Specialists of the UAC together with the law firm "G N S PARTNERS" prepared an analysis of the main changes in the Law of Ukraine "On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine on the application of norms for martial law" from 03.15.2022 №2120-IX (entered into force 03.17.2022)

1. According to the newly adopted Law, individuals or legal entities with an annual income of up to UAH10 billion may, on April 1, 2022, become a payer of the single tax of the third group, where:

• tax rate is 2% of turnover;
• such persons are not payers of VAT and other taxes, which are specified in paragraph 297.1 of Art. 297 of the Civil Code of Ukraine;
• removed restrictions on the number of workers;
• removed restrictions on activities (except for excisable goods and gambling);
• the Cabinet of Ministers gets the right to determine the order of tax payment;
• after the abolition of martial law, a person automatically switches to the tax system in which he was before (paragraph 9 of subsection 8 of section XX "Transitional Provisions" of the Civil Code of Ukraine).

We pay attention! If a VAT payer becomes a single tax payer, the VAT payer's registration is canceled, and for goods/services, non-current assets, that were not used in taxable transactions within the economic activity (remained tax credit), tax liabilities are accrued based on the normal price (conditional sale); in this case, the person is entitled to receive budget reimbursement, regardless of whether he/she will be a VAT payer. At the same time, in practice, the State Tax Service often denies VAT non-payers the right to reimburse budget reimbursement, which is why they have to go to court (paragraphs 184.1, 184.7, 184.9).

2. During martial law it is allowed to include in the VAT tax credit the amounts for which tax invoices have not yet been registered in the Single Tax Invoices Register (including those drawn up before the martial law), on the basis of the primary (estimated) available to the payer documents. Such tax invoices must be registered in the Single Tax Invoices Register within 6 months from the end of martial law (paragraph 32.2 of subsection 2).

3. Budget reimbursement of VAT is renewed, if according to the results of in-office audit such an amount becomes agreed, in-office audits are resumed accordingly (items 69.2, 69.11 of subsection 10 of the Civil Code of Ukraine). At the same time, it is unknown if this rule will work for tax invoices that are not registered in the Single Tax Invoices Register, as the in-office audit is carried out on the basis of tax invoices drawn up and registered in the Single Tax Invoices Register and/or customs declarations. So, probably, only on export operations it will be possible to carry out budgetary reimbursement.

4. Actual inspections are resumed (paragraph 69.2 of subsection 10).

5. A 0% excise tax rate and 7% VAT on fuel have been set (item 81 of subsection 2 and item 40 of subsection 5 of the Tax Code of Ukraine).

6. From March to December 31, 2022 of the year following the year in which the martial law ceased, taxpayers whose land is located in the territories where hostilities are taking place (land tax and rent for state and communal lands) or in the temporarily occupied territories will be exempted from payment of land tax. The list of territories is determined by the Cabinet of Ministers (paragraph 69.14 of subsection XX). Please, note that this does not apply to the single tax of the 4th group of the simplified taxation system.

7. For 2022 and 2023, the minimum tax liability is not accrued and paid for lands on which hostilities are taking place or in the temporarily occupied territories (paragraph 69.15 of subsection XX);

8. In 2022, the environmental tax is not paid in the territories where hostilities are taking place or in the temporarily occupied territories (paragraph 69.16 of subsection XX).

9. From 03.01.2022 until the termination of martial law + 12 months after its termination individuals, persons engaged in independent professional activity and members of the farm do not pay single social tax (SST) for themselves (paragraph 9-19 of Section VIII "Final and Transitional Provisions" about SST).

10. Individuals of the 2nd and the 3rd tax groups of the single tax, legal entities of the 3rd group of the single tax, may decide not to pay SST for mobilized workers. Such amounts will be paid from the state budget (paragraph 9-20 of Section VIII "Final and Transitional Provisions" about SST).

11. Transfer of fuel through forced alienation or seizure of property for the needs of the state, transfer of other humanitarian aid to the Armed Forces and other formations (increased list) is not taxed (item "c" of item 216.3 of the Criminal Code of Ukraine, item 69.5, 69.6 of subsection XX, item 22 of subsection 1, item 32.1 of subsection 2).

12. It is established that restrictions on the allocation of charitable assistance to non-profit organizations in the amount of not more than 4% of the amount of profit do not apply to charitable assistance provided to health care institutions and special services account of the National Bank of Ukraine to support the Armed Forces and other formations (paragraph 69.11 of subsection 10).

13. Charitable assistance provided by any person for the benefit of employees of the Armed Forces of Ukraine, other military formations, as well as individuals who live (lived) where hostilities are (were) taking place and/or who have been forced to leave their place of residence because of the conduct of hostilities in such settlements in certain types of such assistance is not a subject for personal income tax (paragraph "c" of paragraph 165.1.54 and paragraph "a" of paragraph 170.7.8 of the Tax Code of Ukraine).

14. The right to a tax rebate on personal income tax on donations to non-profit organizations in the amount of up to 16% (instead of 4% now) of taxable income (paragraph 21 of subsection 1).

15. For the period of martial law and for 3 months after its ending, fines on SST, which are provided for SST payers (except for banks (part 11 of Article 25 on SST)), fines are not applied, and inspections are not carried out (paragraphs 9-21-9-23 of Section VIII "Final and Transitional Provisions" of the Law on SST).

16. Sanctions for violations of the law on Registrar of Settlement Operations (RSO) are not applied until the end of martial law, except for sanctions for violations in the sale of excisable products (paragraph 12 of section II "Final Provisions" of the Law on RSO).

17. The right of banks to issue blank loans (unsecured loans) (paragraph 13 of Section VII "Final Provisions of the Law of Ukraine" On Banks and Banking ") is suspended.

18. During martial law + 30 days the consumer is released from liability to the lender for late repayment of consumer credit, prohibited foreclosure and eviction of residents (does not apply to newly concluded mortgage agreements, paragraph 6-1 of Section IV "Final and Transitional Provisions" Article "On Consumer Lending", paragraph 5.2 of Section VI Final Provisions” Law “On Mortgage").