Ukrainian business will be monitored by tax nannies

MP Nina Yuzhanina shares her thoughts on the draft law proposed for signing by MPs, which proposes the idea of a "Tax Nanny."

She reminds us that there have already been the "Economic Passport of a Citizen" and the "Investment Nanny," both of which had zero results.

Now Hetmantsev and others (Arakhamia, Bezugla, Buzhansky, Zheleznyak, Tretyakova and other authors of the draft law that is being prepared for registration) propose to introduce a "Tax Nanny" - a tax authority official responsible for interaction with the taxpayer, under the fashionable name of "Compliance Manager".

But not everyone will be so lucky - only selected taxpayers.

And the tax authorities themselves will select taxpayers on the basis of an updated risk management system under the fashionable word "Compliance ", the criteria for which they will approve.

The selected taxpayers will be assigned the status of a high level of voluntary compliance with tax legislation and will not be subject to routine documentary audits:

- will not be subject to scheduled documentary audits;

- the timeframe for desk and documentary audits (up to 10 days in total) to confirm VAT refunds will be reduced to 5 days;

- individual tax consultations and information on tax risks and ways to eliminate them will be provided within 5 days.

However, in order to be selected, a taxpayer will have to meet many criteria (more on this in the next newsletter), including the absence of a decision to classify a taxpayer as a risky one.

According to Yuzhanina, under the guise of tax nannies for the chosen ones, the authorities will try to legalize the right of the tax authorities to recognize a taxpayer as a risky one (this is provided only by a resolution of the Cabinet of Ministers) in order to stop the registration of its tax invoices, which in many cases has elements of tax raiding.

To become an elected taxpayer, legal entities and individual entrepreneurs must simultaneously meet the following basic requirements

- the taxpayer was not a risky payer in the SMKOR;

- no TNDs on violation of the deadlines for settlements for export and import of goods during the year;

- no disagreed amounts under the TNDs exceeding UAH 51 thousand based on the results of documentary checks;

- no violations in the submission of reports and/or documents/notifications, including CFC and financial statements;

- no debts on payment of taxes/ ERUs or the presence of a debt not exceeding UAH 3060;

- no sanctions applied to the payer in accordance with the procedure established by the Law of Ukraine "On Sanctions".

But this is not the end of the story, as additional criteria must be met to become an elected payer.

In order to become an elected taxpayer, a legal entity must simultaneously meet the following additional criteria:

► on the general taxation system:

► the level of corporate income tax payment is higher than the industry average;

► VAT payment rate is higher than the industry average (except for taxpayers with exports of more than 25%);

► employees' salary is not less than the average salary in the relevant industry in the region with a coefficient of 1.1, and the number of employees is not less than 5 people.

single tax payers of the third group:

• the level of taxes paid to the state and local budgets is higher than the industry average;
• salary of employees is not less than the average salary in the relevant industry in the region with a coefficient of 1.1, and the number of employees is not less than 5 people.

Group IV single tax payers:

• the level of taxes paid to the state and local budgets per 1 hectare is higher than the national average;
• salary of employees - not less than the average salary in the relevant industry in the region with a coefficient of 1.1, and the number of employees is not less than 5 people;
• own or leased land plots of at least 500 hectares, or leased land plots of municipal and/or state ownership of at least 0.5 hectares.

To be elected, an individual entrepreneur must simultaneously meet the following additional criteria:

general taxation system:

• the level of payment of personal income tax from business activities and the level of payment of VAT is higher than the industry average;
• the salary of employees is not less than the average salary in the relevant industry in the region with a coefficient of 1.1.

Group III single tax payers:

• turnover exceeds UAH 5 million and the level of taxes paid to the state and local budgets is higher than the industry average;
• employees' salaries are not less than the average salary in the relevant industry in the region with a coefficient of 1.1.

Unfortunately, individual entrepreneurs - single tax payers of Group I, Group II, Group IV, and Group III with an income of less than UAH 5 million or who do not have employees cannot be considered by the current government to be taxpayers with a high level of voluntary tax compliance.