On 07 March 2022 two vital laws regulating tax and reporting obligations during martial law in Ukraine became effective:
The Law of Ukraine No. 2118-IX On Amendment of the Tax Code of Ukraine (the Law 1)
In accordance with the Law 1 the following key changes were implemented in the Tax Code of Ukraine (the TCU):
Taxpayers are released from any liabilities indicated in the TCU, in particular resulting from failure to pay taxes, submit tax declarations / other tax reports, register VAT and Excise tax invoices / adjustments to VAT / Excise tax invoices in timely manner. Such unfulfilled tax obligations must be completed within 3 months following the end of martial law in Ukraine.
No tax audits must be initiated. All on-going tax audits must be suspended.
Taxpayers that directly participate in war actions are released from any liabilities as per the TCU concerning their failure to fulfill tax obligations indicated in point (a) above in timely manner due to the consequences of their participation in war actions. Such tax obligations must be completed within 1 month following the end of the mentioned consequences.
Fuel or ethanol can be transported without registration of Excise tax invoice on condition that a way bill of lading contains all information that must be indicated in the relevant Excise tax invoice. The Excise tax invoice must be registered either within 3 months as per point (a), or within 1 month as per point (c) indicated above.
Free of charge transfer of monies, commodities, as well as provision of services for the benefit of the Ukrainian Armed Forces or territorial defense units is not considered supply of goods / services. Consequently, such transactions should not be subject to VAT.
Monies, soldiers' protection gear, medicine, medical gear, food as well as other commodities, works, services as per the list to be approved by the Cabinet of Ministers of Ukraine that are free of charge transferred to the Ukrainian Armed Forces, as well as other law enforcement agencies, shall not increase financial result subject to Corporate Profit Tax of taxpayers that transfer / provide / perform such goods / services / works.
Compensation for the fuel used for transportation services provided by natural persons for the benefit of the Ukrainian Armed Forces or territorial defense units must be exempt from Income Tax of such natural persons
Production and importing of electronic cigarettes under classification code 2402 20 90 20 can be done using excise stamps for foreign or domestic electronic cigarettes interchangeably on condition that the rate of the Excise Tax is the same.
All terms indicated in tax and other legislation for taxpayers, as well as for tax authorities are suspended.
All expired or unpaid during martial law licenses for (1) production / turnover of ethanol, alcohol, tobacco products and liquids for electronic cigarettes, (2) production, storage, retail and wholesale of fuel, as well as places of production, storage, retail and wholesale of fuel are considered valid during martial law period. Prolongation of the licenses, as well as payment for them must be done within 30 days following the end of martial law.
Office / field tax audits related to VAT refund are canceled during martial law.
Socially significant food, medicine and medical gear which prices are to be fixed by the Cabinet of Ministers of Ukraine must be exempt from import duties during martial law
Taxpayers are released from any liabilities indicated in the Law of Ukraine On the use of cash registers in the sphere of trade, public catering and services during martial law
The Law of Ukraine No. 2115-IX On Protection of Interests of Persons Submitting Reporting and Other Documents during Martial Law (the Law 2)
In accordance with the Law 2 the following key provisions were adopted:
- All natural persons, private entrepreneurs, legal entities may submit reporting, financial, accounting documents, auditors` reports or any other documents as per the valid legislation (if such documents were not submitted during martial law) within 3 months following the end of martial law in Ukraine.
- During martial law or within 3 months following the end of martial law in Ukraine no administrative or criminal liability can be imposed on natural persons / legal entities indicated in point (a) above.
- If natural persons do not have physical possibilities to submit documents indicated in point (a) above due to the consequences of their direct participation in war actions, then such persons shall be free from administrative / criminal liability and must submit the reporting or other required documents within 1 month following the end of the mentioned consequences.
- No audits regarding timeliness and completeness of submission of any reporting document must be initiated during martial law.
Furthermore, on 07 March 2022 the Government of Ukraine announced additional measures to release during martial law and during 1 year period following the end of the martial law:
- Private entrepreneurs subject to Unified Tax (Groups 1, 2) from payment of the Unified Social Security Tax (the USST) in full
- Private entrepreneurs and legal entities subject to Unified Tax (Group 3) from payment of the USST for their employees drafted to the Ukrainian Armed Forces and other defense units
- Taxpayers from payment of land tax and land rent on all Ukrainian territories where war actions are ongoing
By Viktoriya Fomenko, Partner, Integrites