The disputed law on large-scale tax reforms is already in force

On May 23, 2020, the Law of Ukraine “On Amendments to the Tax Code of Ukraine to Improve Tax Administration, Eliminate Technical and Logical Inconsistencies in Tax Legislation” of 16.01.2020 № 466-IX (the somewhat scandalous bill № 1210) entered into force. However, some amendments to this law will come into force on July 1, 2020 and January 1, 2021.

Almost all sections of the tax law have changed. They concern the administration of taxes, inspections and fines, income tax, non-resident income tax, VAT, personal income tax, land tax, single tax, etc.

Among the novelties of the law:

  • increased the criterion for the recognition of fixed assets to 20 thousand UAH (companies will have to make changes to their accounting policies, reissue orders for it and appropriately change the organization of their accounting)
  • the right to determine guilt for committing a tax offense was given to tax officials, not the court;
  • doubled the amount of fines for violations of tax legislation, set in fixed amounts;
  • up to 7 years increase the statute of limitations on personal income tax;
  • auditors were given the right to interview employees of the taxpayer for violations;
  • all transactions with non-residents will be checked for “business purpose”. If the tax authorities do not see this, the inspectors will not recognize the costs incurred by the taxpayer in relations with a non-resident;
  • Ukraine implemented the BEPS plan earlier than most OECD member countries, which threatens to put additional pressure on businesses from the tax authorities;
  • exemption from land tax will not apply to individuals who lease their land and real estate;
  • the term for self-repayment of tax debt is reduced by 2 times.

This is just the tip of the iceberg – another law that, in the words of the authorities, “will simplify the administration of taxes and the lives of taxpayers.”

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