Rada votes for expanding tax audits starting Dec 1 as part of obligations to IMF
MOSCOW. Nov 9 (Interfax) - The Ukrainian Verkhovna Rada on Thursday passed amendments to the Tax Code and the law On the Collection and Registration of a Unified General Mandatory State Social Insurance Contribution as concerns the resumption and expansion of tax audits.
"The bill is aimed at ensuring that Ukraine fully complies with its obligations under the Memorandum of Economic and Financial Policies [with the IMF] of December 8, 2022 as concerns the limitation of a moratorium on tax inspections," Ukrainian media quoted the Finance Ministry's commentary.
Starting December 1, 2023, a schedule of planned documentary audits would also include taxpayers that, according to indicators formed based on the 2021 outcomes, meet one of the criteria stipulated by the law, as well as non-residents operating in Ukraine through autonomous subdivisions (permanent offices).
Yaroslav Zheleznyak, first deputy head of the Verkhovna Rada Finance, Taxation, and Customs Policy Committee, said earlier that the list of businesses subject to planned documentary inspections could be extended to include taxpayers whose receivables were twice as big as payables, whose profit tax and VAT payments were under 50% of average in their industry, and whose yearly incomes were over UAH 10 million and expenditures exceeded 75% of this amount in 2021.
The bill retains the earlier reinstated inspections with regard to excised products (alcohol, tobacco, fuel), the organization of games of chance (gaming business), and financial and payment services.
On June 30, the Verkhovna Rada passed legislation seen as a key structural benchmark of the IMF cooperation program repealing the 2% unified tax starting August 1, instituting control of cash registers starting October 1, and reinstating documentary audits in the financial, gaming business, and excised goods sectors.
However, IMF Mission Chief Gavin Gray said in early October that the legal provision on resuming tax audits had to be adjusted so as to meet Ukraine's obligations. At the same time, he said the IMF allowed for the possibility that an updated law would implement a risk-based approach.
In Gray's words, the resumption of tax audits was among the two key requirements Ukraine had to meet before the second review of its Extended Fund Facility program, the other one being legislation tightening the financial monitoring of politically exposed persons (PEP), which the Rada adopted in mid-October.