How can Problem Regulations of the Tax Code be Applied?

Nataliya V. Koloskova

The Round Table How to Apply Problem Regulations of the Tax Code? was arranged on 20 April by LIGA:ZAKON. Leading experts of the tax field, key Ukrainian tax lawyers, editors, as well as representatives of the State Tax Administration of Ukraine (STAU) gathered together to discuss the topical problems. The general aim of the event touched upon certain controversial regulations, which have ambiguous definitions and could lead to initiation of disputable situations with the STAU.

Aleksandr Popov, chief editor of LAWYER & LAW Weekly, who acted as the moderator, introduced Elena Voloshina, leading expert-analyst of LIGA:ZAKON, who described the new company’s project Tax Consultant. Aleksey Zadorozhnyy, representative of the STAU, presenting the report Changes to Profit Tax, made by Tax Code, pointed to the significant approach of tax records to accounting.

Mr. Popov prepared a report devoted to factual tax audits.

The contributor described principal places where audits can be held: the whereabouts of taxpayers, location of holding of economic activity and the whereabouts of its properties. However, the frequency of audits is not determined. Audits are carried out by at least two officials of the tax bodies, who must have an order to hold an audit and assignment for it. The period for holding the audit is quite short and comes to 10 days. It is possible to increase the term for 5 more days. After the audit is carried out an act is drawn up, which the taxpayer is obliged to sign. In case of the taxpayer not agreeing with the act, he should sign the document anyway and then provide objections within five working days from the time of the act’s receipt.

Aleksey Shmatko, partner of Aksonova & Partners, provided the audience with a report related to changes to the concept of the place of delivery of services aimed for definition of VAT. While Alexander Minin, senior partner of KM Partners, reported on the practical experience of working with tax bodies’ inquiries during control through the Tax Code. Mr. Minin noted that relations between taxpayers and tax bodies are in the process at the present time.

Ivan Yurchenko, senior associate of Vasil Kisil & Partners, spoke about taxation of operations with non-residents in the light of the Tax Code. Mr. Yurchenko said that as the economics of Ukraine is concerned with foreign investments, the Code should make provisions for attracting foreign investors. However, nominally nothing has changed. Neither has the Code made special clarifications regarding securities. The speaker supposed the regulations of royalty as one of the biggest problem points in the Code. The royalty has been used to evade paying taxes. Nowadays, for instance, the making of royalty payments in the IT sphere is infringed.

Ms. Voloshina touched upon the problems of implementing some of the Code’s regulations by using the examples of the hotels and construction fields.

Afterwards, Tatyana Kuzmenko, partner of AstapovLawyers, spoke about tax accounts. As was established earlier, there are three ways to present a tax return: personally by the taxpayer, by post or e-mail. Liability for non-submission of a tax return has been changed. Non-submission can also cause extra control on the part of tax bodies.

Elena Ryzhikova, editor of Accountant & Law, highlighted the taxation of operations in foreign currency. Concluding remarks belonged to Victor Moroz, managing partner of Law Guild VictoriAl, who focused on reporting on VAT. Mr. Moroz admitted that many negative novelties with regard to VAT were introduced by the Tax Code. For example: certain businesses do not work as VAT payers, but at the same time continue working with enterprises which do pay VAT.