Tax Settlement Law Entered into Effect

Avellum Partners, Kyiv, Ukraine
Mon, Jan 26, 2015

On 25 December 2014Verkhovna Rada of Ukraine approved Law of Ukraine No. 63-VIII “On Amendments toTax Code of Ukraine Regarding Distinctions of Adjusting Tax Liabilities ofCorporate Income Tax and Value Added Tax in Case of Tax Settlement” (“Tax Settlement Law”). The TaxSettlement Law is effective from 17 January 2015.

Tax Settlement Law providesfor the tax settlement, which means discharge of 95% of concealed corporateincome tax and value added tax for periods before 1 April 2014 (“Tax Settlement”). It does not apply toany other taxes.

In order to benefit fromthe Tax Settlement taxpayers must adjusting calculations and the list(description) of transactions, for which the adjustment is made. Taxpayersshould take into account that they can take an advantage of the Tax Settlementonly within 90 calendar days of the effective date of the Tax Settlement Law.

Based on adjustingcalculation, tax authorities will decide whether it is necessary to conductdocumentary unscheduled audit (“Audit”).If tax authorities do not carry out the Audit, the amount of tax liability willbe deemed agreed. In case the Audit was conducted, the amount of tax liabilitywill be specified in the tax assessment made by tax authorities. Nevertheless,95% of tax liability defined by tax authorities will be discharged.

If taxpayer decides tochallenge the tax assessment, the Tax Settlement will not apply.

Individuals will not bearadministrative or criminal liability for breaching the accounting requirements(Art. 1631 of Code of Ukraine on Administrative Offences) or for tax evasion(Art. 212 of Criminal Code of Ukraine), if they have reached the TaxSettlement. However, there is no direct provision which discharges from thecriminal liability for forgery in office (Art. 366 of Criminal Code ofUkraine), which is usually an accompanying charge for tax evasion.

For further information on the topic pleasecontact us by telephone +380 44 220-0335 or via e-mail.