Tax updates (6.12.2022)

Below, you will learn about:

• Renewal of certain tax audits during martial law
• New procedure for confirming the status of a tax resident of Ukraine

Renewal of certain tax audits during martial law

Law of Ukraine No. 2719-IX as of November 3, 2022, amended the Transitional provisions of the Tax Code of Ukraine. In particular, the list of tax audits permitted during martial law has been expanded.

The Law allows almost all essential tax audits, including audits on compliance with transfer pricing (hereinafter - TP) legislation.

We recommend to prepare or finalize the Local Files and other transfer pricing documents as soon as possible, draft or renew relevant documentary evidence and make sure that all TP files are complete and available.

The following tax audits are currently permitted:

• desk tax audit;
• documentary unscheduled tax audits related to control over TP and other matters. In particular, audits based on information that a non-resident is conducting activities in the territory of Ukraine through a permanent establishment without being registered for tax purposes;
• ex post (actual) tax audit.

Documentary unscheduled tax audits (including TP control) that were started but not completed by February 24, 2022, have been renewed for the unused period.

In case of violations, no moratoriums (due to martial law, state of emergency, or quarantine) apply.

New procedure for confirming the status of a tax resident of Ukraine

On November 1, 2022, Order No. 248 dated August 19, 2022 entered into force. It approved key documents for application of double tax treaties (hereinafter - the DTT). Order No. 248 defines two main procedures:

• issuing a tax residency certificate (hereinafter – the TRC) to a legal entity or an individual who is a resident of Ukraine as defined by the Tax Code of Ukraine and the DTT, and
• submission a request to apply DTT with documents issued by foreign tax authorities.

A tax resident of Ukraine can get the TRC free of charge by submitting an application. It is important that even a correctly completed and submitted application does not guarantee that TRC will be granted. Information specified in the application will be checked by the tax authorities. A taxpayer can provide documents to support his application.

The text of the TRC is drafted in Ukrainian and English, it can be issued as an e-document and downloaded from the taxpayer's personal account. The TRC or a reasoned refusal is issued within 10 calendar days from the date of receipt of the application.

The procedure describes the algorithm for the taxpayer to get tax-exemption on income received in a foreign country or to reimburse paid foreign taxes, by submitting the supporting documents to the Ukrainian tax authorities.