On December 12, the first meeting of the expert council regarding the preparation of summarizing tax consultations took place. The first point on the meeting’s agenda referred to the banking sector. Clarifying the issues of the banking sector will help improve the quality of the credit portfolio of the Ukrainian banks through the removal of tax hurdles in the processing of bad loans which result in the ambiguous interpretation of tax regulations.
What’s it about?
The most frequent tax issues challenging Ukrainian banks include the write-off of debts, consolidation of bank reserves and notification of debtors about debt relief or debt cancellation.
Tax consultations are expected to deliver answers on haw banks should handle bad loans while improving the quality of their credit portfolio and avoiding possible additional taxation. It is the lack of clear solutions for debt restructuring, write-offs or debt relief which causes additional tax load for such transactions.
Hence, these solutions are, first of all, needed for the Ukrainian banking sector. Representatives of the IMF and the World Bank also repeatedly stressed the necessity to approach the above issues.
However, the banking sector is not the only area where a lot of questions remain to be cleared. Ambiguous tax regulations result in numerous administrative and court disputes between taxpayers and tax authorities. Summarizing tax consultations deliver an effective tool which makes it possible to reduce the number of reasons for such disputes significantly. Taking into account numerous requests, the Ministry of Finance selected the most critical questions based on proposals from the Parliament’s committee for tax and customs policy, the State Fiscal Service and leading business associations. Following that, priority questions were selected which need to be clarified – those questions concerned the highest number of taxpayers and the highest taxable amounts.
For consultations, the Expert Council was established which consists of representatives of the Ministry of Finance, the State Fiscal Service, business associations and the business ombudsman.
The Expert Council is a permanent advisory and consulting body at the Ministry of Finance which serves as a platform to discuss tax issues which need to be clarified through summarizing tax consultations.
What comes next?
The Ministry of Finance will be making efforts to provide summarizing tax consultations in an effective and fast way.
“We are working to prepare explanations on disputable issues in the tax regulations through summarizing tax consultations. We hope that acknowledged experts for tax affairs as well as representatives of business associations and the business ombudsman participating in the Expert Council will contribute to making summarizing tax consultations transparent as well as ensure high-quality expertise and the quality of such consultations”, Minister of Finance Oleksandr Danyliuk said.