How would you evaluate Draft Law No. 3220 (Law No. 533-IX) of measures to prevent the occurrence and spread of COVID-19?

How would you evaluate Draft Law No. 3220

Liliia Taran, Senior Consultant, KPMG in Ukraine


On 18 March  2020 Law No. 533-IX (Draft Law No.3220) On Amendments to the Tax Code of Ukraine and other Laws of Ukraine on Support of Taxpayers for the Period of Measures to Prevent the Occurrence and Spread of the Coronavirus Disease (COVID-19) came into force. This Law is aimed at supporting businesses during the quarantine period and introducing certain tax exemptions. However, the taxation and tax administration system continue to operate, so each amendment should be carefully analyzed.

One of the most supportive actions introduced by the Law is postponing tax audits. Namely, the Law introduced a moratorium on documental and actual tax inspections for the period from 18 March to 31 May 2020 except for audits on VAT refunds (Art. 78.1.8 of the Tax Code of Ukraine ) and a moratorium on audits regarding the unified social tax for the period from 18 March  to 18  May 2020. Taxpayers should take into account that the period of limitation (prescribed by Art. 102 of the TCU) is suspended for the same period.

According to the updated schedule of tax audits published by the tax authorities on 24 March the number of scheduled audits for 2020 is not reduced, which may mean an increase of pressure on the tax authorities.  In addition, the tax authorities may conduct desk audits and send requests to taxpayers during this period. The Law does not establish special exemption on providing information to a request made by the tax authorities, which may cause violation of the TCU requirements on providing information because of constrained delay. The land tax and real estate tax are not charged for March and April 2020. The current edition of the Law does not determine any limitation on this exemption for entities which did not suspend their business activity. To realize the right to this exemption  taxpayers should submit an adjusting tax return for 2020 before the deadline of the relevant tax payments.  Cancellation of UST charges was introduced for individual entrepreneurs only, for March and April 2020, so legal entities are obliged to pay the UST under the general rules.

In addition, special medical goods for anti-Covid-19 measures determined by the Cabinet of Ministers are temporarily exempted from import VAT and customs duties.

Taxpayers are temporarily exempted from penalties and late payment interest for violation of tax legislation for the period from March to May 2020 as well as for late submission of UST reports, late payment of the UST or underpayment of the UST for the period from March to April. However, tax penalties are still in force for violations of accrual, declaration and payment of VAT, excise tax, rent, regulations on ethanol and fuel. The tax authorities have issued clarifications that penalties for late registration of VAT invoices are temporarily cancelled, just like other penalties, but the right to VAT credit exists only on the basis of a registered VAT invoice.

The Law really has provided some simplifications for entities. However, certain under-law regulations should be amended to ensure that the simplifications provided operate in reality.

Liliia Taran, Senior Consultant, KPMG in Ukraine

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