The UAC, defending the interests of agricultural producers, appealed to the authorities to make changes in the taxation of farmers during martial law.

On May 12, 2022, the Verkhovna Rada of Ukraine adopted the draft Law of Ukraine №7360 "On Amendments to the Tax Code of Ukraine and other laws of Ukraine on the peculiarities of tax administration of taxes, fees and single contribution during martial law, state of emergency", which introduced significant changes to the Tax Code and the Law of Ukraine "On Currency and Currency Regulation.

The experts from an advisory center “Smart Country” with the support of the USAID Agricultural and Rural Development Program (AGRO) analyzed the document.

Among the main changes:

1. Significant changes have been made to tax reporting, in particular VAT, inspections and budget reimbursement of value added tax:

• the refund of the budget reimbursement will be made from July 21, 2022;
• the return of the agreed amounts of budget reimbursement is carried out in chronological order in accordance with the order of entry in the Register of applications for the return of the amount of budget reimbursement;
• for the tax periods February-May 2022 tax credit is formed on the basis of available taxpayer’s primary documents drawn up (received) by the taxpayer for transactions for the purchase of goods/services in accordance with the Law "On Accounting and Financial Reporting in Ukraine";
• taxpayers of value added tax are obliged to ensure within 6 months from the date of termination of martial law or within 60 days from the date of resumption of tax obligations, registration of tax invoices in the URTI (Unified Register of Tax Invoices) and adjustment calculations, the deadline for registration of which falls on February-May 2022, and to reconcile the tax credit declared on the basis of  available payer’s documents, taking into account the data of tax invoices and/or adjustment calculations registered in the URTI.
• the procedure for confirming the possibility or impossibility of the taxpayer's meeting of duties and the list of documents for confirmation have to be approved by the Ministry of Finance;
• Taxpayers who have the opportunity to timely fulfill tax obligations to meet the deadlines for payment of taxes and fees, reporting, registration in the relevant registers of tax invoices, adjustment calculations, are released from liability for late meeting of such obligations, the deadline for which falls on the period from February 24, 2022 to the date of entry into force of this Law, provided that: such taxpayers register tax invoices and adjust calculations in the URTI by July 15, 2022; submission of tax reporting by July 20, 2022 and payment of taxes and fees no later than July 31, 2022;
• amounts of VAT included in the tax credit in the purchase of goods that were subsequently destroyed (lost) due to force majeure during martial law, are not included in the calculation of the amount of budget reimbursement and are not included in the calculation of the amount of budget reimbursement and are included in the tax credit of the next reporting (tax) period until its full repayment;
• taxpayers of VAT before the termination or abolition of martial law are not entitled to submit adjusting calculations to tax invoices for reporting (tax) periods until February 2022 with indicators for reducing tax liabilities and/or declaring the amount of budgetary reimbursement of VAT.

2. Significant changes have been made regarding the conduct of inspections by regulatory authorities:

• in-house, factual, documentary and unscheduled inspections (provided safe access to the objects and documents) that are made due to appeal of taxpayers and/or in case of reorganization of a legal entity or for budget VAT refund, and/or unscheduled documentary audits of taxpayers in terms of compliance with deadlines for receipt of goods for import transactions and/or foreign exchange earnings for export transactions, are renewed.

Who and how will determine whether access is secure is not defined by the law;

• in-house tax audits of value added tax declarations and adjustments to them for the reporting tax periods February-May 2022 - begin the day after July 20, 2022 and end no later than September 20, 2022;
• in-house tax audits of VAT declarations and adjustments for the reporting tax periods June-July 2022 - begin the day after August 20, 2022 and end no later than October 20, 2022.
• submitted adjusting calculations for VAT returns for the reporting tax periods until February 2022 are verified within the period specified in this paragraph for the reporting period, which is at the day of submission of such an adjusting calculation (submitted in May - verification will be from July 21 to 20 September).

3. In March 2022, the Tax Code of Ukraine was amended to suspend the course of terms, determined by this Code and other legislation acts, for the period of martial law.

The adopted law restores the deadline for:

• compliance with the deadlines for tax invoices registration, calculations of adjustments in the Unified Register of Tax Invoices, submission of reports, payment of taxes and fees by taxpayers;
• terms of conducting in-house inspections, drawing up acts, submission and consideration of objections, monetary obligations determination, acceptance, sending and appealing of tax notice-decision based on the results of in-house inspections, accrual of interest;
• deadlines for conducting factual and documentary unscheduled inspections, drafting acts, submission and consideration of objections, additional documents and explanations, determination of monetary obligations, acceptance, sending and appeal of tax notice-decision, administrative seizure of property based on actual inspections.

4. In March 2022, the Tax Code of Ukraine was amended, which did not apply fines and penalties for violations identified as a result of tax audits.

The adopted law restores the prosecution of taxpayers for committing tax offenses identified as a result of inspections, except for their commission due to force majeure (force majeure).

In connection with the imposition of martial law in Ukraine in view of the military aggression of the Russian Federation against Ukraine, the Chamber of Commerce and Industry of Ukraine (hereinafter - CCI of Ukraine) reported that these circumstances from February 24, 2022 to their official end, are extraordinary, inevitable and objective circumstances for business entities and/or individuals under the contract, a separate tax and/or other obligation, the performance of which occurred in accordance with the terms of the contract, agreement or other regulations and the implementation of which became impossible in due time due to the occurrence of such force majeure (force majeure).

5. Importers/exporters who violated the deadlines for payments on export/import transactions in connection with the ban on exports/imports of goods from Russia are released from liability (penalty 0.03 percent).