TAX MORATORIUM LIFTED – COMPANIES, BE PREPARED

On November 9, 2023, the Verkhovna Rada of Ukraine passed draft Law of Ukraine No. 10016-d "On amendments to the Tax Code of Ukraine and other laws of Ukraine on lifting of the moratorium on tax audits" (hereinafter referred to as the Law). It is expected to be signed by the President of Ukraine in the near future.

The Law stipulates the expansion of the list of entities that may undergo scheduled desk audits, in particular:

• Non-residents operating through representative offices, if:
  
  • the growth rate of income tax is 50% less than earnings-growth rate; or
  • declaration of salary in the absence of profit or income exempt from taxation under an international treaty.
    
• Taxpayers who, based on the results of 2021, meet at least one of the following criteria:
  
  • the level of income tax and/or VAT payment is 50% less than the level of such payment in the relevant industry; or
  • accounts receivable is twice as much as accounts payable; or
  • the total amount of expenses is 75% of the annual income (with income of UAH 10 million or more); or
  • payment of salary is less than the average salary (in the relevant industry and region).

In addition, there will be a resumption of desk audits that were initiated but not completed before February 24, 2022.

However, the tax moratorium on scheduled desk audits will be retained for:

• entities located or registered in temporarily occupied territories or territories of hostilities; or
• single tax payers of the first and second groups (until December 1, 2024).

The Law is scheduled to take effect from December 1, 2023. Currently, the text of the Law has been endorsed by the Chairman of the Verkhovna Rada and forwarded for the President's approval.

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