Wednesday, January 17, 2018

Tax Amendments under New Year Tree of 2018


Co-authored by Anton Havryk

The end of 2017 has not been an exception in terms of brining amendments to the tax legislation to be in effect from the beginning of 2018.

In the continuation of the “good” long-standing tradition  just few days before the New Year’s Eve, the President of Ukraine signed the Law of Ukraine "On Amendments to the Tax Code of Ukraine and Certain Statutory Instruments of Ukraine on Ensuring the Balanced State Revenues in 2018".  The Law was officially published on 30 December 2018.

The Law provides for a large number of changes to the tax legislation. Below is a very brief summary of the most important of these changes.

VAT - the suspension of registration of VAT invoices. Quite a major reform is being accomplished in the area of the suspension of the registration of VAT invoices. In short, the essence of the reform can be boiled down to as follows.

The system of the suspension of the registration of VAT invoices stopped its functioning following the entry into force of the Law. The system will resume its operation after the approval by the Cabinet of Ministers of Ukraine of a new procedure governing the suspension of the registration of VAT invoices. The Cabinet of Ministers of Ukraine is supposed to adopt the new procedure by 1 March 2018. However, there are some doubts whether the Cabinet of Ministers of Ukraine will be able to do it on time.

Rather favorable transitional provisions are envisaged for VAT invoices the registration of which has been already suspended, but the decision to decline their registration has not been issued yet by the tax authorities.De pending on the date (before or after December 1, 2017) at which the taxable person provided explanations/documents for the restoration of the registration, the registration can be either completely automatic or must be carry out after the expiry of five business days set aside for the consideration of such explanations/ documents.

VAT - the abolishment of VAT refund on the exportation of oilseeds.  The exportation of soybeans will be exempt from VAT from 1 September 2018 to 31 December 2021. The exportation of yellow rocket seeds and rapeseeds will be exempt from VAT from 1 January 2020 to 31 December 2021.

The above VAT exemptions will result in the abolishment of VAT refund on  exportation of the aforesaid oilseeds.

It is worthy of note that initionaly the draft law provided for VAT exemption (canceling VAT refund) on the exportation of sunflower seeds, rapeseeds and soybeans from 1 March 2018. As far as we understand,  under the increasing pressure of the strong Ukrainian agrarian lobby these provisions have been seriously alleviated at the stage of the adoption of the final wording of the law.

VAT - exemption in case of non-commercial importations of goods into the customs territory of Ukraine (hand luggage, passenger luggage, international mail and express shipments). Special rules have been established to combat abuses related to the use of the aforesaid  VAT exemption on commercial purposes (fairly common practice as of  today).

Restrictions are tied up to the frequency of the departure of persons transporting goods from abroad and the frequency of receiving international shipments. For example, the VAT exemption available for international shipments priced at no more than EUR 150  only works for first three shipments per month. The value of all the three first shipments are cumulated for the purposes of the exemption. The exemption is to be  granted only to the extent that the summed up value of the first three shipments during the calendar month does not exceed of EUR 150.

VAT - exemption for the supply of "electrocars". A VAT exemption is provided for the importation and domestic supplies of automobiles propelled by electric motors. The exception is of a temporary nature to be in force for the entire 2018. We can expect electric cars to fall in price by 20%!

Transfer pricing. Considerable changes to the transfer pricing rules have been made. Of those changes, it is worthwhile to mention the adjustment of the criteria for controlled transactions as well as the introduction of new requirements for the contents of transfer pricing documentation.
Excise tax, environmental tax, rent charge.  The rates of these taxes have been increased.

Tuesday, December 12, 2017

New Code of Administrative Proceeding of Ukraine to Enter into Force

Co-authored by Anton Havryk

The long-lasting story surrounding the adoption of new procedural codes  and the beginning of the work of the new Supreme Court has finally found its end.      

15 December 2017 is going to be the starting point at which the new procedural codes will come into force and the new Supreme Court will start functioning.

We cannot exclude the scenario under which  the formation of the apparatus and material and technical base of the new Supreme Court is not entirely completed until 15 December 2017.  Given this fact, as well as the large balance of the unresolved cases (about 50 thousand), the easy launch of the new Supreme Court will be very unlikely to happen.

