Support for taxpayers during the quarantine: reviewing the Law #3220
Better Regulation Delivery Office systematized the changes introduced by the Law “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine to support tax payers for the period of the implementation of measures aimed at prevention of emergence and spread of coronavirus disease (COVID-19)” for the convenience of readers. The Law will enter into force the day after its publication in the parliamentary newspaper Holos Ukrainy.
Here are the proposed changes:
- No penalties are applied for violations of tax legislation committed during the period from March 1 to May 31, 2020, except for:
- violation of requirements for long-term life insurance contracts or non-state pension insurance contracts, in particular, supplementary pension insurance
- alienation of the pledged property without the consent of the supervisory authority;
- violation of the rules of accounting, production and circulation of fuel or ethanol in excise warehouses applied on a general basis;
- violation of assessment, declaration and payment of value added tax, excise tax and rent.
- Taxpayers are not imposed a penalty during the period from March 1 to May 31, 2020, while assessed penalties, which are not payed during this period, should be written off.
- No land fees (land tax and rent for state and municipal lands) for land plots owned or used, including on lease, by individuals or legal entities and used by them in business activities are charged and paid during the period from March 1 to May 31, 2020. However, since land tax returns for 2020 have been already submitted by land tax payers (other than individuals) to the State Tax Service before February 20, this Laws makes them eligible to submit a tax return specifying changes in tax land payment obligations for the respective months. That is, the tax return for the period from March 1 to April 30 will not include the amount of land payment. The relevant State Tax service agencies will reassess the land payments for individuals who are the land taxpayers.
- A tax on non-residential real estate other than land plots owned by individuals or legal entities is suspended for the period from 1 March to 30 April 2020.
- The following persons are temporarily exempt from a unified social tax (UST) for the periods from March 1 to March 31 and from April 1 to April 30, 2020:
- individual entrepreneurs;
- persons engaged in independent professional activities (scientific, literary, artistic, educational or teaching activities, as well as medical and legal practice, including advocacy and notarial activities) or persons engaged in religious (missionary) activities or other similar activities while earning revenues from such activities;
- farm users, if they are not among the persons who are subject to insurance on other grounds
This UST exemption also applies to payers who have not received income (profit) in the reporting quarter or in the specific month of the reporting quarter.
Delaying the declaration
- The annual property and income statement for 2019 is to be submitted by July 1, 2020, unless such statement can be submitted later than this period.
- Individuals are required to pay the tax amount specified in their annual property and income statements for 2019 independently by October 1, 2020.
Moratorium on state tax audits
- Introducing a moratorium on tax documentary and physical inspections (by state tax authorities) for the period from March 18 to May 31, 2020, except for documentary unscheduled inspections of only those tax payers who have declared the value added tax reimbursement (i.e, refunding) in the amount of more than 100 thousand hryvnias from the state budget, namely inspections regarding the legality of such declaration.
- Documentary and physical inspections initiated before March 18, 2020 and not completed are temporarily suspended until May 31, 2020. Such suspension interrupts the period of inspection and does not require any further decision by the supervisory authority.
- A moratorium on documentary unified social tax audits for the period from March 18 to May 18, 2020.
- Documentary unified social tax audits initiated before March 18, 2020 and not completed are temporarily suspended until May 18, 2020.
- Documentary planned tax audits, which were scheduled to begin between March 18 and May 31, 2020, and were not initiated on the date of the entry into force of the Law, are postponed to another period, and information on their postponement shall be included in the updated schedule to be published on the official website of the State Tax Service by March 30, 2020.
- The limitation periods prescribed by the Tax Code (Article 102) are suspended from March 18 to May 31, 2020, namely 3 years from the date of the tax return submission for paying the amount determined by the state tax service authorities based on the results of taxpayers audits or 7 years for taxpayers using transfer pricing.
Moratorium on state supervision (control) measures
The state supervision (control) authorities are temporarily prohibited to carry out state supervision (control) activities in the field of economic activity until May 31, 2020, except for state supervision (control) over:
- activities of high risk economic entities;
- the compliance with requirements for the formation, establishment and application of government regulated prices;
- sanitary and epidemiological well-being of the population.
- Fines are not temporarily applied for the following violations committed from March 1 to March 31 and from April 1 to April 30, 2020:
- late payment (late transfer) of the unified social tax;
- underpayment or late payment of the unified social tax amount simultaneously with providing payment amounts, on which the unified social tax amount is charged (advance payments);
- late reporting to the tax authorities provided by this Law. Moreover, the part two of paragraph 7 of part 11 of Article 25 of this Law does not apply to such violation committed from March 1 to March 31 and from April 1 to April 30, 2020.
- The unified social tax payers are not imposed a penalty during the period from March 1 to March 31 and from April 1 to April 30, 2020, while penalties assessed during these periods should be written off.
