Article 3 minute read

Everything you need to know about changing accounting and tax laws in Ukraine

17 May 2018

It’s important for Ukraine businesses to be aware of the new requirements.

Countries:

The Ukrainian government has been shining a light on accounting and tax legislation in the country in recent months, and the resulting changes have local companies in a spin about compliance. To help, TMF Ukraine and DLA Piper recently held a joint practical seminar devoted to these changes, working together to ensure businesses are aware of requirements.

So, what's changing? 

Process for handling a tax invoice registration ban and respective complaints

At the end of 2017, in recognition of business complaints against an unclear procedure, the suspension of registration of tax invoices was cancelled until new rules could be elaborated by the Ministry of Finance. Usual process resumed, however, on 21 March 2018.

There are new procedures and new criteria for monitoring of tax invoices and their automatic ban. A new evaluation step has been introduced requiring each taxpayer to be considered for risk. If the taxpayer is considered ‘non-risky’, all of its tax invoices will be registered automatically. And, the new complaints procedure will be now much clearer when a decision is not taken in time for a tax invoice to be registered.

This is a clear step forward and will hopefully speed up the processes that had previously been stalled.

In related developments, all communication with tax authorities related to suspended registration of tax invoices are becoming electronic; this will include the submission of complaints applications (in prescribed form), and receiving the decision on registration/refusing to register a tax invoice.

Also new, tax authorities will share a tax burden index and risk status for each taxpayer in its online electronic cabinet on a monthly basis. It’s worth noting that if a tax burden is more than 3%, tax invoices will not fall under this monitoring process.

Applications and decisions will be logged in an electronic register which will be publicly available online. If the tax commission refuses to register a tax invoice, it will indicate the reason as well as list what documents the taxpayer failed to submit.

Accounting and financial statements

Changes have not just been in the realm of VAT, tax invoices and complaints procedures; the amendments to the law on Accounting and Financial Statements came into force this year. It’s worth noting the following:

  • A new classification of entities (small / middle / large enterprises) will influence reporting and accounting requirements
  • A new section for financial statements, the management report, must include not only financial indices but also qualitative information about the entity
  • New rules for audit, publication, and provision of financial statements are to be introduced
  • There are also changes to requirements for accounting department for companies of ‘public interest’ - and all large companies are considered to fall under this category
  • Finally, there will be a new mandatory usage of IFRS for some businesses

Limited Liability Companies (LLCs)

According to a new law, participants of an LLC will be able to conclude an agreement similar to the shareholders’ agreement in English law, which would regulate a wide spectrum of LLC corporate governance, shares sales and so on.

This law has been long-expected by the business community in Ukraine and is actually a breakthrough in local corporate legislation.

Local transfer pricing legislation

While this is an area of much change both globally and locally, the most important things to note for the Ukraine at present are new criteria governing related parties for legal entities and the publication of an updated list of low-tax jurisdictions. There has also been clarification published on the rights of tax authorities to appeal to the court to recognise any parties to a deal as related parties.

Talk to us

It’s clear there has been a lot of movement in the accounting and tax field in the Ukraine. To help make sure you remain compliant, it’s best to work with a local partner who can keep you informed and up-to-date on these changes.

Get in touch with our local experts to find out more about how these changes impact your Ukraine business.

Written by

Nataliia Afanasieva

Managing Director, Ukraine

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