Renewal of tax audits

On 6 December 2023, the President of Ukraine signed the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Lifting the Tax Audits Moratorium” (the “Law”).

The Law stipulates that the moratorium on scheduled documentary tax audits will be eased effective 1 December 2023. Below is a summary of key changes.

For taxpayers engaged in the production or sale of excise goods, gambling activities, or provision of financial or payment services, the rules for conducting and scheduling tax audits (effective from 1 August 2023) will continue to apply. However, the audit schedule may now additionally include:

1) Non-residents that operate/have operated in Ukraine through representative offices or permanent establishments (or representative offices/permanent establishments themselves):

• whose CIT growth rate is 50 or more percent lower than the growth rate of their income and/or;
• which have declared the accrued payroll with no declared CIT taxable object or income exempt from taxation in accordance with an international treaty.

2) Taxpayers who meet at least one of the following criteria based on the 2021 indicators:

• the amount of corporate income tax, value added tax, payroll paid is significantly lower than industry-wide level based on the statistics to be published on the website of the State Tax Service on the basis of KVED 009:2010 (for details see para. 69.35-2 of subsection 10 of the Transitional Provisions of the Tax Code of Ukraine);
• accounts receivable exceed accounts payable by more than twice;
• the total expenses declared in income tax return exceed by 75 percent or more the amount of total annual income declared in such income tax return (if the total annual income from business activities exceeds UAH 10 million).

Scheduled tax audits of new groups of taxpayers may commence no earlier than two calendar months after the updated audit plan is announced.

For single tax payers of the first and second groups, a moratorium on all audits (except for liquidation audits and audits requested by taxpayer) will remain in effect until 1 December 2024.

At the same time, the moratorium remains partially in effect for taxpayers registered in the occupied territories, territories with ongoing active hostilities or territories where hostilities are possible. In particular, the following audits are allowed: desk tax audits, unscheduled documentary audits of relations with non-residents, audits for compliance with currency payment terms, transfer pricing, VAT refundables, liquidations, audits on the grounds of information received from the foreign controlling authorities, audits requested by taxpayer, etc.).

The Law renews the unfinished audits for which the moratorium has been lifted.

Furthermore, the Law establishes a general requirement for ensuring the safety of documentary and physical audits during martial law, including safe access to premises and documents, safe conditions for inventory taking. In the absence of safe conditions, no audit can be performed, and any initiated (resumed) audit must be suspended. This requirement does not apply to documentary audits for compliance with tax legislation regarding:

• taxation of non-residents income;
• declaration of budgetary VAT refund;
• receipt of information by the tax authorities from the foreign controlling authorities.

Therefore, the Law approximates the tax audit procedure to the regime that existed before the imposition of quarantine and Russia’s full-scale invasion of Ukraine, taking into consideration the need to comply with safety requirements.

How Deloitte experts can help you

Deloitte has one of the most reputable tax practices in Ukraine and a team of lawyers with many years of litigation experience. Our tax and legal team can help you with:

• Preparing your business for a tax audit by identifying tax risks in advance and advising on mitigating measures.
• Preparing your company for submitting SAF-T reports at the request of the tax authorities.
• Communicating with the tax authorities on your behalf.
• Protecting the rights and interests of business in relations with tax authorities in the most effective way possible.

If you have any questions or need advice, please contact our team of experts who will be happy to answer all your questions.

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