​The Ministry of Finance and the State Fiscal Service have jointly improved the criteria for the system monitoring risky tax bills

11/23/17

The Ministry of Finance and the State Fiscal Service work consistently to improve the system for the monitoring of VAT-related risks. On November 17, the order of the Ministry of Finance No. 926 entered into force which amends the criteria for the assessment of risks which are deemed sufficient to stop the registration of tax bills in the Unified Register of Tax Bills.

Why is it important?

The monitoring system for VAT-related risks was implemented to prevent VAT manipulations by non-diligent taxpayers aimed to evade taxes. It is an integral part of the automated VAT refund procedure which has been in operation since April 1, 2017. Under this procedure, 81.4 billion hryvnas have already been refunded to VAT-payers.

According to the new criteria:
• Automated acceptance of taxpayers’ charts from entities who tax burden is higher than 2% and the supply of goods or services captured in the Register since January 1, 2017, is over 25% of the total supply volume for the respective period;
• The SFS will be automatically calculating the data by the 10th day of each month, and taxpayers will have insight into these results in their electronic offices;
• Amendments have been adopted which makes it impossible to pursue manipulations with the “risky goods stock” (dependence of the allowed percentage of risky goods on the tax burden).

The correlation between risky goods and the tax burden is as follows:
Tax burden over 3% - allowed share of risky goods or services is up to 75%;
Tax burden is 2% to 3% – allowed share of risky goods or services is up to 60%;
Tax burden is 1.5% to 2% - allowed share of risky goods or services is up to 50%;
Tax burden is 1% to 1.5% - allowed share of risky goods or services is up to 40%;
Tax burden is 0.5% to 1% - allowed share of risky goods or services is up to 30%.

What is the benefit?

· these amendments are aimed to tackle manipulations with primary financial documents whose participants want to evade monitoring and utilize fake tax credit schemes;
· the automated registration of process cards will significantly reduce the number of taxpayers from the real sector of the economy who are subject to monitoring.

For information:

1. The share of suspended tax bills has been reduced significantly - from 1.3% after the launch of the system to only 0.3% in the last months;
2. Since the launch of the risk monitoring system, the registration of 515.5 thousand tax bills/corrective calculations amounting 11.2 billion hryvnas has been suspended. This is equal to 0.54% of the total number of the tax bills submitted for registration (almost 97 million tax bills/corrective calculations with the VAT amounting over 566 billion hryvnas as per November 22);
3. So far, the responsible commission of the SFS has not yet violated the timeline for the examination of submitted tax bills;
4. In November, the number of process cards being examined by the SFS commission went down more than 4-fold and is equal to 2% of the total number. The SFS has already accepted more than 15,000 process cards from taxpayers representing the real sector of the economy.

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