LIFTING QUARANTINE – TAX CHANGES

The quarantine (due to COVID-19 disease) established by Resolution of the Cabinet of Ministers of Ukraine (CMU) No.1236 of December 9, 2020 will end on June 30, 2023.

Following the end of the quarantine, the provisions of the Tax Code of Ukraine, which eased taxpayer liability and granted preferential conditions on tax audits, will be abolished.

In particular, procedural changes are as follows:

• Lifting of the penalty moratorium for all tax violations and reinstatement of penalties (clause 52-1 of subsection 10 of section XX of the Tax Code of Ukraine).

PROVIDED HOWEVER: Penalties will not be applied for all violations, since such an existing provision on the moratorium on penalties is set forth in the "military" law, but this list is far narrower than the "quarantine" one;

• Resumption of the desk audits started before March 18, 2020 (clause 52-2 of subsection 10 of section XX of the Tax Code of Ukraine);

• Enterprises where tax audits have been scheduled after March 18, 2020 and have not taken place shall be included in the updated list of tax audits (clause 52-2 of subsection 10 of section XX of the Tax Code of Ukraine);

• Restoration of the limitation period suspended on March 18, 2020 (clause 52-2 of subsection 10 of section XX of the Tax Code of Ukraine).

PROVIDED HOWEVER: The limitation period shall remain suspended from February 24, 2022 under the "military" law.

General changes are as follows:

• Resumption of VAT accrual on the supply on the territory of Ukraine of goods (medical products and/or medical equipment) necessary for the implementation of measures aimed at preventing the occurrence and spread of epidemics and pandemics of coronavirus disease (clause 71 of subsection 2 of section XX of the Tax Code of Ukraine);

• Resumption of excise tax accrual for the manufacture of disinfectants (subclause 29-3.2 of clause 29-3 of subsection 5 of section XX of the Tax Code of Ukraine);

• Removal of the deduction for income tax purposes by public and/or communal health facilities of income from funds or goods (medicinal products and medical devices) received by them for the elimination of coronavirus disease (clause 51-2 of subsection 4 of section XX of the Tax Code of Ukraine).

Lifting quarantine will not restore the deadlines for:

• Providing individual tax advice;

• Consideration of taxpayers' administrative complaints as an administrative appeal against unlawful acts of tax authorities.

If you have any questions, please feel free to contact Partner and Head of Tax Practice at Legal Alliance Vitalii Savchuk by email: savchuk@l-a.com.ua