Changes to the tax invoice blocking system are approved. What businesses should prepare for?
On March 22, Ukraine should introduce a new system for blocking VAT invoices automatically. That is three weeks later than planned, but the State Fiscal Service claims the new procedure will be more effective and reliable. The amendment draft has been already approved by the Resolution No. 117 of the Cabinet of Ministers of Ukraine. But what businesses should prepare for?
Let us find out how the new verification will work
There will be multiple verification stages for tax invoices. At first, a taxpayer will be subject to verification and then – taxpayer’s transactions. That said, there will be the third stage – tax record.
And here comes the most interesting part: There are no risk assessment criteria approved for each level by now. We know for sure there will be such criteria but no details at this point. At least the State Fiscal Service claims that the proof of concept is already complete and being approved by the Ministry of Finance. The Ministry, however, provided no information on this matter. The State Fiscal Service informs that the document is planned to be approved this week. Such an uncertainty is suspicious since there is not much time left before March 22.
Other details to bear in mind
Even though the amendments are ill-considered, some of them are noteworthy.
First of all, the tax history peg raises some flags. Introducing this criterion means the system performance will depend on tax examiners and on how will they verify taxpayers. To make this system truly worth the effort, the verification criteria will have to be refined down to last detail and eliminate abuse opportunities. Can someone give such guarantees in the Ukrainian realities? We doubt it. Let us remind you that the Ministry of Finance did not support the idea of pegging the tax history and a greater role of tax officers’ in the registration of tax invoices. Its effort to modernize the tax invoice blocking system introduced in February, on the contrary, prescribed an ultimate automatic performance and liquidation of the human element. Given the above one can assume that the Ministry of Finance will not support the project of the State Fiscal Service and the system will be delayed. Even if the system is modernized, its operation subtleties will remain unclear.
Secondly, one should point out one more innovation noted in the resolution no. 117, a creation of e-register for blocked tax invoices/adjustment calculations. Taxpayers can use it to learn the reasons and current status of blocked documents. This register will launch on March 22 and will run in a test mode over the first months. According to the resolution, tax invoices suspended from March 22 will not enter the register. It does not mean, however, they will not be deemed blocked. The State Fiscal Service plans to inform the holders of such invoices about new issues in writing.
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