LAW DIGEST:

Taxpayer burden reduction

The On Amendments to the Tax Code of Ukraine on Reducing the Tax Burden on Taxpayers Act of Ukraine of 17 July 2015, No.655-VIII introduces significant changes to the Tax Code of Ukraine in the field of reducing the tax burden on taxpayers. In particular, the amendments deal with providing general or individual tax advice.

The Act stipulates that a taxpayer can appeal against the order on providing  general tax advice or individual consultation as a legal act of individual action represented in written or electronic form that contradicts the norms or the content of the corresponding tax or duty.

Cancellation by a court of such an order serves as ground for providing new tax advice taking into account the court’s ruling.

Part of the amendments deal with tax notices. It is provided that the regulatory authority sends to the taxpayer  the tax assessment notice if the sum of financial obligation is calculated by the regulatory authority, according to Article 54 of the Code  (except for declaration of goods provided for citizens) or if by the results of inspection from the side of regulatory authority the following is established:

— Inconsistency of  tax refund and tax return sums;

— Overdeclaration of the taxable item negative value by the income tax or the negative value of VAT sum calculated by the taxpayer according to Chapter V of the Code,

— Underdeclaration or overdeclaration of tax duties stated in the tax return or tax credit written in the VAT return, except for cases when the mentioned under— or overdeclaration are taken into account while making other tax notices based on the inspection results.

According to the  taxpayer’s written request, the on-site documentary inspection, instead of the remote documentary inspection, can be provided. This Act comes into effect on 1 September 2015. 

E-money

Resolution No.481 of the Board of the National Bank of Ukraine (NBU) of 24 July 2015 affirms the amendments to the Regulation On E-money in Ukraine.

In particular, the Regulation is amended, with two new Chapters, providing the procedure for revoking the document on coordination of e-money system rules and the procedure of transactions with e-money issued by a non-resident.

NBU revocation of the banking license from the issuer serves as a ground for the document on coordination of e-money system rules losing its effect. The issuer is obliged to terminate all e-money transactions after the banking license is revoked.

NBU has a right to revoke the document on coordination of e-money system rules in the following cases:

— If the document on coordination of the rules of  e-money system or any amendments introduced therein are based on unreliable data;

— If the issuer violates any requirements settled by the Acts of Ukraine or the NBU Regulations which govern the issue and use of e-money;

— If the issuer fails to issue e-money over the course of one year from the date of receipt of the document on coordination of the rules of e-money system.

The NBU sends a registered letter on the revocation of the document on coordination of the rules of e-money system to the issuer stating the reasons. 

After receiving the registered letter the issuer who ensured the e-money issue is obliged to terminate the e-money issue and other e-money transactions (except for redemption) within the period stipulated  by the NBU.

In his turn, the user has the right to use e-money issued by a non-resident to pay for goods in favor of a non-resident via an international online payment system.

The trader has the right to accept e-money issued by a non-resident as a means of payment from a non-resident buyer if an international online payment system provides the e-money transfer with simultaneous redemption by transferring the means of payment to the trader’s resident bank account.  

Rent ceiling for land plots

The Act of Ukraine On Amendments to the Article 288 of the Tax Code of Ukraine as to Rent Ceiling of 30 June 2015, No.557-VIII introduces amendments to Paragraph 288.5 of Article 288 of the Tax Code of Ukraine. It is specified that rental rates for state and municipal land plots can exceed 12% of standard monetary valuation in the event of  the lessee determining this on a competitive basis.

VAT administration

The Act of Ukraine On Amendments to the Tax Code of Ukraine Regarding Improvement of VAT Administration of 16 July 2015, No.643-VIII provides the taxpayer with the following: to receive the right to attribute VAT amounts to the tax credit on the basis of VAT invoices registered in the Unified Register of Tax Invoices within 365 calendar days from the date of the VAT invoice billing; to receive information on his/her accounts in the VAT electronic administration system; an opportunity to prepare VAT invoices on the daily returns basis; to delay penalties for the late registration of VAT invoices until 1 October 2015.

Comments

Myroslava Savchuk,  senior associate, Aequo

On the first day of September Act No.655-VIII, which the legislator has ambitiously called the Act on changes regarding lessening the tax burden, comes into force. The Act introduces a number of changes to various provisions of the Tax Code of Ukraine dealing in particular with filing of tax declarations, tax inspections, tax rulings, tax notifications-decisions, liability of tax payers, tax administration in relation to non-residents.

Perhaps the most interesting change is the temporary (until 31 December 2016) cancellation of financial sanctions in case of timely payment by the taxpayer (with income below UAH 20 million), of tax liabilities as determined by the tax authorities. Other noticeable changes relate to the penalty for non-payment of taxes and provide that (i) the penalty for non-payment begins to accrue after 90 days from the due date for payment, and (ii) if the taxpayer himself has found and corrected a mistake in its tax reports within 90 days from the due date for payment then no penalty will accrue. While the latter amendments do not raise concerns, the practical effects of temporary removal of sanctions remain to be seen.

An indisputably positive step is the imposition of the obligation to publish on the Internet all individual tax rulings within 10 days from the date they are issued. General tax rulings, which are now to be issued by the Ministry of Finance, shall be published within 5 days. These changes will increase transparency and predictability for taxpayers.

Although the discussed Act indeed contains a number of positive changes they are non-systemic and insufficient. Further amendments to the systemic nature in respect of tax accounting and administration are needed and they will hopefully be introduced by the anticipated tax reform.