“Bill No. 1210 turns the supervisory authority into punitive authority.”-Ukrainian Bar Association

Committee of the Ukrainian Bar Association on tax law and customs law after analyzing bill no. 1210 has determined that it fails to perform its primary task – facilitate relations between taxpayer and supervisory authority.

“Law and Business” reports: According to the UBA, the bill, in fact, turns the supervisory body into a punitive one, increases corruption risks and places an additional burden on taxpayers (both on tax burden and on
appealing decisions, actions and omissions of the tax authority).

The UBA Committee sent an open appeal to Danil Getmantsev – the Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, in which they expressed concern about the changes in
tax administration that are proposed to the Tax Code of Ukraine and asks to draw attention to the following:

  • it is proposed to introduce the concept of “guilt” into the chapter “Responsibility” and the concept of “intent”, which will be determined by the supervisory authority.
  • S ignificantly increase or establish new punitive damages for several tax offenses, and in some cases increases the amount of the penalty.
  • the possibilities for conducting scheduled and unscheduled documentary tax audits are considerably expanded and substantially increases the time for their conduct.
  • additional grounds for suspension of limitation period are introduced in unbalanced way and it is proposed to provide the supervisory authority with extended discretion in the appointment of inspections.
  • expanding the circumstances of administrative arrest on property.
  • supervisory authority is provided with unlimited discretion in determining taxpayer tax obligations.
  • the principle of stability of tax legislation is violated by significantly increasing the tax burden on a number of sectors of the economy in violation of the deadlines specified in paragraphs. 4.1.9. Article 4 of the Tax Code of Ukraine.
  • controlled foreign companies are placed in unequal conditions with Ukrainian taxpayers, since the financial criteria for determining the need to apply the “arm-length” principle for controlled foreign companies are more than twice lower.

The Committee emphasizes that such changes are alarming and perceived by business and the legal community as unreasonable fiscal pressure, which contradicts the position of the President of Ukraine on the need to liberalize the tax environment in the state.

Public message: “At the same time, the UBA Committee approves a constructive approach in determining the deadlines for paying tax obligations, partial liberalization in the issue of applying fines to a person in the presence of circumstances, plus mitigating responsibility and eliminating technical roughness in the Tax Code of Ukraine”.

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