tax reliefs

Ukraine Combats Coronavirus  

Tax reliefs and labor regulations in Ukraine  

by Crowe Ukraine National Association
tax reliefs

Tax reliefs and regulations

The moratorium on the application of penalties for violations of tax legislation during the period 01.03.2020-31.05.2020, except for several ones, in particular, violations of accrual, declaration, and payment of VAT, excise tax, rent.

Please note the following:

- the above incentives should apply to penalties for late registration of VAT-invoices;

- this moratorium does not exempt from penalties for violations of non-tax legislation

The moratorium on the conduct of tax audits for the period from 18.03.2020 to 31.05.2020, except for the audits aiming at confirmation of VAT refund). In this case:

- scheduled inspections, that fall in the period of moratorium, are not canceled, but should be delayed to another period (will be published in the updated schedule);

- inspections initiated before 18 March should be put on hold till 31 May 2020;

- moratorium for the period from March 18 through May 18 is also introduced for the audits over mandatory social contribution;

 Also a moratoriums on carrying out non-tax audits in the various areas of economic activities have been set. 

The extension of the period for submitting of Individuals revenues’ declaration until July 1, 2020. The payment of tax arrears  postponed until October 1, 2020.

The land tax shall not be assessed by individuals or legal entities using the land for economic activities during the period of  the moratorium. Non-residential real estate owned by individuals or legal entities will not be a subject to real estate tax from 01.03.2020 to 30.04.2020.  The tax audit and accrual of tax liabilities (Article 102 of the Tax Code) shall be postponed  from March 18 to May 31, 2020;

 The exemptions for mandatory social contribution for the certain tax payers (mainly entrepreneurs) are introduced. The restrictive measures/requirements for the fiscal control over cash payments are delayed for three months. Penalties for non-compliance in area of the fiscal control over cash payments are reduced.

 Labor issues

The introduction of quarantine in Ukraine entails the need to rearrange working hours of many companies. Not only should the employer decide what measures will be taken by him but also formalize this decision properly to avoid violations of labour legislation. These can be:

- Idle mode - allows entity to regulate the employment of individual units or companies as a whole. Since such an idle mode is not due to the fault of the employee, it is paid in the amount of 2/3 of the official salary. The period of idle mode is not limited by law.

pay leave (basic or additional) is possible only under the application of the employee and could not last more than the term settled by legislation and unused part of the leave.

No-wage leave is also possible upon the application of the employee and only for the quarantine period.

the transfer of workers to remote (home) work for the period of quarantine - allows keeping employment and workers' wages.

The introduction of quarantine in the company, measures for the protection of workers from infection should be reflected in the company's occupational work and safety documents (for example, purchasing disinfectants, instructions on sanitizing hands, working surfaces, etc.) to reduce the risk of bringing the employer to liability for violations in the field of labor protection.

Contract obligations. Recognition of COVID-19 as a force majeure

 Given the introduction of quarantine from March 12 to April 3, 2020 on the territory of Ukraine and the introduction of restrictions defined by the resolution of the Cabinet of Ministers of Ukraine on March 11, 2020 No. 211 «On preventing the spread of coronavirus COVID-19 in Ukraine», there is an issue of recognition of the quarantine as a force majeure. The party to the contract that refers to force majeure shall apply to the competent authority of the country in which such circumstances arose, and obtain the relevant document (certificate or license), for the possibility of presenting it to the counterparty according to the terms and conditions of the contract.

The certificate of Chamber of Commerce and Industry can be obtained in Ukraine in order to proof the circumstances which refer to the impossibility of fulfilling the obligation under the contact.