Tax changes during wartime one should be aware of

Author

Valery Moiseev

The State Tax Service explained the substance of the changes imposed to the Tax Code by Law No. 2120-IX of March 15.

On paying taxes

From April 1 and during martial law paying a single tax for sole proprietors (FOP in Ukrainian) and single tax payers of groups I and II is voluntary. Anyone who does not want to pay tax during martial law simply does not fill out a declaration for the specified period.

During the mobilization, FOPs who have chosen a simplified taxation system and belong to groups II and III, as well as legal entities belonging to group III, may not pay a single social security tax for employees that are military conscripts.

From April 1, FOPs and legal entities whose income for the previous calendar year does not exceed 10 billion UAH can switch to paying a single tax of group III at a rate of 2%, taking into account the following:

such single tax payers are not subject to restrictions on the number of employees;
single tax payers are not VAT payers;
the single tax advance payment is paid monthly before the 15th day following the results of the previous month;
tax reporting is submitted on a quarterly basis within the time limits provided for quarterly reporting.

At the same time, the following economic entities will not be able to become payers of the single tax:

those organizing and conducting gambling, lotteries, and betting;
those engaged in foreign exchange;
those producing, exporting, importing, and selling excisable goods;
those carrying out the extraction and sale of minerals;
those engaged in certain types of financial activities, including insurance (reinsurance) brokers, banks, credit unions, pawnshops, leasing companies, insurance companies, investment funds, etc.

The taxpayer returns to the taxation system that was used to switch to the single tax system at a rate of 2% from the beginning of the next calendar month, after the end of martial law.

From March 1, 2022 to December 31 of the year following the year martial law is terminated or abolished in, taxpayers are exempted from paying land fees (land tax and rent for the land plots of state and communal property) for plots located in the territories where hostilities take (took) place or the temporarily occupied ones, those and owned or used, including on a lease basis. There is also no need to pay for plots identified by the regional military administrations as littered with explosive ordnance or where there are fortifications.

Taxpayers are exempted from paying the general minimum tax liability for land plots located in the territory where hostilities are taking place and in temporarily occupied territories for the 2022 and 2023 tax years.

In the 2022 tax year, taxpayers are exempted from paying the environmental tax for items of taxation located in the territories where hostilities are taking place or in the temporarily occupied ones.

Tax audits

During martial law, it is only allowed to conduct actual tax and desk audits of declarations an application for VAT refund has been submitted in.

Actual tax audits (at the place of actual production by the payer of activities) are carried out concerning:

compliance with the norms of legislation on the regulating the circulation of cash;
conducting cash transactions;
possession of licenses and certificates;
the employer’s compliance with the requirements of the legislation on registering labor relations;
settlement transactions by taxpayers.

Regarding timetable

During martial law, the timetable determined by the tax legislation is suspended.

Tax liability

During martial law it is prohibited to:

charge fines for violations related to paying a single social security tax;
apply punishment for violating the procedure for the implementing settlement transactions. However, this does not apply to penalties for violating settlement transactions in the sale of excisable goods;
state bodies are exempt from compensation for damage caused by illegal actions or inaction.