer’s ability, are released from liability for late registration of tax invoices / adjustment calculations in the Unified Register of Tax Invoices, submission of reporting, payment of taxes and levies under condition that they fulfill such tax obligations within 60 calendar days from the first day of a month following month of renewal of such taxpayers’ opportunities.
2.4 Taxpayers who made a transition to the simplified taxation system with 2% payment of tax are released from liability for late compliance with tax obligations deadline for which falls on a period from 24.02.2022 before the date of transition to the simplified taxation system, provided that such obligations are met within 60 days from the date of transition to the taxation system on which such taxpayer was before election of the single tax at 2% rate.
2.5 Taxpayers, who correct errors by submitting adjustment calculations until 25.07.2022, are exempted from penalties for understatement of tax liabilities for reporting tax periods during the martial law.
Temporarily, until termination or abolition of the martial law, the VAT payers will not be entitled to submit adjustment calculations to tax declarations for reporting (tax) periods until February 2022 with indicators on reduction of tax liabilities and / or declare the VAT amount for budgetary refunding.
! Procedure for confirming possibility or impossibility of fulfilling tax obligation and list of documents confirming impossibility of fulfilling such obligations is established by the Ministry of Finance.
3. In-place audits of tax reporting, timeliness of registration of tax invoices / adjustment calculations in the Unified Register of Tax Invoices, timeliness of submission of tax declarations (calculations) and timeliness of payment of agreed amounts of tax liabilities are resumed.
There are determined terms of conducting in-place tax audits of value added tax declarations and adjustment calculations to them for the reporting tax periods of:
February, March, April, May 2022 – begin the day after 20.07.2022 and end not later than 20.09.2022;
June, July 2022 – begin the day after 20.08.2022 and end not later than 20.10.2022.
Submitted adjustment calculations to the value added tax declarations for reporting tax periods until February 2022 are checked within a period specified in this Paragraph for the reporting period on which the day of submission of such adjustment calculations falls (Clauses 2, 5 – 8 of Sub-paragraph 69.2 Paragraph 69 Sub-section 10 Section XX of the Code).
4. Resumption of conduction of documentary audits:
- conducted at the taxpayer’s request;
- in case of reorganization, termination, bankruptcy of a person;
- audits on currency control;
- in case the payer declares budgetary refunding and / or negative value of the VAT.
5. Budgetary refunding of the VAT amounts is renewed.
Sub-paragraph 69.11 Paragraph 69 Sub-section 10 Section XX of the Code suspended validation of Paragraphs 200.10 – 200.12 of Article 200 of the Code until 21.07.2022, which determine procedure for approval, terms of audits and procedure for refunding by the controlling body of claimed amount of budgetary refunding based on the result of in-place and documentary audits.
For reporting tax periods February – July 2022, Paragraphs 200.10 – 200.12 of Article 200 of the Code are applicable taking into account deadlines for conducting in- place and documentary tax audits, envisaged by Paragraph 69.2 Paragraph 69 Sub-section 10 Section XX of the Code.
Adjusted calculations submitted to the VAT declarations for reporting tax periods until February 2022 are checked within a period specified in this Paragraph for reporting period, which is the day of submission of such adjustment calculations.
Reimbursement of agreed amounts of budgetary refunding is carried out in chronological order according to the order of submission of applications for budgetary refunding to the Register.
6. A new sub-clause 69.29 was added to Paragraph 69 Sub-section 10 Section XX of the Code, according to which amount of the value added tax included in tax credit for the purchase of products that were subsequently destroyed (lost) due to the force majeure during the martial law:
is not included in calculation of amount for budgetary refunding;
is included in tax credit of the next reporting (tax) period until its full repayment.
7. Law № 2260-IX excludes possibility, established for a period of the martial law, state of emergency, for taxpayers to submit to the supervisory authority tax declarations and other documents in a paper form, as they were required to submit reporting in the electronic form.
8. Law enters into force on the day following the day of its publication – on 27.05.2022, except for amendments to Sub-paragraphs 69.2 and 69.11 of Paragraph 69 Sub-section 10 Section XX of the Tax Code of Ukraine in part of the in-place audits of declarations and adjustment calculations (in case of their submission) to which application for budgetary refunding has been submitted that will come into force on 02.06.2022.
That is, the procedure and deadlines for in-place audits of tax declarations (adjustment calculations) with declared VAT amounts for budgetary refunding come into force on 02.06.2022.
