Tax and Legal updates in Ukraine (19.05.22)

Tax changes

The Draft Law #7360

On May 12, 2022, the Verkhovna Rada adopted the draft Law of Ukraine (#7360) "On Amendments to the Tax Code of Ukraine and other Laws of Ukraine on peculiarities of the tax administration of taxes, fees and single contribution during martial law." The law is currently awaiting signing by the President of Ukraine and will enter into force the day after its publication.

The Law restores the tax obligations of taxpayers, desk and documentary inspections, allows the VAT refunds, etc.

VAT administration

The operation of the electronic VAT administration becomes functional allowing registration of tax invoices and adjustment calculations in compliance with the registration deadlines.

At the same time, starting from June 2022, it will not be allowed to use the simplified procedure of recognition of the VAT credit based on the primary documents.

Temporarily, until the end of martial law, VAT payers are not entitled to submit adjustment calculations for the VAT returns to reduce tax liabilities and/or declaration of the amount of budget refund for VAT for the reporting periods prior to February 2022.

Budget VAT refund

From July 21, 2022, the budget refund of VAT will be resumed. The refund of the agreed amounts would be made in chronological order by the order of submission of VAT refund applications.

Amounts of VAT included in the tax credit for the purchase of goods, which were subsequently destroyed/lost during martial law, are not included in the budget refund amount and are counted as part of the tax credit of the next reporting (tax) period until full repayment.

Tax liabilities

New approach to determining the responsibility for the fulfillment of tax obligations on payment of taxes and fees, submission of reports, registration of tax or excise invoices, and settlement adjustments:

  1. If there is no possibility to fulfill the tax obligations in time, taxpayers are exempted from liability for non-fulfillment of their debt within six months after termination or cancellation of martial law in Ukraine.
  2. Taxpayers who can fulfill such tax obligations promptly shall be exempt from liability for failure to fulfill such obligations in case they will:
    • Register tax invoices and adjustment calculations for February-May by July 15, 2022.
    • Submit the tax returns by July 20, 2022.
    • Ensure payment of taxes and fees no later than July 31, 2022.
  3. Taxpayers who will renew the ability to perform their tax obligations for the period starting February 2022, shall perform such tax obligations within 60 calendar days of the first month through the next month their ability is renewed.

Single taxpayers of the 3rd group, who has chosen the tax system at the rate of 2%, will be released from liability for late fulfillment of tax obligations, provided they fulfilled their tax obligations within 60 calendar days from the date of returning to their previous tax system.

In the case of self-correction of errors in tax periods before July 20, 2022, which led to an understatement of tax liabilities in the reporting periods due to martial law, such taxpayers are exempt from fines and penalties.

Tax inspections

The following inspections are resumed:

  • Desk inspections;
  • Documentary unscheduled inspections (on the grounds stipulated by the Tax Code);
  • Actual inspections.

For the duration of martial law, there will be some peculiarities and limitations of conducting the documentary, unscheduled and desk inspections, which were started and not completed before February 24, 2022, are established.

In case of identifying violations of the law resulting from the inspections, taxpayers are liable by the Tax Code of Ukraine and the current legislation with force majeure circumstances. At the same time, the restrictions and moratorium on the application of penalties due to the spread of coronavirus disease during martial law do not apply.

Changes in legal regulations

Selected innovations on obtaining and prolonging a work permit

The Law of Ukraine No. 2220-IX stipulates that during martial law the issuance and prolongation of work permits for citizens of the Russian Federation, the Republic of Belarus will be carried out by agreement with the regional bodies of the Security Service of Ukraine.

The terms of consideration of applications for issuance or prolongation of the work permits, determined by the Law of Ukraine "On Employment", are prolonged until obtaining respective approval or refusal in such approval.

The regional offices of the Employment and Labor Migration Center will not issue or prolong the work permit in case of refusal of the Security Service of Ukraine to approve or prolong such permit.