The business discussed urgent taxation issues with Danylo Hetmantsev and the State Tax Service representatives

02/ 05/ 2023

On April 28, the European Business Association held a meeting with Danylo Hetmantsev, Chairman of the VRU Committee on Finance, Tax and Customs Policy, and representatives of the State Tax Service. During the meeting, the business had the opportunity to address urgent taxation issues to the officials. In particular, in the context of simplifying the procedure for confirming taxes paid abroad, the business voiced a proposal to cancel the requirement to legalize certificates of income received and payment of taxes abroad for the period of martial law. However, this proposal currently does not have the support of the VRU Committee on Finance, Tax, and Customs Policy. Ukrainians must obtain such a certificate and have it apostilled in the relevant state bodies of foreign countries where such taxes have been paid. However, the Tax Code (Article 13 and Clause 170.11.2 Clause 170.11 of Article 170) provides the possibility of notifying the SFS of Ukraine about postponing the submission of the income declaration until December 31. In addition, it can be done remotely - in the taxpayers electronic cabinet. If a citizen of Ukraine has changed his tax residency (stays abroad for more than 183 days) and maintains employment relations with Ukraine, and receives wages in Ukraine, then such a citizen should contact the Ukrainian employer and inform the tax office in Ukraine so that no taxes are withheld from such income in Ukraine. In theory, everything looks simple, but practice shows a large number of obstacles on the part of tax service specialists, which are created by the lack of a clear understanding of the norms of the Tax Code. The exchange of tax information between countries (according to Law No. 2970) should start in the second half of 2023, while the Ukrainian tax office will transmit information about foreigners for the second half of the year, and will receive information about the income of Ukrainians abroad for the whole year. The received information will be used as one of the grounds for checking declared income. The representatives of the Association also called for speeding up the work on the draft law on Smart-FOP №8226, taking into account the proposals of the Association and the draft law №8143 on self-employed persons. In the context of current tax issues for legal entities, in particular, the status of the initiative of additional taxation of companies that have not left the Russian market was discussed. Although there are currently no details regarding the practical implementation of this initiative, Mr. Hetmantsev confirmed that this issue is being discussed, given its complexity, there is no definite solution yet. However, the very discussion of this initiative should encourage companies that fall under this criterion to take more decisive actions to exit the Russian Federation before implementing liability measures in Ukraine. Regarding the VAT refund process, 48 billion have already been refunded since the beginning of the year and there should be no problems with this procedure at the moment. In case of difficulties or violations, we encourage companies to contact the Association and report any problematic points in VAT refund. The EBA once again declared its support for draft law №8137 on the CIC and insists on the importance of its adoption. With regard to Law №2876 regarding the prohibition of gaming business to be on the simplified system - oral clarifications were received from the tax office that the change in terms of VAT registration of invoices and mitigation of liability will be applied from the date of its adoption - February 8, 2023, and not February 24, 2022, because the law is not retroactive. The draft law, which provides for the introduction of an electronic excise stamp, is currently being finalized and should be submitted to the committee in a week or two. The association voiced a request to finalize the mentioned document considering business proposals. At the same time, the business reminded that it has been waiting for several weeks for the President to sign draft law №7632 on the occupied territories, because many regulations, including tax regulations, depend on this document. Finally, the business learned about the status of the Recovery Plan of Ukraine. Currently, the document is being finalized in the Cabinet of Ministers, and meetings of the National Recovery Council are not planned in the near future. Currently, the efforts of the countrys leadership are focused on fast recovery and immediate reconstruction. The recovery plan remains a strategic roadmap for the long-term rebuilding process. In addition, on the part of the Plan related to financial relations, an income strategy until 2030 will be built, which should be developed by Ukraine in accordance with the Memorandum with the IMF. We are grateful to Mr. Hetmantsev and representatives of the SFS for the regular dialogue, we hope that it will continue to lead to positive decisions for transparent business.

In particular, in the context of simplifying the procedure for confirming taxes paid abroad, the business voiced a proposal to cancel the requirement to legalize certificates of income received and payment of taxes abroad for the period of martial law. However, this proposal currently does not have the support of the VRU Committee on Finance, Tax, and Customs Policy.

Ukrainians must obtain such a certificate and have it apostilled in the relevant state bodies of foreign countries where such taxes have been paid. However, the Tax Code (Article 13 and Clause 170.11.2 Clause 170.11 of Article 170) provides the possibility of notifying the SFS of Ukraine about postponing the submission of the income declaration until December 31. In addition, it can be done remotely – in the taxpayer’s electronic cabinet.

If a citizen of Ukraine has changed his tax residency (stays abroad for more than 183 days) and maintains employment relations with Ukraine, and receives wages in Ukraine, then such a citizen should contact the Ukrainian employer and inform the tax office in Ukraine so that no taxes are withheld from such income in Ukraine. In theory, everything looks simple, but practice shows a large number of obstacles on the part of tax service specialists, which are created by the lack of a clear understanding of the norms of the Tax Code.

The exchange of tax information between countries (according to Law No. 2970) should start in the second half of 2023, while the Ukrainian tax office will transmit information about foreigners for the second half of the year, and will receive information about the income of Ukrainians abroad for the whole year. The received information will be used as one of the grounds for checking declared income.

The representatives of the Association also called for speeding up the work on the draft law on Smart-FOP №8226, taking into account the proposals of the Association and the draft law №8143 on self-employed persons.

In the context of current tax issues for legal entities, in particular, the status of the initiative of additional taxation of companies that have not left the Russian market was discussed. Although there are currently no details regarding the practical implementation of this initiative, Mr. Hetmantsev confirmed that this issue is being discussed, given its complexity, there is no definite solution yet. However, the very discussion of this initiative should encourage companies that fall under this criterion to take more decisive actions to exit the Russian Federation before implementing liability measures in Ukraine.

Regarding the VAT refund process, 48 billion have already been refunded since the beginning of the year and there should be no problems with this procedure at the moment. In case of difficulties or violations, we encourage companies to contact the Association and report any problematic points in VAT refund.

The EBA once again declared its support for draft law №8137 on the CIC and insists on the importance of its adoption. With regard to Law №2876 regarding the prohibition of gaming business to be on the simplified system – oral clarifications were received from the tax office that the change in terms of VAT registration of invoices and mitigation of liability will be applied from the date of its adoption – February 8, 2023, and not February 24, 2022, because the law is not retroactive. The draft law, which provides for the introduction of an electronic excise stamp, is currently being finalized and should be submitted to the committee in a week or two. The association voiced a request to finalize the mentioned document considering business proposals.

At the same time, the business reminded that it has been waiting for several weeks for the President to sign draft law №7632 on the occupied territories, because many regulations, including tax regulations, depend on this document.

Finally, the business learned about the status of the Recovery Plan of Ukraine. Currently, the document is being finalized in the Cabinet of Ministers, and meetings of the National Recovery Council are not planned in the near future. Currently, the efforts of the country’s leadership are focused on fast recovery and immediate reconstruction. The recovery plan remains a strategic roadmap for the long-term rebuilding process. In addition, on the part of the Plan related to financial relations, an income strategy until 2030 will be built, which should be developed by Ukraine in accordance with the Memorandum with the IMF.

We are grateful to Mr. Hetmantsev and representatives of the SFS for the regular dialogue, we hope that it will continue to lead to positive decisions for transparent business.