Law No. 2260: how and why did the business become a “scapegoat” for problems with the system of electronic VAT administration and registration of tax invoices?
This article describes several problematic issues, which have arisen due to the blocking by the tax authorities the register of VAT invoices and system of electronic VAT administration for a period of February – May of this year. Such blocking caused situation that all VAT from the period of February was not displayed by system of electronic VAT administration. For the all period of martial law taxpayers were granted the right of VAT deduction under primary documents.
On May 12, 2022, Ukrainian parliament adopted the Law No. 2260, by which the work of the register of VAT invoices and system of electronic VAT administration is actually restored. Taxpayers are obliged to register VAT invoices and the right of VAT deduction under primary documents is revoked. At the same time, work of the register of VAT invoices and system of electronic VAT administration is actually restored only partially for those taxpayers, who have a possibility to perform their tax duties.
Firstly, there should be criteria for differentiation of taxpayers, which have, and which have not such possibility to perform their tax duties. Ministry of finance is in charge of adoption of such criteria, but nowadays such criteria have not been adopted yet. So, it is quite unclear for which taxpayers the duty of VAT invoices registration is envisaged.
Secondly, such partial restoration for only part of taxpayers causes severe problems for businesses, starting from economic burden (taxpayer should deposit all sum of VAT by cash and loses the right for VAT deduction while working with taxpayers, which have not possibility to perform tax duties) and ending with the extremely short terms for fulfillment of tax obligations (for example, the term for filling VAT returns for period of four months is actually 5 days).
So, the Law No. 2260 is extremely harmful for business, that’s why there is a necessity of immediate legislative changes at least to postpone the registration of VAT invoices for February – May 2022 for the period after the end of the martial law, as well as to ensure “simultaneous” launch of the register of VAT invoices and system of electronic VAT administration for all taxpayers to ensure equal distribution of VAT burden among all participants in the supply chain. Finally, the article also provides recommendations for business how to minimize negative economic risks of significant cash outflows for deposit all sum of VAT.
The full version of the article is available in Ukrainian by the link.
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