Frequently asked questions regarding determination of the minimum tax liability

Individual owns land plot classified as the agricultural land. It is not rented out, cultivated independently. Accruing the minimum tax liability for 2022, the tax authority did not take into account in the reduction of minimum tax liability personal income tax and military levy paid from income from the sale of agricultural products grown on this plot (property and income tax declaration was submitted before May 1, 2022 year for 2021). Is it legitimate?

Sub-paragraph 170.14.3 Paragraph 170.14 Article 170 of the Code stipulates that tax notification-decision together with a detailed calculation of tax amount on payment of annual personal income tax liability for amount of positive value of difference between amount of the total minimum tax liability and amount of taxes, levies paid during tax (reporting) year and payments, control over execution of which is entrusted to the controlling bodies related to production and sale of own agricultural products and/or to the ownership and/or use (rent, sublease, emphytheusis, permanent use) of land plots classified as the agricultural land (further in this Paragraph – total amount of paid taxes, levies and payments) is sent (delivered) to the taxpayer in manner specified by Article 42 of the Code, by July 1 of year following the reporting year.

Sub-paragraph 170.14.5 Paragraph 170.14 Article 170 of the Code stipulates that the total amount of taxes, levies and payments paid by the taxpayer during tax (reporting) year includes:

personal income tax and military levy on income from the sale of own agricultural products;

land tax for land plots classified as the agricultural land. Amount of taxes, levies and payments paid erroneously and/or excessively paid in the tax (reporting) year is not taken into account.

Part of the personal income tax liability is positive value of difference between the total minimum tax liability and the total amount of paid taxes, levies and payments.

Therefore, for calculation of the minimum tax liability for 2022, the controlling body will take into account personal income tax and military levy on income from the sale of own agricultural products, as well as land tax paid during 2022.

At the same time, property and income tax declaration form in version valid during 2022 (Order of the Ministry of Finance № 783 as of 17.12.2020) did not contain separation of data on income received from the sale of own agricultural products grown, fattened, caught, collected, manufactured, produced, processed and/or processed directly by individual on the land plots.

It should be noted that Sub-paragraph 170.14.6 Paragraph 170.14 Article 170 of the Code stipulates that if citizen does not agree with the total minimum tax liability and/or amount in tax notification-decision determined by the controlling body, such citizen has a right within 30 days from the date of delivery of tax notification-decision to apply to the controlling body for data reconciliation, and provide supporting documents, in particular, regarding amount of paid taxes, levies and payments.

In the amount of taxes, levies and payments, erroneously and/or excessively paid amounts in the tax (reporting) year are not taken into account.

Tax authority calculated the minimum tax liability of individual, based on the average value of arable land in a region (as for plots that have not been evaluated). Normative monetary evaluation of the plot was carried out. Individual paid the minimum tax liability on time, but later discovered a mistake made by the controlling body. Can individual apply to the tax authority to recalculate amount of the minimum tax liability, because normative monetary evaluation of the plot is significantly different than average normative monetary assessment in a region?

Sub-paragraph 170.14.6 Paragraph 170.14 Article 170 of the Code stipulates that in case of the taxpayer’s disagreement with the total minimum tax liability determined by the controlling body and/or amount of annual personal income tax liability calculated in relevant tax notification-decision, such taxpayer has a right, according to procedure established by Article 42 of this Code, within 30 days from the date of delivery of tax notification-decision to apply to the controlling body for a reconciliation of data used to calculate amount of the personal income tax with provision of supporting documents, in particular regarding:

land plots owned and/or permanently used or leased by the taxpayer (sublease, emphyteussis), their normative monetary evaluation and area;

amount of income received from the sale of own agricultural products;

amounts of paid taxes, levies and payments.

In case that the taxpayer submits to the controlling body title documents for land plots or agreements on lease, emphyteussis or other use of land plots, concluded and registered according to the law, information about which is not available in databases of the information systems of central executive body that implements state tax policy, calculation of the minimum tax liability is carried out on the basis of information submitted by the taxpayer until the controlling body receives information from relevant authorities about ownership/use or transfer of the ownership right/use of such land plots.

If, according to the reconciliation results, discrepancies are found between data of the controlling body and data confirmed by the taxpayer based on originals of relevant documents, the controlling body within 10 days following date of completion of the reconciliation is obliged to cancel (withdraw) such tax notification-decision and, if necessary send (hand over) to the taxpayer new tax notification -decision along with a detailed calculation of tax amount, drawn up taking into account the reconciliation results.