Starting from 1 January 2021, a taxpayer’s guilt must be established as a necessary condition to bring a payer to liability for tax offences of certain types (failure to pay the taxes).
Being guilty means that the person was able to comply with, but did not take sufficient measures to follow, the rules prescribed by law. Measures are sufficient unless the tax body proves that the person who committed certain actions acted unreasonably, in bad faith, without due diligence.
Such offences include, but not limited to:
- person infringing intentionally, which infringement resulted in the tax body reducing the amount of VAT refund, determining the amount of tax payable, etc.;
- person using the taxes not paid based on a tax benefit otherwise than for their designated purpose;
- person not paying intentionally the agreed amount of tax;
- failing intentionally to charge, withhold, and pay a tax amount to a non-resident or other payer, including a non-resident failing to pay a tax (if it must pay taxes in Ukraine on its own).
The law states that controlling authorities bear liability for committing tax offences whether they are in fault or not. A tax body bears liability in the form of compensation for damage to the person against whom the tax body committed the offence, based on a court decision.
The damage may include:
- value of the lost (destroyed) property;
- taxpayer’s additional costs incurred due to illegal decisions or actions by the tax body;
- costs and expenses for administrative / judicial appeal (for example, legal support, save for the costs of legal assistance in court).
The damage caused by a tax body before 1 January 2021 or caused by violations in the form of illegal decisions made based on the results of tax inspections initiated before 1 January 2021 shall be compensated under the old rules.
If there is an intent, this will affect the fine amount. The fine shall be 10% of the amount of unpaid tax, if there is no intent; 25%, if the act has been committed intentionally; 50% and 75%, if the taxpayer has committed a tax offence for the second time or more times during 1,095 days, respectively .
In order to qualify taxpayer’s actions as intentional, a tax body must prove that the person acted falsely and purposefully to create conditions that do not may have another purpose but a violation of rules of the tax law.
A payer may be released from liability if:
- the limitation period to apply the fine has expired;
- the person acted in accordance with the individual tax advice or summarized tax advice given to him or her, was guided by conclusions of the Supreme Court, from which the Supreme Court subsequently deviated (including model cases);
- the person violated the requirements of the law due to illegal decisions or actions of the tax body, due to the fault of the bank, treasury body, postal operator;
- the person has committed a violation due to technical errors (technical failures) in the taxpayer’s electronic cabinet (a technical error or technical failure may be recognised by tax bodies, for example, in a notice placed at the official website or under a court ruling);
- the person has corrected errors in the submitted declarations (calculations) and paid independently the accrued amounts of tax, penalties;
- the person acted contrary to the rules due to Force Majeure;
- the person acted in accordance with the decision of a customs body, consultation on customs matters and is otherwise exempt from liability under the Customs Code of Ukraine.