Individual entrepreneurs may be allowed to choose the VAT reporting period: Rada committee supports the bill

Ukraine plans to simplify the rules for administering value-added tax (VAT). Individual entrepreneurs who are VAT payers may be given the right to independently choose the reporting period – monthly or quarterly. At the same time, legislative changes provide for the automation of tax documentation and a review of the grounds for conducting inspections.

The Verkhovna Rada Committee on Finance, Tax and Customs Policy recommended that the parliament adopt draft law No. 16037-d in the second reading and as a whole.

The document was prepared on the basis of government draft law No. 16037. It provides for amendments to the Tax Code of Ukraine.

Individual entrepreneurs will be able to independently choose the reporting period

One of the key innovations will be the opportunity for individual entrepreneurs registered as VAT payers to independently determine the period for submitting tax reports.

In particular, entrepreneurs will be able to choose between two options:

monthly reporting period;

quarterly reporting period.

It is expected that this approach will make tax administration more flexible and reduce the burden on entrepreneurs.

Tax reporting to be filled in automatically

The bill also provides for the introduction of a mechanism for automatic pre-filling of tax reporting and tax invoices.

For this, information already contained in the electronic systems of the State Tax Service will be used.

The possibility of such filling is planned to be provided to all VAT payers.

The procedure for applying the mechanism and the volume of data that will be filled in automatically will be determined by the Ministry of Finance of Ukraine.

The threshold for tax audits may be increased tenfold

Another important change concerns the grounds for conducting unscheduled documentary audits.

Currently, declaring a budget refund or a negative VAT value in the amount of 100 thousand hryvnias or more may be grounds for a corresponding audit.

The bill proposes to increase this threshold to 1 million hryvnias.

Thus, the maximum amount that may be the basis for an inspection under the relevant criterion will increase tenfold.

At the same time, this will not mean the complete abolition of tax control or other grounds for inspections provided for by law.

The rules for issuing tax invoices will change

Some provisions of the draft law relate to the preparation of consolidated tax invoices.

VAT payers are proposed to be allowed to issue such invoices when supplying goods or services to buyers who are not registered as VAT payers, provided that they have received advance payment.

In addition, it is planned to abolish the requirement for the continuous and rhythmic nature of the relevant supplies.

When will the new rules enter into force

The proposed changes have been developed within the framework of fulfilling Ukraine’s international obligations to the European Union and the International Monetary Fund.

The adoption of the relevant legislation is related, in particular, to the conditions for providing Ukraine with macro-financial assistance.

Currently, the relevant parliamentary committee has supported the draft law No. 16037-d and recommended that the Verkhovna Rada adopt it in the second reading and in its entirety.

The final decision must be made by the parliament. The proposed innovations do not apply until the law is adopted.