As for tax disputes, from 15 December 2017 on they will be dealt with under the new wording of the Code of Administrative Proceedings of Ukraine (CoAP Ukraine). The Highest Administrative Court of Ukraine will cease its activities on 15 December 2017.  The tax disputes undergone the cassation appeal  will be considered by the Administrative Court of Cassation in the capacity of the subdivision of the Supreme Court.

The most painful moment is that the new CoAP of Ukraine does not provide for virtually any transitional provisions. All disputes will be considered under the new rules irrespective of the court in which they are pending, and regardless of whether the proceedings have been or not opened before or after the entry into force of the new CoAP of Ukraine.  

The exception is set forth only for already filed applications on the review of court judgements by the previous Supreme Court of Ukraine on the grounds of ambiguous application of the rules of law and inconsistency of the contested judgment with the opinion of the Supreme Court of Ukraine.

Such applications will be considered by the Administrative Court of Cassation under the rules of the old version of the CoAP of Ukraine.

By the way, some time ago we analyzed then draft of the CoAP of Ukraine and published our brief descriptions of the most striking changes having bearing on tax litigation. Undoubtedly, the final version of the new CoAP of Ukraine and its draft are different. However, in their majority the novelties described by us have not lost their relevance as of today.


Photo from http://pvo.com.ua/

Tuesday, October 24, 2017

Novelty 16 - New Procedure for Filing Appeals

Co-authored by Anton Havryk

This article continues a series of publications on the most striking changes in the new version of the Code of Administrative Procedure of Ukraine for the purposes of tax litigation.

What follows is the overview of the sixteenth most significant change, in our opinion,  attributable to the changed procedure for filing appeals against the judgements of courts of first instance.

There are two key changes anticipated.

Firstly, appeals will be filed directly with courts of appeal, not through courts of first instance, as it happens now.

Secondly, time limits for filing appeals are expected to be elongated. Appeals against judgements on the merits of the case can be lodged within 30 days (against today's 10 days), and appeals against court orders (rulings) can be lodged within 15 days (against today's 5 days).

* Photo from http://motortransportsolicitor.co.uk

Friday, October 13, 2017

Novelty 15 - Revised Court Fees

Co-authored by Anton Havryk

This article continues a series of publications on the most striking changes in the new version of the Code of Administrative Procedure of Ukraine for the purposes of tax litigation.

What follows is the overview of the fifteenth most significant change, in our opinion,  attributable to revised amounts of court fees.

Firstly, a long-awaited change is planned which is the introduction of a threshold for court fees payable on filing complaints of a pecuniary nature with courts of first instance by legal entities and governmental agencies. The threshold will be fixed at a fairly high level of 350 subsistence minimums for employable persons.
 
Secondly, the  rates of court fees expressed as the percentage of the amount of a complaint will somewhat increase. Complaints of a pecuniary  nature submitted by legal entities and governmental agencies will attract a 2% court fee as against a 1.5% court fee in existence as of now. The amount of a court fee for lodging an appeal with a court of appeal will be 150% of the amount of the court fee paid during the filing of the complaint with the court of first instance (as against 110% as of today), and a court fee for filing an appeal with the court of cassation will be 200% as against 120% as of today.  

* - As of September 2017, a subsistence minimum for employable persons amounts to UAH 1,684.

** - Photo from http://www.yaplakal.com

Tuesday, September 19, 2017

Novelty 14 - Digital Evidence

Co-authored by Anton Havryk

This article continues a series of publications on the most striking changes in the new version of the Code of Administrative Procedure of Ukraine for the purposes of tax litigation.

What follows is the overview of the fourteenth most significant change, in our opinion,  attributable to the use of digital evidence.

Along with well-known written evidence, a new kind of evidence will appear. This will be digital evidence. In particular, digital evidence will include:

  • electronic documents (text documents, images, photographs, video and audio recordings);

  • web pages;

  • text, multimedia and other messages;

  • databases.
Digital evidence will be filed with a court, either in the original or in a copy.

As we understand, submitting digital evidence in the original will mean carrying a laptop, smartphone, camera or other multimedia device with recorded information constituting digital evidence to the court for its review.

There seem to be two possible ways of  submitting digital documents in a copy:

  • Submission of an electronic copy of the evidence certified by the  digital signature (probably on a disc or a flash drive);

  • Submission of hard paper copy of digital evidence (printed information).

The court, at its discretion, may request the original of the digital evidence filed in a copy.  

* Photo from http://www.iusinitinere.it