Joint statement of the Ministry of Finance and the State Fiscal Service on the operation of the monitoring system aimed to detect risks sufficient to suspend the registration of tax bills


The system for the suspension of the registration of risky tax bills is a tool for tackling fraud in VAT refund. It ensures automated and timely VAT refund to tax payers as well as prevents corruption schemes and budget losses amounting billions of hryvnas. Parallel with the full-scale launch of the risk monitoring system, one more initiative was launched: from now on, captured tax bills are a sufficient reason to claim tax credit; also, they cannot be subject to tax audits anymore. In fact, 99% of tax payers now make use of their new rights!

The system was launched in full on July 1 following its test run. Currently, technical issues can occur for various reasons. The Ministry of Finance and the SFS are now using all their additional resources to solves issues with the registration of tax bills as fast as possible. Criteria applied by the system do not allow to capture tax bills which are suspected to be fake. At the same time, a number of tax bills submitted by tax payers from the real sector of the economy were really denied registration in line with the valid risk criteria. We were well aware of this risk. To solve this problem, an algorithm was developed as well. For instance, additional information which is to be submitted in the format of the taxpayer’s processing card shall remove all potential issues for tax payers representing the real sector of the economy.

In regard to the proposals for the abolition of this system and a temporary ban on the suspension of the registration of tax bills, it must be said that this system is an essential condition for the automated VAT refund. The creation of this system was supported by the MPs who voted for the respective legislation; the list of risk criteria was prepared jointly with the Parliament’s committee for tax and customs policy, experts and representatives of business associations. There is no way back. This system prevents manipulations and significant losses for the state budget.

Three groups oppose this system now: 1) those who arrange manipulations with VAT refund and feel the risk to lose; 2) those who want to boost their political profile and to make panic; 3) companies from the real sector of the economy which are confronted with technical issues and do have all reasons to be upset.

This is the third group which we are going to cooperate with for our common benefit and are solving all emerging issues as fast as possible for this.

What else is important to know about the way the system operates?

1. Those who make panic and report about an extremely high number of suspended tax bills try to undermine the operation of the automated VAT refund register.
2. In fact, only 1.2% of all tax bills submitted as per July 19 have been suspended from registration. This is a much better value compared to the forecast based on the test run of the system. Moreover, we see cases when a huge number of tax bills with minor sums is submitted by one tax payer. For example, one tax payer has already issued 4,000 tax bills amounting not more than UAH 1000 each. In this way, attempts are made to overload the system and to manipulate it to register fake tax bills. But the system reacts properly and blocks such tax bills. Now we have pretty many cases like this when low-value tax bills are presented in high numbers. However, the number of such cases will inevitably go down along with awareness that these attempts make no sense – the system always reacts properly and blocks tax bills suspected to be fake.
3. The system will not be static: we thoroughly analyze the suspension criteria and will be adjusting them in the process to make the number of suspended tax bills from the real sector of the economy go down steadily. We take into account feedback provided by diligent tax payers and take steps to make the registration procedure faster and more transparent. Those who want to bypass the system will, of course, invent new fraudulent schemes; that is why we will be always adjusting our algorithms accordingly.
4. The algorithms of the system do their job and stops the registration of potentially “dark” tax bills which account for the lion’s share of all suspended tax bills.
5. Tax payers whose tax bills have been suspended shall only submit the processing card to the SFS commission, which is enough to stop suspension for their respective transactions in the future. As per July 19, the SFS commission examined processing cards presented by 52% of applicants, for 33% of them the registration of tax bills was approved.
6. Presently, technical issues related to the submission of documents are being solved which were caused by defects in the operation of the electronic taxpayer’s office and the recent cyber-attack on the IT systems of the SFS. The SFS continues to enhance its systems and is improving the operation of the electronic taxpayer’s office. It must also be noted by tax payers that they can use any service which is suitable for them to speed up the submission of documents.
7. The SFS is now developing solutions for big tax payers who are facing issues using the electronic tax payer’s office to submit documents. The SFS is engaging all possible additional recourses to solve the technical issues. The Ministry of Finance adopts necessary amendments to the relevant regulations.
8. Kyiv, Kharkiv and Dnipropetrovsk regions account for almost 50% of the suspended tax bills. In many regions, there are almost no cases of the suspension of tax bills’ registration.

You can mark the parts of text you like, which will be available at the link in the address bar of your browser

You can mark the parts of text you like, which will be available at the link in the address bar of your browser