he Law of Ukraine # 63-VIII “On Amendments to the Tax Code of Ukraine concerning the Features of Corrections to the Tax Liabilities of Corporate Income Tax and Value Added Tax in the Case of Application of the Tax Compromise” took force of 17 January 2015 (the respective law was adopted by the Supreme Council of Ukraine on 25 December 2015).
The above law introduces a regime of “tax compromise”. It regulates a mechanism for adjusting tax liabilities on Corporate Income Tax (hereinafter – CIT) and Value Added Tax (hereinafter – VAT).
According to the legislation, taxpayers can voluntarily submit a corrected calculation of their tax liabilities on CIT and/or VAT for any tax periods prior to 01 April 2014 and in doing so, only a 5% of their stated tax liabilities shall be payable whilst the remaining 95% shall be deemed as settled.
The taxpayer can submit the application for the tax amnesty to the Fiscal Authorities within the period from 17 January 2015 till 17 April 2015 (within 90 days).
In its turn the Fiscal Authorities will review the application and inform the taxpayer accordingly; whether their tax compromise has been accepted or whether an additional audit is required (the taxpayer is notified within 10 business days).
Thus, the taxpayer is obliged to proceed with a payment in the amount of 5% of the tax liabilities indicated in the application or to be assessed during the conducted audit within 10 business days following the day of receiving the notice from the Fiscal Authorities.
Moreover, according to the amnesty mechanism, the legal responsibility for a tax understatement (i.e. financial, administrative and criminal responsibility) is not applied to taxpayers.
Once the tax liabilities are duly paid by the taxpayer, a tax compromise is deemed to be achieved.