Payment of taxes by a taxpayer whose funds have been seized

Is a taxpayer whose funds have been seized by the state enforcement service or a private enforcement officer obliged to pay tax liabilities and how?

Pursuant to clause 15.1 of the TCU, taxpayers are individuals (residents and non-residents of Ukraine), legal entities (residents and non-residents of Ukraine) and their separate subdivisions that have, receive (transfer) taxable objects or carry out activities (transactions) that are subject to taxation in accordance with the TCU or tax laws, and are obliged to pay taxes and fees in accordance with the TCU (clause 15.1 of the TCU).

According to subpara. 14.1.39 of the TCU, a taxpayer's monetary obligation is the amount of funds that the taxpayer must pay to the relevant budget or to a single account as a tax liability and/or other obligation, the control over the payment of which is entrusted to the controlling authorities, and/or a penalty (financial sanction) levied on the taxpayer in connection with the violation of the requirements of tax legislation and other legislation, the control over compliance with which is entrusted to the controlling authorities, as well as sanctions for violation of legislation in the field of foreign economic activity.

Sub-clause 14.1.156 of the TCU defines tax liability as the amount of funds that a taxpayer, including a tax agent, must pay to the relevant budget or to a single account as a tax or fee on the basis, in the manner and within the time limits specified by tax legislation (including the amount of funds specified by the taxpayer in the tax bill and not paid within the time limit established by law), and/or the amount of funds formed by tax benefits that were used by the taxpayer for other purposes or in violation of the procedure for their provision, and is established by the taxpayer.

Tax liability is the obligation of the taxpayer to calculate, declare and/or pay the amount of tax and duty in the manner and within the time limits specified by the TCU and laws on customs matters (clause 36.1 of the TCU).

The grounds for termination of the tax obligation are defined in clause 37.3 of the TCU.

The taxpayer is obliged to pay the amount of tax liability specified in the tax return filed by him/her within 10 calendar days following the last day of the relevant deadline provided for by the TCU for filing a tax return, except in cases established by the TCU (paragraph one of clause 57.1 of the TCU).

Payment of taxes and duties is made in cash or non-cash form (including using electronic money), except as provided by the TCU or laws on customs matters. For the purposes of the TCU, the taxpayer's obligation to pay taxes and fees to a single account, as defined in Article 35, subpara. 1 of the TCU, is considered fulfilled from the moment when the initiation of the transfer is completed for such a taxpayer in accordance with the Law of Ukraine "On Payment Services" (clause 35.2 of the TCU).

The sources of independent payment of monetary obligations or repayment of tax debt of a taxpayer are any own funds, including those received from the sale of goods (works, services), property, issue of securities, in particular, corporate rights received as a loan (credit), and from other sources, taking into account the specifics specified in Article 87 of the TCU, as well as the amount of overpaid payments to the relevant budgets (paragraph one of clause 87.1 of the TCU).

The source of self-payment of value added tax liabilities is the amount of funds, the sources of which are specified in the first paragraph of clause 87.1 of the TCU and are recorded in the electronic value added tax administration system. In case of payment of tax liabilities that arose before July 1, 2015 and/or repayment of tax debt on tax liabilities that arose before July 1, 2015, the funds are transferred to the budget directly from the taxpayer's accounts opened with banks and non-bank payment service providers (paragraph two of clause 87.1 of Article 87 of the TCU).

According to subpara. 1 of subpara. 1 and subpara. 2 of para.¹⁰² of Section XIII "Final and Transitional Provisions" of the Law of Ukraine No. 1404-VIII "On Enforcement Proceedings" dated 02.06.2016 (hereinafter - Law No. 1404), as amended on 06.05.2023 by the Law of Ukraine dated April 11, 2023 No. 3048-IX "On Amendments to Certain Laws of Ukraine on Certain Peculiarities of the Organization of the Enforcement of Court Decisions and Decisions of Other Bodies during the Period of Martial Law", temporarily, for the period until the termination or abolition of martial law in Ukraine, introduced by the Decree of the President of Ukraine "On the Introduction of Martial Law in Ukraine" dated February 24, 2022 No. 64/2022, approved by the Law of Ukraine "On Approval of the Decree of the President of Ukraine "On the Introduction of Martial Law in Ukraine" dated February 24, 2022 No. 2102-IX:

1) individuals - debtors whose funds have been seized by the state executive service, private executors, may carry out expenditure transactions from the current account in the amount that within one calendar month does not exceed two minimum wages established by the law on the State Budget of Ukraine as of January 1 of the current calendar year, as well as pay taxes, fees without taking into account such seizure, provided that such current account is designated for expenditure transactions in accordance with the procedure ^established by the Such account shall not be subject to foreclosure within the specified amount;

2) legal entities - debtors, self-employed persons (using hired labor of individuals), whose funds have been seized by the state executive service, private executors, may carry out expenditure transactions from current accounts solely for the payment of wages in the amount of not more than five minimum wages per month per employee of such legal entity or self-employed person, as well as for the payment of taxes, fees and a single contribution to the obligatory state social insurance. Control over compliance with the requirements established by law in the course of making payments is vested in the officers of the legal entity-debtor and the self-employed person, respectively.

In view of the above, a taxpayer whose funds are seized by the state executive service or a private enforcement officer is obliged to pay tax liabilities at its own expense.