Today, 17 March 2020, the Verkhovna Rada (Parliament) of Ukraine has adopted a number of laws aimed at preventing and counteracting the spread of the coronavirus disease (COVID-19) in Ukraine. The Law that amends the taxation legislation to support taxpayers is among them.
Given below are the recent changes introduced by the Law to the taxation.
Regarding Taxpayers' Liability
Fines for violating the taxation legislation committed from 1 March to 31 May 2020 are not applicable, no penalties are accrued, and those accrued but not paid for this period must be written off.
We note, however, that there is still liability, among other things, for:
- disposing of property subject to a tax lien without consent from a tax authority;
- failing to accrue, declare and pay VAT, excise duty and rent payments.
Regarding Tax Inspections
There will be no tax inspections from 18 March to 31 May 2020.
However, any unscheduled documentary inspection of taxpayers to verify whether they declare lawfully the VAT refund from the state budget for more than UAH 100 thousand must be treated as an exception.
Information about postponing the inspections scheduled for 18 March to 31 May 2020 but not commenced will be set forth in a new schedule plan and disclosed at the website of the State Tax Service until 30 March 2020.
The inspections that have been commenced but not completed are suspended for the period until 31 May 2020. Such suspension interrupts the inspection period and requires no additional decisions to be made by any tax authority.
Regarding the Declaration of an Individual Income Tax
A declaration on property status and income must be filed until 1 July 2020, rather than 1 May this year. An individual must pay the declared amount by 1 October 2020, rather than 1 August.
Regarding the Land Fee
The land tax and rent payable for stated-owned and communally owned land plots are not accrued and paid and non-residential property is not subject to the real property tax during the period from 1 March to 30 April 2020.
Legal entities may file an adjusting declaration in view of such changes, while a controlling body must make the relevant adjustment for individuals.
Regarding the Period of Limitation in the Tax Legislation
The period of limitation set forth in article 102 of the Tax Code of Ukraine is suspended from 18 March to 31 May 2020.
Regarding the Payment of the Single Social Contribution
The following persons are exempt from accruing and paying the single social contribution for themselves (though they may elect to pay such contribution) for the period from 1 March to 31 March and from 1 April to 30 April 2020:
- Individual entrepreneurs, including those who elected the simplified taxation system;
- Individuals who carry out independent professional activities (such as research, literature, artistic, arts, education or teaching, medical or law practice);
- participants of farming enterprises.
We note that such category of single social contribution payers as, for example, corporate employers and individual entrepreneurs who use hired labor are not exempt from accruing and paying the single social contribution for such period.
Regarding Penalties for Violations Related to the Single Social Contribution and Inspections
No penalties will be imposed temporarily for violations committed during the period from 1 March to 31 March and from 1 April to 30 April, such as:
- untimely payment (untimely transfer) of the single contribution;
- incomplete payment or untimely payment of single contribution amounts at the same time as paying out amounts subject to the single contribution (advance payments);
- untimely reporting on the single social contribution to tax authorities.
Within the same period, no inspections will be carried out to verify payment of the single social contribution and those commenced are suspended, no penalties are accrued and those accrued for these periods must be written off.
Benefits and other actions aimed at facilitating taxpayers' standing during the epidemic and quarantine are being prepared and have been already granted and taken in many countries.
The U.S. intend to extend the period for filing an income declaration, reduce the tax burden on small and medium-sized businesses and social contributions. The United Kingdom is preparing a set of actions for business lending and implements tax initiatives. Denmark has provided for financial support to business and postponed payment of taxes by taxpayers who suffered from the coronavirus, including, in particular, the value added tax. Italy, France, Spain, Greece, Czechia and may other countries are taking similar actions.
The Parliament has supported the initiative to sign immediately this draft law and submit it for signing to the President of Ukraine.
Authors: Tetyana Berezhna, Counsel, Attorney-at-Law