Representatives of the Analytical Center of the Union of Ukrainian Entrepreneurs — Andrii Yerashov and Myroslav Laba — took part in a meeting between the leadership of the State Tax Service of Ukraine and representatives of business associations.
The meeting focused on approaches to tax administration and tax control for businesses that have suffered losses as a result of the full-scale war, as well as the further implementation of a risk-based approach by the tax service.
State Tax Service: A Separate Approach for War-Affected Businesses
Lesia Karnaukh, Acting Head of the State Tax Service of Ukraine, announced the preparation of a set of measures aimed at ensuring a targeted and risk-based approach to tax administration and control of businesses affected by military aggression.
The State Tax Service plans to introduce a corresponding designation for such taxpayers in its information systems. Information from the State Emergency Service of Ukraine, military administrations, local self-government bodies, law enforcement agencies, and state registers will be used to compile the list of businesses.
At the same time, according to representatives of the State Tax Service, businesses will not be required to resubmit documents that are already held by government authorities.
The State Tax Service also emphasized that a decrease in the turnover, profitability, or tax burden of a business affected by shelling should not automatically constitute grounds for a tax inquiry or an audit.
SUP’s Position: The Risk-Based Approach Must Be Applied Systematically
SUP representatives supported the transition to a risk-based model of tax administration and emphasized the need for systematic improvements to the business environment and the implementation of measures envisaged by the Memorandum with the International Monetary Fund.
In particular, SUP emphasized the need to:
- review the criteria used by the Risk Evaluation Criteria Matching Monitoring System for Tax Invoices (SMKOR) and reduce the share of suspended VAT invoice registrations to below 0.08% of their total monthly volume;
- improve the quality and soundness of decisions made by the State Tax Service, which would help reduce the number of tax disputes and court proceedings;
- establish performance indicators for the State Tax Service that focus not only on ensuring budget revenues but also on reducing the administrative costs incurred by businesses;
- simplify VAT reporting;
- ensure a full transition to risk-based tax control;
- raise the threshold from UAH 100,000 to UAH 1 million, above which an unscheduled tax audit may be conducted in connection with a claimed budget VAT refund or a negative VAT amount.
For businesses, it is important that the risk-based approach is not merely declared but consistently applied in practice, taking into account the actual circumstances of businesses’ operations and without creating additional administrative pressure.
SUP to Continue Dialogue with the State Tax Service
The Union of Ukrainian Entrepreneurs supports practical steps aimed at taking into account the specific operating conditions of businesses affected by the war and developing a risk-based model of tax administration.
At the same time, it is important that the announced approaches be formalized in transparent procedures and that their implementation result in a real reduction of the administrative burden on businesses.
SUP will continue its dialogue with the State Tax Service and represent the position of Ukrainian entrepreneurs in the preparation and implementation of relevant decisions.