Chronicles and faces

The Tax and Financial Reporting Committee of the German-Ukrainian Chamber of Industry and Commerce held an online event on June 12, 2025, dedicated to the topic of tax audits. This issue remains consistently relevant for taxpayers due to frequent legislative updates and recurring instances of tax authorities exceeding their powers. That is why it is crucial to stay informed about the latest developments in order to assess risks in a timely manner and develop an effective strategy to protect against unlawful actions.

Senior partner at Alexander Minin spoke on two important topics: “Tax audits: Types, criteria, and grounds for initiation” and “Statutes of limitations: Restrictions for tax audits, application of sanctions, tax document retention, and the impact of COVID/martial law.”

Alexander once again outlined the types of tax audits and the grounds for their initiation. He emphasized that tax authorities often blur the lines between different types of tax audits – for example, attempts to shift from a “factual” tax audit to a “factual + documentary” one in a manner not provided for by the Tax Code of Ukraine. Such actions are not only unlawful but may also serve as a basis for the taxpayer to challenge and invalidate the results of the tax audit.

That is why it is essential to pay close attention to such procedural violations and abuse of power by the tax authorities and to use them as effective legal tools for protection.

The legal regulation of limitation periods for tax audits, tax assessments, the application of penalties, and tax documents retention appears to establish clear timeframes that tax authorities are required to observe separately for each specific action.

However, in practice, calculating these limitation periods has become increasingly complex in recent years due to the COVID-19 pandemic, the full-scale war, and numerous amendments to related legislation – all of which have created significant room for ambiguity, particularly given the interplay and cumulative impact of these factors. Attempts by fiscal authorities to overly expand these timeframes are, however, constrained by specific legal safeguards – and taxpayers should not hesitate to rely on them.

Alexander also highlighted the distinction between the Ukrainian terms “строки” (time limits covering defined periods; limitation periods) and “терміни” (deadlines referring to fixed points in time), as used in Ukrainian tax legislation – not just in name, but in substance – particularly in relation to the actual legal meaning of the declared “suspensions” during martial law and the pandemic.

‘ Partner Ivan Shynkarenko presented on the equally pressing topic, “TP Audits: What inspectors focus on” (presentation available via link).

First of all, Ivan noted a significant increase in transfer pricing (TP) control between 2022 and 2025, according to data from the State Tax Service of Ukraine as of the end of April. Over these three years, 441 TP documentation requests have been issued – representing 41% of all such requests. In total, since 2013, the number of requests has reached 1,045.

The most frequent audit targets during 2015–2021 were exporters of agricultural products, other raw materials, rolled metal products, etc. Ivan also highlighted that the number of violations identified was substantial: 1,467 violations were recorded between 2022 and 2025, accounting for 55.67% of all violations.

Given the TP audit approaches typically applied by Ukrainian tax authorities, it appears that the primary aim of these audits is not so much to establish objective truth, but rather to maximize additional tax assessments.

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