- For individual entrepreneurs, persons engaged in independent professional activities and farm users who didn’t pay insurance contributions for the periods from March 1 to March 31 and from April 1 to April 30, 2020 on the basis of the temporary unified social tax exemption introduced by the Law, such periods are included in the insured length of service, and it is considered that insurance proceeds were paid in the amount of the minimum insurance contribution prescribed by law for each such period
Deferred PTR application
The requirement of PTR application is postponed until January 1, 2021 and April 1, 2021, except for certain types of individual entrepreneurs:
- The requirement to apply PTRs by unified social tax payers of the second-fourth group, whose income does not exceed UAH 1,000,000 during the calendar year regardless of the chosen activity is postponed until January 1, 2021, except for those engaged in:
- selling technically sophisticated household goods subject to warranty repairs;
- selling medicines and medical products
- The PTRs are not applied by single tax payers of the second-fourth group (individual entrepreneurs), whose income does not exceed UAH 1,000,000 during the calendar year regardless of the chosen activity until April 1, 2021, except for those engaged in:
- selling goods (provision of services) via the Internet;
- selling technically sophisticated household goods subject to warranty repairs;
- selling medicines, medical products and providing paid health care services;
- selling jewelry and household items from precious metals, gemstones, organic precious stones and semi-precious stones;
- retail selling of second-hand goods in stores (group 47.79 according to KVED);
- activity of restaurants, cafes, fast-food restaurants, if such activity is other than defined in clause 11 of Article 9 of the Law of Ukraine “On Use of Payment Transactions Recorders in Commerce, Catering and Services”;
- activities of travel agencies and tour operators;
- activities of hotels and similar short-term accommodation (group 55.10 according to KVED);
- selling soft goods (except for sales for cash on the markets), parts and accessories for vehicles according to the list approved by the Cabinet of Ministers of Ukraine.
The following measures are suspended:
- increase in the amount of sanctions for violation of the requirements of the Law on use of payment transactions recorders from October 1, 2020 to January 1, 2021
- entry into force of the Law of Ukraine “On Amendments to the Law of Ukraine “On Use of Payment Transactions Recorders in Trade, Catering and Services” and Other Laws of Ukraine on Unshadowing of Payments in Commerce and Services” until August 1, 2020 (it was expected that the Law would enter into force on April 19, 2020 before the proposed amendments), and some its provisions will be postponed until January 1, 2021 (instead of October 1, 2020)
Social insurance of employees
- The temporary disability allowance is provided to insured persons in the form of material security compensating for loss of wages (income) fully or partially as well as if such an insured event as a stay in specialized health care facilities, as well as in self-isolation under medical supervision due to the measures to prevent the emergence and spread of coronavirus disease (COVID-19) and the localization and elimination of its outbreaks and epidemics, occurs. Such allowances are paid by the Social Insurance Fund of Ukraine to insured persons, starting from the sixth day of disability for the whole period until the restoration of working capacity or until the disability determination agency determines the end of the disability regardless of the dismissal, termination of business or other activity of insured persons as long as the disability exists in the amounts established by law. The first five days of temporary disability due to the occurrence of the aforementioned insured event shall be paid for by the employer in accordance with the procedure established by the Cabinet of Ministers of Ukraine.
- The temporary disability allowances in the amount of 50 percent of average wage (income) are paid to the persons staying in specialized health care facilities, as well as in self-isolation under medical supervision due to the measures to prevent the emergence and spread of coronavirus disease (COVID-19) and the localization and elimination of its outbreaks and epidemics, regardless of their length of service
- In the event of late fulfillment of obligations under a consumer loan contract from March 1, 2020 to April 30, 2020, such a consumer will be relieved from liability for such a delay to the loan provider. In particular, but not as a limitation thereof, in the event of such delay, the consumer will be relieved of the obligations to pay a forfeit penalty (fine, penalty) and other payments provided for in the consumer loan contract for missed deadlines (non-fulfillment, partial fulfillment) to the loan provider.
- It is prohibited to increase loan interest rates (in particular, but not as a limitation thereof, late fulfillment of payment obligations by consumers between March 1, 2020 and May 31, 2020) from March 1, 2020 to May 31, 2020. Such prohibition shall not apply to the use of variable interest rates, at which the loan provider has the right to increase and is obliged to reduce the interest rate independently at certain intervals specified in the loan contract in accordance with the terms and procedure established by the loan contract.
The entry into force of the Law of Ukraine “On Amendments to the Tax Code of Ukraine regarding the Unshadowing of Payments in Commerce and Services” is postponed until August 1, 2020 (it was expected that the Law would enter into force on April 19, 2020 before the proposed amendments), and some its provisions will be postponed until January 1, 2021 (instead of October 1, 2020).
Payments for housing and communal services
Consumers shall be exempted from paying a penalty interest in case of late payment for housing and communal services until July 1, 2020.
BRDO is an independent regulatory policy advising institution in Ukraine, funded by the European Union under the FORBIZ project and within the framework of EU4Business Initiative.