During the period of martial law in Ukraine, taxpayers in Ukraine are still subject to liability for any failure to fulfil their tax obligations, including reporting obligations provided they have the ability to fulfil such obligations.
On 6 September 2022, the Procedure for Confirming the Ability or Inability of Fulfilment the Taxpayer’s Obligations (the “Procedure”) became effective.
The Procedure establishes grounds for a taxpayer to confirm their inability to fulfil their tax liabilities, the list of relevant supporting documents as well as the procedure for taxpayers to follow in order to submit their application. The Procedure also establishes the procedures the tax authority should follow to consider the submitted documents and to take a decision on the ability / inability of the relevant taxpayer to fulfil their tax obligations.
Pursuant to the Procedure, if:
- as of 6 September 2022 and thereafter, a taxpayer is unable to fulfil their tax obligations but is able to submit the relevant request (with supporting documents) to the tax authority for the latter to confirm such inability; then,
- by 30 September 2022, such taxpayer is required to submit (either in paper form or electronically) the relevant application and supporting documents to the local tax authority.
The following circumstances, amongst others, may serve as grounds for a taxpayer’s inability to fulfil their tax liabilities:
- the loss (destruction or deterioration) of primary documents, computers or other equipment as a result of the Russian invasion of Ukraine;
- the inability to use or transport documents, computers or other equipment, or where such actions pose a risk to life or health, as a result of the Russian invasion of Ukraine, or due to limitations established by the Ukrainian authorities;
- the taxpayer’s location (registered address or actual location) in temporarily occupied territories or territories where military actions are conducted; and
- other confirmed force-majeure circumstances.
In the event that, upon consideration of the submitted documents, the tax authority confirms a taxpayer’s inability to fulfil the relevant tax obligations, then that taxpayer should not be subject to liability for untimely performance of the relevant obligations. The taxpayer is nevertheless still required to fulfil such obligations after the ability for such performance arises.
If, however, the taxpayer is unable to fulfil their tax obligations and unable to submit the relevant application with supporting documents to the tax authority by 30 September 2022, then such application and supporting documents must be submitted once the relevant ability arises, but by no later than 60 calendar days from the first day of the month following the month when such ability arose.
Taxpayers who fail to submit the relevant application and supporting documents within the abovementioned timelines, or in respect of whom tax authorities make a decision on such taxpayer’s ability to fulfil their tax obligations, are to be considered as having the possibility to fulfil their tax obligations and may be subject to liability for the non-fulfilment or untimely fulfilment of such obligations.
Click here to read other blog posts in this Ukraine legal developments series.