Business opposes new rules for registration of tax invoices for export of agricultural products

Recently, the State Tax Service has published a draft resolution of the Cabinet of Ministers of Ukraine "On Amendments to the Procedure for Suspending the Registration of a Tax Invoice/Adjustment Calculation in the Unified Register of Tax Invoices" and a draft order of the Ministry of Finance "On Amendments to Certain Regulatory Acts of the Ministry of Finance of Ukraine".

According to the experts of the European Business Association and, in particular, the Grains and Oilseeds Committee, the innovations proposed in the documents will actually create significant risks for the normal and uninterrupted functioning of the agricultural sector. The proposed amendments to the CMU Resolution No. 1165 will complicate the administration of value added tax in terms of registration of tax invoices and calculations of adjustments for export operations for several reasons.

First, companies that meet the condition of returning at least 80% of their export revenue will have to register tax invoices and adjustment calculations in the general procedure and will lose time and resources for such actions.

Secondly, the test for unconditional registration of such tax invoices and adjustment calculations will not be positive in most cases for large enterprises, as minor conditions may not be met, such as late submission of reports and the presence of an insignificant amount of tax debt reflected in the integrated taxpayer card by the State Tax Service of Ukraine during the transition from administrative to judicial appeal of the STS decisions.

Thirdly, the formula used to calculate the total volume of export operations outside the customs territory of Ukraine includes an indicator of the amount of purchase from a risky counterparty, whose decision on riskiness may be later canceled by the State Tax Service or a court.

According to the business, the proposed approach to the amendments will actually transfer the export of grain and oilseed products to manual control by possibly blocking tax invoices and adjustments to them. After all, there is no responsibility of the State Tax Service officials for making erroneous or deliberately unlawful decisions regarding the recognition of the riskiness of enterprises or transactions, which led to the losses of the exporting company as a result of blocking tax invoices and adjustment calculations.

In addition, business representatives are concerned that, given the proposed changes, exports may be suspended indefinitely due to successive requests for all possible primary documents and the risk status remaining for a long time.

In such a difficult time for both business and the country as a whole, these innovations may increase the threat of unpredictable and excessive business losses, in particular

• additional and voluminous separate administration of export operations in terms of VAT.
• Unblocking tax invoices and adjustment calculations and the procedure for providing explanations/appeals against decisions of the territorial commission to the State Tax Service or the court will lead to the disruption of contracts, unpredictable costs for transportation downtime, costs for grain storage in terminals and its spoilage.
• Adding time to the procedure for unblocking a tax invoice and appealing against refusals will lead to a loss of economic sense of the transaction.
• Appealing against refusals to unblock may lead to a lengthy procedure for changing the contract price and registering new tax invoices.

It is worth emphasizing that blocking a tax invoice in the context of the proposed mechanism will mean blocking the physical export of goods, and the physical blocking of exports may result in the collapse of the entire system of Ukrainian seaports. Additionally, it will significantly reduce the inflow of foreign currency earnings into the Ukrainian economy, which is unacceptable at this time.

Transparent Business is convinced that the burden of all negative consequences and responsibility for illegal transactions and tax evasion within the country should remain on the lawbreakers who directly commit such actions.

Therefore, it seems reasonable to propose to exclude from the mechanism of blocking tax invoices exporters who have a positive history and have not committed abuses with non-return of foreign exchange earnings for exported goods.

In this context, the EBA business proposes 2 aspects.

To provide for unconditional registration of tax invoice/adjustment calculation for reputable exporters who fulfill the condition of returning at least 80% of foreign currency earnings within the statutory period.

For all other exporters, unconditional registration of a tax invoice should be provided in case of a positive tax history. In particular, in this case, no checks for compliance with the riskiness of transactions and the payer are carried out.

Under martial law, it is important to ensure the stable operation of the state's economy, one of the main driving forces of which is the agricultural sector. It is an important component of food security, budgetary stability and currency stability. Despite the military situation in the country, Ukraine remains one of the leading suppliers of food to the global market. Therefore, the export of Ukrainian agricultural products is a priority not only for Ukraine, but also for the whole world to ensure global food security.

Therefore, the EBA has already prepared and sent a number of proposals to the State Tax Service and requests and appeals to the acting Head of the State Tax Service to take into account the proposals of business in order not to stop the export of agricultural products.