Draft Law on the Cancellation of the Tax Inspections Moratorium Has Been Adopted

On October 17, the Verkhovna Rada adopted as a basis the final Draft Law “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding the Cancellation of the Tax Inspections Moratorium” (No. 10016-д).

Previously, this document had received four different versions with varying degrees of “freedom” in relation to taxpayers. The chosen option establishes freer conditions, but with certain features of scheduled inspections until 2024, taking into account the conditions of martial law, temporary occupation of Ukrainian territories and the possibility of hostilities.

Features and Terms of the Moratorium

Therefore, from November 1, 2023, the moratorium shall apply to:

1) conducting documentary inspections of payers of the single tax of groups I and II – until August 1, 2024;

2) conducting factual inspections at the location of taxation objects or facilities subject to taxation, which are located in the temporarily occupied territories of Ukraine and the territories of active/possible hostilities until the last day of the month in which the temporary occupation was terminated or the possibility of hostilities was eliminated in the relevant territory, and in case the taxpayer changes its location to another territory of Ukraine – until the date of state registration of the change of location.

Types and Conditions for Payers Subject to the Inspection

The plan-schedule of conducting scheduled documentary inspections in the period from November 1, 2023 to December 31, 2024 may include:

1) taxpayers who carry out/have carried out activities in the field of production and/or sale of excise goods;

2) taxpayers who carry out/have carried out activities in the field of organization and conduct of gambling (gambling business) in Ukraine;

3) taxpayers who provide/have provided financial and payment services;

4) non-residents who carry out/have carried out activities in Ukraine through separate divisions, including permanent representative offices and/or separate divisions, including permanent representative offices of a non-resident with a high degree of risk;

5) other taxpayers who, on the basis of indicators formed at the end of the 2021 calendar year, meet one of the criteria defined by law, namely:

– the level of income tax payment is 50 percent or lower than the level of tax payment in the relevant industry;

– the level of payment of value-added tax is 50 percent or lower than the level of tax payment in the relevant industry. This criterion does not apply to taxpayers whose transactions of goods export outside the customs territory of Ukraine constitute 25 percent or more of the total volume of supplies, and at the same time the income tax payment level is at least 50 percent of the income tax payment level in the relevant industry;

– receivables exceed payables by more than 2 times;

– the total amount of expenses reflected in the tax declaration on property and income is 75 percent or more of the amount of total annual income declared in such a declaration, provided that the amount of total annual income received from conducting business activities is UAH 10 million or more of accrual and/or payment by a tax agent – a legal entity of income in the form of salary in the amount of less than the average salary for enterprises of the relevant industry in the relevant region.

Inspections during martial law shall be carried out only if there are safe conditions for them to be carried out. A documentary inspection of a taxpayer who was included in the updated plan-schedule of inspections for the current year may be started no earlier than two months after the date of publication of the updated plan-schedule.