What’s with scheduled and unscheduled tax audits from August 1, 2023?
The scope of unscheduled audits is expanded, and can a scheduled audit be conducted just because, for example, you are dealing with fuel?
With the promulgation and entry into force of the Law 3219-IX (former draft law 8401) “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine On Peculiarities of Taxation within Martial Law” the regulation on scheduled and unscheduled tax audits has been changed.
Scheduled tax audits have been partially renewed, but it is still unclear as to what categories of taxpayers exactly. In practice, the range of taxpayers who may be included to the plan of scheduled tax audits, may be wider than literally expected, in particular, in view of former approaches of the tax authorities for qualification of transactions with fuel (as an excisable goods).
Thus, it was introduced the possibility of executing unscheduled tax audits under para. 78.1.1 of the Tax Code regarding the taxpayers carrying out activity in the field of production and/or sale of excisable goods, organization and conduct of gambling in Ukraine (gambling business), taxpayers providing financial and payment services.
It is also allowed to execute documentary scheduled tax audit for the above categories of taxpayers.
But how to determine that the taxpayers belong to any of the mentioned categories?
For example, what does ‘activity in the field of sale of excisable goods’ mean, as it is literally stated in the definition?
The Tax Code does not define this. Therefore, it may potentially be noted that para. 69.35 of the Tax Code lacks certainty regarding the subject of scheduled tax audits in connection to excisable goods. And according to the practice of the European Court of Human Rights, the law should be considered as determined if it has a sufficient degree of certainty.
Para. 69.35 of the Tax Code speaks literally about activity in the respective field, and not just the sale of excisable goods, which may give the right to conduct tax audits. Considering the rule about the conflict of interests, in this case uncertainty may be interpreted in favor of taxpayers, meaning that not every sale of excisable goods gives the right to conduct respective tax audits, but only activities in this field (and it would be better if the legislator decides what does it mean).
However, considering the practice of the tax authority’s approaches in previous periods, we do not exclude that there may be situations where tax authorities expand the range of taxpayers who may be subject to respective tax audits.
In the event of such a situation, it is worth checking whether you really fall into the respective category, or whether it is a “fruit of imagination” of the tax authorities.
The full version of the article is available in Ukrainian by the link.
Difficulties or opportunities: an exemption from fines and penalties in case of payment of calculated tax liability amount within 30 calendar days after receipt of the tax notification-decision under subpara. 69.37 para. 69 of Sub-section 10 Section XX “Transitional Provisions” of the Tax Code of Ukraine
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