On 4 October the Ukrainian Parliament supported Draft Laws No. 1049 and No. 1051, which implement a unified account for payments of tax, duties and unified social tax (UST). What is the reason for such changes, what lies behind it and how will they affect the tax system?
According to current legislation, taxes and duties are paid to different accounts in the Treasury Service of Ukraine (TSU). The system of such accounts is widely differentiated, depending on the type of tax, type of taxable transaction, tax authority body, etc. Such accounts are changed every year. A mistake in the payment order (number of account or other date) causes underpayments to the budget and a tax debt for the taxpayers.
The Drafts introduce a unified account for payments of taxes and duties except for VAT, excise tax on supply of petrol and ethanol, and transfer of the net profit of state entities to the State Budget. Taxpayers are not required to use the unified account mandatory, the relevant choice should be made in the Electronic Cabinet of Taxpayer (ECT). The taxpayers might manage the unified account through the ECT, including initiation of the payments of the taxes and duties. The Drafts state the priority of the charges from the unified accounts to the budgets. Unpaid UST has the highest priority, the debts on the other taxes and duties follow it.
Any overpayments to the unified account might be returned to the current bank account of the taxpayer if there are no tax debts. In addition, the Drafts prohibit the collection and seizure of funds on the unified account.
The Drafts provide the simplification to the process of tax administration. The time investment for tax administration is expected to be reduced. However, at this stage the Drafts have certain shortcomings. This novelty in the tax administration process might require significant improvement of the technical resources and special software of the tax and treasury authorities, as well as involvement of extra human resources.
Considering that the servicing banks are authorized to control the UST and personal income tax payments to the State Budget during salary payment, additional administrative burden might be required to prove the fact that the tax payments have been made. The Drafts (if enacted) will come into force from 1 January 2021.
Liliia Taran, Senior Tax Consultant, KPMG in Ukraine
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