White Business Club: New Tax Benefits for Taxpayers in Ukraine

A taxpayer who meets all requirements established in the Tax Code of Ukraine is subject to inclusion into the List of Taxpayers with a High Level of Voluntary Compliance with Tax Legislation.

Eligibility criteria

Legal entities and individual entrepreneurs must simultaneously meet the following requirements:

• No more than 51,000 Hryvnias in tax debt and/or arrears in payments vested with the tax authorities for collection, and no more than 30 days have passed since the date of their accrual.
• No arrears (deficiencies, fines, penalties) in payments for a single social contribution.
• No violations of tax obligations in connection with submission of reports and/or documents (notifications) during the last 12 months.
• No tax notices-decisions issued against the taxpayer in connection with violating settlement deadlines set for goods export and/or import transactions during the last 12 months.
• No decisions regarding the taxpayer’s meeting VAT payer risk criteria.
• No procedures initiated for dissolution of a legal entity or business activity of an individual entrepreneur.
• No initiated bankruptcy (insolvency) proceedings for the taxpayer.
• No decisions applying sanctions against the taxpayer and/or his/her/its beneficial owners.
• The taxpayer and/or his/her/its beneficial owners do not have Russian citizenship or place of residence in Russia.
• No changes have been made to the main type of economic activity during the last 12 consecutive calendar months.
• Compliance with criteria that are individually defined for the taxpayer’s chosen taxation system. For example, the taxpayers enjoying the general taxation system must additionally meet the following criteria:
  • The income tax paid not lower than the average indicator in the relevant industry for the last four quarters.
  • VAT payment is equal to/exceeds the average indicator in the relevant industry (except for exporters) for the last 12 reporting months.
  • The average monthly salary indicator for the last four quarters is not less than the average salary in the relevant industry in the relevant region, multiplied by a factor of 1.1, and the average monthly number of employees is not less than five people.

A taxpayer who meets all of the specified requirements is included into the List of Taxpayers with a High Level of Voluntary Compliance with Tax Legislation according to the respective application.

Tax benefits

Taxpayers who are included into the List of Taxpayers with a High Level of Voluntary Compliance with Tax Legislation are granted the following benefits:

1. Tax authorities will not initiate:

• Ex post reviews of issues pertaining to licensing of fuel storage activities exclusively for the needs of own consumption and/or industrial processing
• Unscheduled document audits, except for audits:
  • That are carried out exclusively at the request of a taxpayer
  • That are carried out in terms of control over transfer pricing
  • That are carried out in connection with violation of the deadlines set for return of foreign currency earnings
  • That are carried out with respect to the taxpayers engaged in the activities with excisable products, gambling businesses and those providing financial and payment services
• Scheduled document audits, except for audits of the taxpayers carrying out activities in the field of:
  • Production and/or sale of excise goods
  • Organization and conduct of gambling
  • Providing financial and/or payment services

2. The timeframe for conducting in-office and document inspections with respect to the VAT declared for refund, is reduced from 20 to five and from 40 to 10 working days, respectively.

3. Individual tax rulings are provided to a taxpayer by the State Tax Service of Ukraine (STSU) within 15 days.

4. The STSU allocates a compliance manager for consulting with each taxpayer on tax-related issues.

Receiving information from the tax body that may be indicative of tax risks in the activity of that taxpayer, as well as consultations on eliminating these risks.

By Valeria Tarasenko, Tax Consultant, Dentons