Businesses affected by shelling want to be allowed to keep VAT tax credit without documents: what the draft law provides

In Ukraine, it is proposed to introduce special tax rules for enterprises that have lost their primary documents as a result of Russian shelling. Businesses want to be allowed to keep declared expenses and VAT tax credit, as well as establish a moratorium on documentary audits for the relevant tax periods.

The relevant changes are provided for by draft law No. 16158, registered in the Verkhovna Rada.

The document is aimed at protecting taxpayers and tax agents who have suffered from Russia’s armed aggression and cannot restore destroyed or damaged documentation.

What tax benefits are proposed to be introduced

Draft law No. 16158 proposes to amend the transitional provisions of the Tax Code of Ukraine.

The new rules will apply to taxpayers who have lost, destroyed or damaged primary documents as a result of Russian shelling.

In particular, it is proposed to:

Preserve the VAT tax credit even in the absence of the relevant primary documents.
Allow previously declared expenses to be taken into account.
Preserve the negative value of the object of taxation by income tax.
Prohibit the increase in declared tax liabilities for the relevant periods.
Introduce a moratorium on documentary tax audits for certain periods.
Provide enterprises with the opportunity to appeal the decisions of tax authorities to refuse to apply special rules.

Thus, enterprises that objectively cannot restore documents due to the consequences of the war will receive additional mechanisms to protect their tax indicators.

How to notify the tax authority about the loss of documents

To apply special rules, the taxpayer will have to notify the supervisory authority about the loss of primary documentation.

The draft law provides for the possibility of submitting such a notification in any form.

It must indicate:

The circumstances under which the documents were lost, destroyed or damaged.

Tax periods to which the loss of documentation applies.

List of lost primary documents.

At the same time, the mere fact of the absence of documents should not automatically become a basis for doubting the reliability of previously submitted tax reports.

The tax authority may be prohibited from auditing individual periods

One of the key innovations of the draft law is the introduction of a moratorium on documentary audits for tax periods to which special rules will apply.

It is important that such a restriction is proposed to be maintained even after the end of martial law.

This should protect enterprises from situations when a tax audit is conducted several years after the shelling, and the taxpayer is physically unable to provide documents destroyed as a result of hostilities.

What to do if the tax authority refuses to apply benefits

The draft law provides for additional guarantees for taxpayers.

In particular, it is proposed to place the responsibility for proving the absence of grounds for applying special rules on the controlling authority.

If the tax authority refuses to grant the enterprise a tax audit, it will have to provide a reasoned decision within 10 calendar days, indicating specific grounds and evidence.

The taxpayer will have the right to appeal such a decision in an administrative or judicial procedure.

During the appeal period, restrictions are provided for conducting inspections and reviewing the relevant tax indicators until the final decision is made.

Is liability for abuse provided for?

At the same time, the proposed changes will not exempt taxpayers from liability for improper use of special rules.

If an enterprise unjustifiably uses the provided mechanism, the draft law allows for the qualification of such actions as tax evasion with the application of liability established by law.

When will the new rules come into force?

Currently, draft law No. 16158 has only been registered in the Verkhovna Rada.

To enter into force, the proposed changes must undergo parliamentary consideration, be approved by people’s deputies and signed by the president.

Therefore, the special procedure for preserving the VAT tax credit and the moratorium on inspections are still a legislative initiative, not current norms.