Alexey Paliy,
lawyer, managing partner
Primary Advisors LLC

Main article
European restrictions on the use of offshore

Competent opinion
Possibility of voluntary declaration of assets by individuals – Law on tax amnesty
Peculiarities of tax credit formation
Circumstances that release from financial responsibility for committing tax offenses
Controlled foreign companies: taxation of retained earnings

Judicial view
Problems of proving the reality of business transactions: case law
Successful proof of the reality of business transactions
Appeal against the decisions of the tax authority to establish the absence of the taxpayer at the location

  1. On July 21, 2021, the Law “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Stimulating the De-Shading of Income and Improving the Tax Culture of Citizens by Introducing One-Time (Special) Voluntary Declaration of Assets Belonging to Individuals and Payment of One-Time Tax Fees” (in the text – the Law).
    This Law determines the procedure for voluntary declaration of income, due to which the property was purchased before 01.01.2021. If the declaration is not submitted, it is considered that all objects were purchased at the expense of which taxes were paid.
    The objects of declaration are income, due to which the property was purchased in Ukraine or abroad before 01.01.2021. The property includes: money in bank accounts; rights of claim; corporate rights worth more than UAH 400,000; residential real estate – apartments and / or property rights from 120 sq.m.; residential buildings, including unfinished, from 240 square meters.; non-residential real estate – from 60 square meters.; land plots – within the limits exceeding the norms of free privatization; vehicles with an engine capacity of more than 3 cubic centimeters or worth more than 400 thousand UAH.
  2. The following cannot be declared:
    a) income received in connection with the commission of corruption and other criminal offenses, except for tax evasion, currency violations and violations of antitrust law in terms of concentration (most likely, we mean those for which no criminal proceedings have been opened);
    b) assets in respect of which a pre-trial investigation or court proceedings have been opened in connection with tax evasion and violation of currency legislation (issues: when opened – not specified in the Law, may have meant as of the date of entry into force of the Law);
    c) cash that is not deposited in a special account in Ukraine or in an account abroad;
    d) assets in the territory of the aggressor State.
    The subjects of the declaration are natural persons – residents, as well as non-residents who were residents at the time of receipt of income or acquisition of the objects of the declaration. Declarants cannot be persons who had to submit declarations from 01.01.2005 in accordance with the Law on Corruption.
  3. The term of declaration provided by the Law is from 01.09.2021 to 01.09.2022.
    In order to determine the value of the objects of declaration are used nominal value, cost or market value (with who has the decisive word in determining the method of assessment – not specified).
    The law sets the following rates of declaration fee: 5% on property located in Ukraine; 7% – for property located abroad (after 01.03.2022 – 9%).
    The deadline for payment of the fee is 30 days from the date of submission of the declaration.
    The origin of income is not declared, but if it is cash in an account in a Ukrainian bank or income from the liquidation of a foreign company, then the rules of financial monitoring to determine the origin of funds apply. Assets within the declared amount may not be subject to inspection or criminal proceedings.
  4. It should be noted separately about the rules of additional tax liabilities based on the results of voluntary declaration:
    – the term of the in-house inspection of the State Tax Service of Ukraine is 60 days from the date of submission of the declaration;
    – in case of an arithmetic error, the tax authority may add a declaration fee in accordance with the established rate;
    – in addition, in case of establishment of the State Tax Service of Ukraine within 365 days from the date of filing a declaration of violation of the conditions of placement of funds in a banking institution, lack of documents confirming the value of the object of declaration, in case of failure to provide such documents and explanations inspection, while the assets specified in the declaration, the value of which must be confirmed (for example, the tax authority considers that it is not confirmed), are taxed at a rate of 18%.

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© LIGA Information and Analytical Center LLC, 2021
© LIGA ZAKON LLC, 2021

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