The scheduled tax audits will be restarted

• The Law of Ukraine "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on the Abolition of the Moratorium on Tax Audits" No. 3453-IX dated November 9, 2023, on the abolition of the moratorium on scheduled tax audits for the period from November 1, 2023 to December 31, 2024, came into force.
• We remind that starting from August 1, 2023, tax audits have been resumed for taxpayers who work with excisable goods, operate in the field of gambling, financial, provide financial and/or payment services, as well as non-residents who operate through separate divisions or permanent establishments in Ukraine.
• Starting from December 8, 2023 the schedule of documentary inspections will include taxpayers that meet one of the following criteria calculated based on the reporting indicators for 2021 (with possible monthly changes):
  • the level of income tax payment is at least 50% less compared to the similar industry;
  • the level of VAT payment is at least 50% less compared to the similar industry;
  • the accounts receivable is more than twice higher than the accounts payable;
  • the total amount of expenses of a private entrepreneur using the general taxation system declared in the income tax return exceeds 75% of the declared annual income (if such income exceeds UAH 10 million);
  • the amount of the salary of the legal entity's employees is less than the average level for the enterprises conducting business in the similar industry in the similar region.
• We draw attention to the fact that tax limitation periods have restarted for entities that might be subject to tax audit.

Our recommendations for preparation before tax audit:

• to check ahead the schedule whether the company is included in the plan of inspections;
• to conduct the CPT & VAT Health Check (detailed analysis of the company's tax accounting and reporting);
• to check and confirm the business purpose in company’s transactions;
• to analyse the potentially risky transactions which may be subject to deeper review (transactions with related parties, non-residents, charitable or financial assistance to other individuals or companies, loss of assets due to military action, etc.);
• to analyse the presence and correctness of primary documents that confirm the facts of business transactions;
• in case of missing primary documents, to substantiate their absence;
• to identify accounting errors, correct them, and reflect them in financial and tax reporting.

The Tax & Legal team is ready to support during the CPT & VAT Health Check, as well as provide recommendations on how to act during a tax audit.

Publication date:December 8, 2023