They want to integrate the Law on Administrative Procedure into the Tax Code: what will change for business

The Rada is considering large-scale changes to tax procedures and appeals of State Tax Service decisions

The Verkhovna Rada of Ukraine has included on its agenda the government bill No. 14196 on amendments to the Tax Code of Ukraine in connection with the adoption of the Law “On Administrative Procedure”.

The document provides for a large-scale update of tax procedures – from electronic correspondence with the tax office to new rules for appealing decisions and inaction of regulatory authorities.

New concepts will appear in the Tax Code

The bill proposes to officially integrate the principles of administrative procedure into the tax sphere.

In particular, new terms should appear in the Tax Code:

“administrative act”;

“administrative proceedings”;

“procedural action”;

“procedural decision”.

It is assumed that the adoption, entry into force and appeal of decisions of tax authorities will take place according to the rules of the Law “On Administrative Procedure”.

Businesses want to be given more opportunities to appeal

The document significantly details the mechanisms for protecting taxpayers’ rights.

In particular, taxpayers will have the right to:

appeal the inaction of tax authorities;
file complaints about procedural decisions;
demand an extension of the appeal deadline;
make full use of electronic communications for submitting documents.

It is separately stipulated that complaints can be filed through the Electronic Cabinet.

The Electronic Cabinet will become the main channel of communication

The draft law significantly strengthens the role of digital services in the interaction between business and the state.

In particular:

for financial agents, electronic correspondence will become mandatory;
payers will receive automatic notifications about documents;
through the E-Cabinet, it will be possible to check the status of counterparties.

Also, the code will use a more modern concept – “electronic communications” instead of the term “means of electronic communication”.

Changes will affect VAT, transfer pricing and CFC

The document details the powers of tax authorities regarding:

registration or blocking of tax invoices;

determination of the riskiness of the VAT payer;

procedures in the field of transfer pricing;

control of controlled foreign companies (CFCs).

For certain procedures, correspondence will be carried out exclusively via electronic communications.

The GNEU warns of risks

At the same time, experts from the Main Scientific and Expert Department drew attention to possible legal conflicts.

In particular, the draft law selectively uses the term “administrative act”, which may create uncertainty as to which decisions of tax authorities fall under the new procedure.

The GNEU also pointed to the imbalance of the appeal deadlines: 6 months are proposed for inaction of tax authorities, while the deadlines for appealing decisions and actions remain much shorter.