Nuances of Calculating Deadlines in Tax Legislation

In connection with the introduction of martial law and the need to settle the issue of taxation, the Parliament adopted a number of laws that extended the terms and deadlines for taxpayers to fulfill their tax obligations.

In particular, in accordance with the paragraph of the second sub-clause 69.1 of clause 69 of sub-section 10 of chapter XX of the Tax Code of Ukraine (hereinafter also referred to as the “TC of Ukraine”), taxpayers who have the opportunity to timely fulfill their tax obligations regarding compliance with the deadlines for paying taxes and fees, submitting reports, including reporting, provided for in clause 46.2 of article 46 of this Code, registration in the relevant registers of tax invoices, adjustment calculations, are exempted from responsibility for untimely performance of such duties, the deadline for the performance of which falls on the period starting from February 24, 2022 until the date of entry into force of the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding the Peculiarities of the Tax Administration of Taxes, Fees and a Single Contribution during the Period of Martial Law, State of Emergency”   on the condition that such payers register tax invoices and adjustment calculations in the Unified Register of Tax Invoices by July 15, 2022, submit tax returns by July 20, 2022 and pay taxes and fees no later than July 31, 2022.

Thus, a logical question arises whether the wording “until July 15, 2022” includes this date, or whether the deadline for registration of invoices in the Unified Register of Tax Invoices expires on the eve of July 14. The same applies to the date “July 20, 2022”. In addition, the norms of the TC of Ukraine provide for a number of other cases where the deadlines for fulfilling tax obligations are determined similarly, for example:

• clause 177.5.1 of the TC of Ukraine – advance payments from personal income tax shall be paid to the budget by the 20th of the month following each calendar quarter (by April 20, by July 20 and by October 20);
• clause 258.2.5 of the TC of Ukraine – water users who have been issued permits for special water use and who supply water to other water users shall submit a list of water users – subscribers to the controlling bodies and water management bodies every year by January 20.

It should be noted that there are no rules for calculating terms and deadlines in the tax legislation that would allow an unambiguous answer to the question. Therefore, one should refer to the direct clarifications of the State Tax Service on this issue, as well as the court practice that has developed in similar legal relationships.

1. Information letter of the State Tax Service No. 3/2022 regarding the registration of tax invoices until July 15

Let us analyze clause 9 of this act verbatim, starting with the wording of the question.

IS IT NECESSARY TO CHANGE THE PERIOD OF TAX CREDIT FORMATION UNDER THE OPERATIONS OF PURCHASE OF GOODS/SERVICES IN FEBRUARY-MAY 2022 IF THE TAX INVOICE, COMPILED UNDER THE OPERATIONS OF THEIR SUBMISSION, WAS REGISTERED IN THE UNIFIED REGISTER OF TAX INVOICES ON JULY 15, 2022 AND LATER?

Therefore, the formulation of this question allows us to conclude that the supervisory authority combines the period from July 15, 2022 and later as the period when the obligation to register a tax invoice is considered overdue. At the same time, a completely different wording is presented in the answer to the question itself:

“If a tax invoice, which was drawn up for operations for the supply of goods/services carried out in February-May 2022 and which confirms the tax credit formed on the basis of the primary (settlement) documents available to the payer, is registered in the URTI after after July 15, 2022, and the supplier has the opportunity to fulfill tax obligations in a timely manner, the buyer loses the right to form a tax credit for such transactions before the date of registration of the tax invoice/tax credit in the URTI”.

As such, there is ambiguity in the question itself and the answer to it. The possibility of different interpretations of such an answer regarding the legality of fulfilling the tax obligation specifically on the date of July 15 can be used by the controlling body to its advantage.

In addition, it follows from the systematic analysis of Article 3 of the TC of Ukraine that the State Tax Service’s information letter is not a source of tax legislation, therefore, when considering a complaint against the decision of a supervisory body, such a document may not be taken into account by either a higher-level supervisory body or a court.

In view of the above, the matter of the deadline for the registration of a tax invoice is ambiguous due to the absence of specific tax legislation regulations that would regulate the issue of calculating deadlines.

1. Position of the Ministry of Justice

The letter of the Ministry of Justice of June 15, 2020 No. 26245/14036-33-20/8.1.2 states:

• It should be noted that quite often the prepositions “till” or “by” are used to define a term with a calendar date. At the same time, the legislation does not contain rules that should be followed when determining the deadline in the case of such wording.
• At the same time, it is noted in the scientific literature that to indicate the initial and final date, that is, a certain period of time, in documents, the preposition from must be used in conjunction with the preposition till. Sometimes, to emphasize the arrival of a certain date before the set deadline, the adverb inclusive is used. However, its use next to the deadline is inappropriate. Perpositions till and by determine the final calendar date of validity or performance of something.

Such a position can be taken into account as an additional argument in favor of the payer, but it will not be unambiguously convincing due to the fact that this letter is also not a normative legal act.

Thus, it is possible to resolve the issue only by applying the analogy of the law, and the result of its resolution will depend on the position of the body that resolves the case. In this regard, we offer the review of the judicial practice in similar legal relations.

1. Judicial Practice in Similar Legal Relations

We have reviewed court decisions in similar tax legal relations.

