Rada Supported Tax Audits Renewal, Strengthening of Financial Monitoring of PEPs

Verkhovna Rada Preliminarily Supported Tax Audits Renewal

On 17.10.2023, the Verkhovna Rada adopted in the first reading amendments to the Tax Code of Ukraine, among others, suggesting to cancel the moratorium on tax audits (Draft Law No. 10016-д).

However, according to the Ministry’s of Finance’s statement, the Draft Law provides for a number of cases when tax audits will not be carried out and establishes certain criteria for selecting taxpayers for scheduled audits until 2024.

In particular, from 01.11.2023, it is planned to keep the moratorium on the following:

  • documentary audits of single tax payers of I and II groups – until 01.08.2024;
  • documentary audits of taxpayers whose tax address is in the temporarily occupied territories and territories of active/possible hostilities (with certain exceptions);
  • carrying out actual audits based on the location of taxable objects or tax-related objects located in the temporarily occupied territories of Ukraine and territories of active/possible hostilities (with certain exceptions).

At the same time, the list of scheduled audits to be held through 01.11.2023 – 31.12.2024 may include:

  1. taxpayers who carry out / carried out activities in the field of production and/or sale of excisable goods;
  2. taxpayers who carry out / carried out activities in the field of organization and conduct of gambling in Ukraine (gambling business);
  3. taxpayers who provide / provided financial and payment services;
  4. non-residents who carry out / carried out activities in Ukraine through separate subdivisions, including permanent representative offices and/or separate subdivisions, including permanent representative offices of a non-resident with a high risk degree;
  5. other taxpayers who, based on the indicators formed at the end of the 2021 calendar year, meet one of the criteria established by law.

At the same time, during the martial law, the audits may be held only in areas with safe conditions.

Verkhovna Rada Adopted Law on Strengthening of Financial Monitoring of PEPs

On 17.10.2023, the Verkhovna Rada adopted as a whole Draft Law No. 9269-д, amending the status of politically exposed persons (PEPs).

In particular, the Draft Law cancels the duration of the PEP status for three years after dismissal and introduces instead a lifetime PEP status for MPs, Supreme Court judges, members of the High Council of Justice and other top officials.

This means that the transactions made by such persons will be subject to audits not only for three years after dismissal, but for the entire life of an official.

In addition, the Draft Law strengthens the liability of financial institutions, including banks, for violating the requirements for identifying whether clients and other persons belong to PEPs, their family members, or other related persons – fines of up to 100 thousand tax-free minimum incomes (up to UAH 1,700,000.00) are provided.

Currently, the law is pending submission to the President of Ukraine for signature.