For a long time tax problems have been the most painful issue for Ukrainian entrepreneurs. However, instead of facilitating the business conditions in the country the authorities continue to increase tax pressure. The adoption of Law No. 1210 as a whole is an evidence of this. Despite numerous official appeals, meetings and calls from all businesses, fundamentally important legislative initiatives in the field of taxation are put to the vote without taking into account the significant comments of business representatives.
The adopted Law No. 1210 contains a number of negative and positive norms for business. In particular, the positive provisions are:
– introduction of accelerated depreciation of fixed assets for the period 2020-2030 (paragraph 43-1 of subsection 4);
– increasing the marginal levels of single tax revenue for the simplified tax system;
– determination that the act of inspection cannot be considered as an application or notification of committing a criminal offense of tax evasion (provision 86.1) and others.
At the same time, in Law No. 1210 most regulations complicate tax administration procedures and substantially increase fiscal pressure on businesses. Critical to us in this law is the increase of administrative pressure on taxpayers by granting the tax authority additional powers, mainly of discretionary matters. Some of them are:
- Extension of the term reasonable economic reason (business purpose) (paragraphs 14.1.231);
- Determination of the duty of the taxpayer during the audit to provide explanations and their documentary confirmation at the request of the tax authority (without specifying the grounds for its provision) (paragraphs 16.1.5, 20.1.46);
- Giving the tax authority the right to receive explanations from employers and / or their employees and / or persons employed without documentation during the audit (paragraphs 20.1.47);
- Extension of the period for providing individual tax consultation for 5 days due to the extension of this term not by 10 but by 15 days (paragraphs 52.1, 52.5);
- Enabling the tax authority to amend the audit plan (paragraph 77.2);
- Providing the possibility of re-examination (paragraphs 78.1.20);
- Increase from 3 to 5 years the term of conducting an audit and making tax notices-decisions on payment of personal income tax, military levy when paying wages (paragraph102.1);
- Double fines for taxpayers for individual tax administration violations;
- Establishment of penalties for each untimely registered tax invoice and other negative business changes.
Implementation of Law No. 1210 will worsen business conditions in Ukraine and will negatively impact Ukraine Doing Business ranking on the “Taxation” indicator (over the past year by this criterion Ukraine has downgraded its position by 11 points, from 54 to 65 places.). In this regard, SUP urged the President of Ukraine not to sign the document and return it to the Verkhovna Rada of Ukraine with remarks on the need to exclude these discretionary norms.
