More and more of our clients are now having to deal with the suspension of registration of their VAT Bills with the Unified Register of VAT Bills (the “Unified Register”) and/or subsequent refusal by the Ukrainian fiscal authorities to register them with the Unified Register.
The suspension of registration of VAT Bills or the refusal to register those with the Unified Register became possible due to the amendments which were introduced to the Tax Code of Ukraine in the end of 2016. Following these amendments, starting from 1 July 2017 the Ukrainian tax authorities became entitled to block or reject registration of the VAT Bills in the Unified Register. This can occur if in the view of the State Fiscal Service of Ukraine (“SFS”) the VAT Bill falls under the risk criteria defined by the Ministry of Finance of Ukraine.
In case of blocking the registration of a VAT Bill, the taxpayer will normally be notified thereof electronically (via an electronic receipt) by the SFS. Following such notification, the taxpayer can appeal such SFS’s decision either with the relevant Commission of the State Fiscal Service of Ukraine (the “Commission”) under the applicable administrative procedure or apply to court. Currently however, all our clients prefer to proceed with the review of these matters under the administrative procedure at the SFS rather than to apply for a court decision.
In order to achieve de-blocking of any suspended VAT Bill through the administrative procedure, the taxpayer must file a complete set of proper documents and information supporting any relevant VAT Bill and file such information with the Commission. It is not uncommon that the taxpayer will be required to provide certain additional explanations to the SFS that can clarify whether any blocking criteria actually apply in the context of any particular situation especially if the Commission refused to register any suspended VAT Bill at the first stage of its review.
We can carefully analyse any particular rejection of registration of VAT Bills by the SFS and advise you on all issues relevant to and assist you further with the filing of the supporting documentation for review with the Commission as well as recommend you how to mitigate or remove such risks entirely in the future.
Current market practice indicates that it can be counterproductive to argue during the administrative procedure whether the existing VAT Bills blocking procedures actually comply with the laws of Ukraine. In our experience it would be more appropriate to save these questions for court, as the case can be. Instead, initiation of the administrative procedure with the SFS’ Commission would appear to be a more effective method for the resolution of the issues affecting registration of VAT Bills with the Unified Register as compared to very likely a lengthy review in court.