TAX AUDITS THAT ARE ALLOWED DURING THE MORATORIUM

The moratorium has been lifted, but are there still any restrictions on conducting audits?

Yes. From August 1, 2023 until the termination or cancellation of martial law in Ukraine, unscheduled documentary tax audits may be conducted only in the following cases:

 – Upon the taxpayer’s request;

– On the grounds specified in subparagraph 78.1.1 (regarding unscheduled documentary audits of taxpayers for whom information has been received indicating violations of tax legislation concerning taxation of income received by non-residents from sources in Ukraine and/or taxation of non-residents operating through separate units, including permanent establishments; taxpayers engaged in the production and/or sale of excisable goods; organization and operation of gambling businesses in Ukraine; taxpayers providing financial and payment services);

 – On the grounds specified in subparagraph 78.1.2 (regarding transfer pricing control);

 – If the taxpayer files objections to an audit report or an appeal against a tax notice-decision issued following the audit, requesting a review of the audit results or cancellation of the tax notice-decision (where the taxpayer refers to circumstances that were not examined during the audit and an objective review is impossible without conducting an audit);

 – If liquidation or reorganization of a legal entity has been initiated (except for transformation), termination of business activity by an individual entrepreneur, closure of a permanent establishment or a separate unit of a legal entity (including a foreign company), initiation of bankruptcy proceedings against the taxpayer, or submission of an application for deregistration;

 – To verify the legality of VAT budget reimbursement and/or negative VAT value claimed in an amount of more than 100,000 UAH;

 – If a complaint has been filed against a taxpayer, as provided for in subparagraph 78.1.9 of paragraph 78.1 of Article 78 of the Tax Code of Ukraine;

 – If a higher-level tax authority reviews reporting documents or materials of a documentary audit carried out by a lower-level authority and finds that the audit conclusions do not comply with legislation or that issues required to form an objective conclusion were not properly examined;

 – If documented information is received that indicates non-compliance of controlled transactions with the arm’s length principle;

 – If the taxpayer fails to submit, or submits in violation of the requirements of the Tax Code, a report on controlled transactions, a notification on participation in an international group of companies, a country-by-country report, master file documentation, etc.;

 – If after conducting a scheduled or unscheduled documentary audit the tax authority receives information and/or documents from foreign government bodies relating to issues covered during the audit, indicating violations of tax, currency or other legislation by the taxpayer;

 – If information is received indicating that a non-resident is conducting business in Ukraine through a permanent establishment without tax registration;

 – If tax information is received indicating violations of currency regulations by the taxpayer regarding compliance with deadlines for receipt of goods under import operations and/or receipt of foreign currency earnings for export operations.

Additionally, tax legislation provides that documentary and factual audits during martial law may only be conducted when safe conditions exist, as defined in subparagraph 69.2 of paragraph 69, subsection 10, section XX of the Tax Code of Ukraine.

14.09.2023

Tax audits 2023