Confirmation of the inability of taxpayers to fulfill their tax obligations

With the adoption of Law of Ukraine No. 2260-IX dated May 12, 2022, the obligation for taxpayers to pay taxes and fees, submit reports, register tax invoices and adjust calculations has been restored.

At the same time, the law provides that, in the absence of an opportunity to fulfill their tax obligations in a timely manner, taxpayers are released from responsibility with mandatory fulfillment of such obligations within 6 months after the termination or cancellation of martial law in Ukraine.

The Ministry of Finance developed a draft of the order, which established the grounds for impossibility of the taxpayer to fulfill his tax obligations and the recommended list of documents to confirm the relevant facts and circumstances.

The main provisions of the order:

1)Grounds for impossibility of execution by natural persons, including self-employed persons with tax obligations are:

staying on the territory of a settlement in which hostilities are taking place, which is surrounded (blocked) or temporarily occupied by the armed forces of the Russian Federation, provided that such a settlement is the taxpayer’s tax address;
stay in hospital treatment (including abroad) in connection with an injury (contusion, trauma, mutilation) related to the defense of the Motherland, or on leave for treatment after an injury according to the opinion (resolution) of the military medical commission;
stay in hospital treatment (including abroad) in connection with an injury or illness received as a result of hostilities and related accidents as a result of hostilities or as a result of violence by the armed forces of the Russian Federation against citizens of Ukraine in the area of hostilities or temporary occupation;
conscription for military service during general mobilization;
belonging to law enforcement officers, military personnel or employees of the Armed Forces, the National Guard, the SBU, the Foreign Intelligence Service, the Main Intelligence Directorate of the Ministry of Defense, the State Border Service, employees of the Ministry of Internal Affairs, the State Emergency Service, military formations and other persons who are directly involved in ensuring national security and defense, repulse and containment of armed aggression of the Russian Federation;
loss/absence (death, recognition as missing, etc.) of persons who are responsible for filling out and submitting a tax return on behalf of the taxpayer, who are minors or persons recognized by the court as incompetent, if such persons are not fully dependent on others persons or the state;
loss (destruction or deterioration) of primary documents, computer and other equipment as a result of hostilities, acts of terrorism, sabotage caused by the military aggression of the Russian Federation, or their presence in the territories where military (combat) actions are being conducted (were taking place), which are surrounded ( blocked) or temporarily occupied by the armed forces of the Russian Federation;
impossibility to use or remove documents, computer and other equipment as a result of military (combat) operations, encirclement (blockade) or if the territory where the documents, computer and other equipment are located is temporarily occupied by the armed forces of the Russian Federation;
use or removal of documents, computer or other equipment, associated with a risk to the life or health of the taxpayer or impossible due to administrative obstacles established by the authorities;
a threat to the security of the state due to the possible leakage of information on the volumes and places of storage of fuel or ethyl alcohol and their subsequent destruction due to the drawing up and registration of excise invoices and/or the submission of electronic documents containing data on the actual remains of fuel and the volume of circulation of fuel or ethyl alcohol (exclusively in part of the performance of such duties);
other circumstances of force majeure, documented

2)Reasons for impossibility of fulfillment of tax obligations by legal entities and their separate subdivisions, in particular the obligations of tax agents, are:

loss (destruction or deterioration) of primary documents, computer and other equipment as a result of hostilities, terrorist acts, sabotage caused by military aggression of the Russian Federation;
impossibility to use or export documents, computer and other equipment as a result of hostilities, terrorist acts, sabotage caused by military aggression of the Russian Federation;
the use or removal of documents, computer or other equipment is associated with a risk to the life or health of an official of the taxpayer or is impossible due to administrative obstacles established by the authorities;
a threat to the security of the state due to the possible leakage of information on the volumes and places of storage of fuel or ethyl alcohol and their subsequent destruction due to the drawing up and registration of excise invoices and/or the submission of electronic documents containing data on the actual remains of fuel and the volume of circulation of fuel or ethyl alcohol (exclusively in part of the performance of such duties);
the taxpayer has no other officials authorized to calculate, collect and deposit taxes and fees to the budget, as well as keep accounting records, prepare and submit tax and financial statements reporting, lack of opportunity for the owner to appoint such officials, provided that such taxpayer does not have taxable objects, or indicators that are subject to declaration, in accordance with the requirements of the Tax Code of Ukraine, which may be related to the following circumstances:
the official is simultaneously one of the owners of the legal entity, provided that the absence of such a co-owner (shareholder, participant, founder) makes it impossible to make a decision on the appointment of another official on a permanent or temporary basis;
a legal entity is based on the property of a separate natural person who is also the sole official of such a legal entity;
stay (tax address of the taxpayer and actual location/location of production facilities, etc.) on the territory of a settlement in which military (combat) operations are conducted, which is surrounded (blockade) or temporarily occupied by the armed forces of the Russian Federation;
other circumstances of force majeure, documented.
Together with the order of the Ministry of Finance, Lists of documents to confirm the impossibility of timely fulfillment of tax obligations must be approved. Please note that such lists are of a recommendatory nature and are not exhaustive. In the presence of other documents that prove the impossibility of fulfilling their tax obligations in a timely manner, taxpayers provide such documents (copies of documents) to the tax authority.

3) The procedure for notifying the tax authority about the impossibility of fulfilling duties

According to the draft order, the taxpayer submits to the supervisory authority at the place of the tax address no later than August 31, 2022, a statement about the lack of such an opportunity together with documents (their copies) and information confirming the impossibility.

Therefore, taxpayers who continue to wish to postpone the submission of reports or payment of taxes should be ready to submit the necessary package of documents within the prescribed time limits.

The submission form is in electronic form (via the payer’s electronic account) or in paper form (in person at the place of the tax address or by mail with a notice of delivery).

Taxpayers’ applications together with documents must be considered by the DPS within 20 calendar days from the date of their receipt.

The taxpayer is released from responsibility for non-fulfilment/late fulfillment of tax obligations only on the basis of the decision of the supervisory authority.

In case of insufficient documents, the DPS sends a preliminary decision with a proposal to provide specific additional documents to confirm the grounds for the impossibility of fulfilling tax obligations specified in the application.

Please note that the order has not been approved at the moment. The order enters into force from the day of its official publication.

Lawyers and consultants K.A.C. Group will be happy to advise on matters related to changes in legislation in connection with the introduction of martial law, as well as provide comprehensive legal support.