1. Decision of the Kyiv District Administrative Court  of September 14, 2022 in case No. 640/4522/22. The case concerned the sale of alcoholic beverages under a license issued until February 21, 2021, on the same day. The controlling body believed that the license would expire the day before – on February 20. The court took the position of the payer based on the following arguments:

• In accordance with part six of Article 7 of the Code of Administrative Procedure of Ukraine, in the absence of a law regulating the relevant legal relations, the court applies the law regulating the relevant legal relations (analogy of law), and in the absence of such a law, the court proceeds from the constitutional principles of the general principles of law (analogy of law).
• The term is defined in years, months, weeks or hours. The term is determined by a calendar date or an indication of an event that must inevitably occur (Article 252 of the Civil Code of Ukraine).
• As established by the court, the term of validity of the specified license was limited by the authorized body with the arrival of the calendar day – February 21, 2021, by specifying in it the preposition “till”, which in the Ukrainian language is used to indicate the final calendar date of validity, inclusive, or the completion of something.
• According to the first part of Article 3 of the European Convention on the Calculation of Time Limits of May 16, 1972, the time limits calculated in days, weeks, months and years begin at midnight dies a quo and expire at midnight dies ad quem.
• Taking into account the above grammatical analysis of the use in the license of its final date of validity “till February 21, 2021” and the provisions of the Convention, the court agrees with the arguments of the plaintiff regarding the prevention of violations of the requirements of Law No. 481/95-BP during the retail sale of excise goods (alcohol and tobacco) on the last day of validity of licenses – February 21, 2021.
• A similar legal position is set forth in Supreme Court’s ruling dated April 25, 2018 in case No. 803/350/17, dated February 7, 2019 in case No. 803/630/17, dated April 18, 2019 in case No. 815/1871/16.

Thus, the above decisions confirm that in the event of a dispute in the field of calculation of terms and deadlines in tax legislation, the European Convention on the Calculation of Time Limits of May 16, 1972 and the Civil Code of Ukraine should be applied, and the preposition “till” is used to indicate the final calendar date of validity including.

1. Decision of the Dnipropetrovsk District Administrative Court of September 7, 2018 in case No. 0440/5098/18.  The case concerned the interpretation of sub-clause 266.7.5 of clause 266.7 of Article 266 of the Criminal Code of Ukraine in terms of determining the deadline for submitting a tax return for tax on immovable property other than land in 2018.  According to this Article (in the version effective at the time of the case hearing), taxpayers – legal entities independently calculate the amount of tax as of January 1 of the reporting year, and till February 20 of the same year, they shall submit a declaration in the form established in accordance with the procedure provided for in Article 46 of this Code, with the breakdown of the annual amount into equal parts on a quarterly basis.

According to the plaintiff, such a deadline is February 20. The position of the tax office was that the deadline is February 19.

The court supported the plaintiff’s position, based on the following:

• A term is a certain moment in time, the occurrence of which is associated with an action or event that has legal significance (part 2 of Article 251 of the Civil Code of Ukraine).
• According to Article 252 of the Civil Code of Ukraine, the term is determined by years, months, weeks, days or hours. The term is defined by a calendar date or an indication of an event that must inevitably occur.
• According to the provisions of Article 1 of the European Convention on the Calculation of Time Limits of May 16, 1972, it applies to the calculation of time limits in civil, commercial and administrative cases, including the procedure for such cases, if such time limits are established by law or by a judicial or administrative body; by an arbitration body, if such a body has not established the procedure for calculating terms; or by the parties, if the procedure for calculating the terms was not directly or indirectly agreed between the parties and is not determined by the existing practice of relations between the parties.
• Part one of Article 3 of the European Convention on the Calculation of Time Limits of May 16, 1972 establishes that time limits calculated in days, weeks, months and years begin at midnight dies a quo and expire at midnight dies ad quem. According to the content of Article 2 of this Convention, the term “a quo” means the day from which the counting of the term begins, and the term “ad quem” means the day on which this term expires. According to the second part of Article 4 of the European Convention on the Calculation of Time Limits, if the time limit is calculated in months or years, the days ad quem is the day of the last month or the last year, the date of which corresponds to the dies a quo, or in the absence of a corresponding date – the last day of the last month.
• Under such circumstances, in accordance with the above-mentioned norms of the Convention with the prescriptions of clause 266.7.5. calue266.7 of Article 266 of the TC of Ukraine, the court came to the conclusion that February 20 of the relevant year inclusive is the deadline for submitting tax returns on real estate tax other than land.

Conclusions:

• The tax legislation does not directly provide for the procedure for calculating and determining terms and deadlines, so there is no clear answer to the question of whether July 15 is included in the deadline for registering a tax invoice. Therefore, this question remains debatable.
• Clarifications of the State Tax Service, the Ministry of Justice and other bodies on these issues are not normative acts. They can be used to strengthen a position. However, when considering such a case in court, the analogy of the law will be applied.
• Court practice on similar tax issues with reference to the European Convention on the Calculation of Time Limits of May 16, 1972 and the Civil Code of Ukraine determines that the preposition “till” is used to denote the final calendar date of validity inclusive. However, court practice is not always stable, and it does not seem possible to guarantee it 100% for the future.
• In addition, it is worth noting that the tax legislation has a principle according to which all doubts regarding the existence of circumstances under which a person can be held liable for violation of tax legislation and other legislation, the control of which is entrusted to the controlling body, shall be interpreted in favor of such a person (clause 112.7 of Article 112 of the TC of Ukraine). Therefore, in this case, doubts should also be interpreted in favor of the position regarding July 15 as the final date of registration of the tax invoice.
• However, in order to avoid disputes with the controlling authorities, if the tax legislation establishes a deadline for the payment of the obligation of the payer as “till indication of a date», we recommend, if possible, to fulfill this obligation no later than on the eve of this date. This will secure your position against potential disputes and costs of time and money for the judicial review of the case.