State Secretary of the Ministry of Finance Yevgeniy Kapinus holds a briefing on the implementation of the anti-corruption draft law on tax amendments No. 1797


On May 12, State Secretary of the Ministry of Finance of Ukraine Yevgeniy Kapinus held a briefing at the Ministry of Finance devoted to the implementation of the Law of Ukraine No. 1797-VIII dated December 21, 2016 “On Amendments to the Tax Code of Ukraine aimed to Improve Investment Climate in Ukraine”.

Unated electronic register for automated VAT refund

On April 1, 2017, the Minister of Finance successfully launched the united register for automated VAT refund. From now on, VAT refund shall be provided in full without any discrepancies. All transactions are carried out on time, just as it was planned. Manipulations with VAT refund and discrimination of business via non-transparent VAT refund procedures are now impossible.

Since the launch of the register, more than UAH 11b have been refunded (UAH 11 367 587 000.46 which is equal to 39.9%) according to applications submitted in April and applications with pending amounts refundable as per April 1, 2017.

The sum of VAT refund (according to applications submitted after April 1, 2017) which can be processed (in the “automatic mode”) in May is equal to UAH 9 706 142 335.33 (2869 tax payers shall receive refund), UAH 254 320 994.15 shall be refunded in June (81 tax payers).

Termination of registration of risky tax bills

Now, the Ministry of Finance and the State Fiscal Service are jointly testing a system for the termination of the registration of risky tax bills to prevent VAT refund fraud. The full-scale launch of the system is due to take place on July 1, 2017. Since April 1 the system has been operating in the test mode without stopping the registration of tax bills.

The following tax bills are not subject to examination:

Small businesses with the monthly turnover not exceeding UAH 500 thousand;

Tax bills of diligent tax payers:
- tax bills for 2016 submitted by entities which paid more than UAH 5m in taxes in 2016;
- tax bills submitted by entities whose tax burden exceeds 5% of their turnover.

Tax bills shall be registered for non-payers of the VAT.

According to calculations, only 2-3% of the tax payers will be subject to examinations according to the risk criteria.

Risk criteria sufficient to stop the registration of tax bills:

Discrepancies in the volume and description of goods purchased and sold;
Missing licenses for some kinds of business activity;
Significant corrections of tax calculations registered for non-payers of the VAT.

Real and expected results:

1. Prevention of the fake tax credit: only in the period from January till February 2017 the State Fiscal Service detected ~ UAH 2b of registered “risky” tax credit;
2. Credible data in the electronic VAT administration system: automated and chronologically correct VAT refund;
3. Increased VAT revenues: liquidation of schemes helping evade the VAT via presenting “fake” expenses.

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