Analysis of innovation as to registration of tax invoice/offset calculation
CHANGES IN THE TAX CODE TO FIGHT AGAINST TAXATION STRUCTURES
Currently, the most important issue for taxpayers is the question of registration of tax invoices and offset calculations, in other words, the refusal to register it by the Fiscal Service.
Since July 1 of this year, the electronic system of risk management at the administration of VAT has fully become operational and automatically began to stop the registration of risk tax invoices.
SUSPENSION OF TAX INVOICES AND OFFSET CALCULATION
According to the leadership of the Central Administration of the State Fiscal Service, today, the systemic problem, the niche, where it is still possible to build tax evasion schemes, the part of the enterprises of the real sector of the economy remains the so-called «misgrading» (carrying out questionable operations, as a result, a fictitious tax credit in connection with the acquisition and sale of goods / services of various nomenclature can be formed). Particularly, in order to combat this scheme, changes to the tax code have been introduced “related to the introduction of a system of automated monitoring of compliance of tax invoices / offset calculations with the criteria for assessing the degree of risk, sufficient to stop the registration of such tax invoices / offset calculations in the URTI(Unfiled Register of tax invoices).
Based on the essence of the value of VAT, and the peculiarities of its administration in Ukraine, it was and remains the most risk in terms of constructing tax evasion schemes. To the introduction of the system of electronic administration of VAT, there were schemes of so-called «tax holes», when enterprises were created, tax liabilities were formed, and then these enterprises were bankrupt and the amounts were not received in the budget. Later, unscrupulous taxpayers used the preferential tax treatment of agricultural enterprises, which was also corrected by the abolition of such privileges.
THE LAW OF TERMINATION OF TAX INVOICES REGISTRATION
On June 16, 2017, it was registered the Order of the Ukraine Department of Treasury №567 from June 13, 2017 «On Approval of the Criteria for Assessing the risk level, sufficient to stop the registration of a tax invoice / offset calculation in the unified register of tax invoices and the exhaustive list of documents sufficient to make a decision on registration of tax invoice / offset calculation in the unified register of Tax invoices» by the Ukraine Department of Justice .
TAX INVOICE MONITORING / OFFSET CALCULATION ARE CARRIED OUT BY THE SFS(STATE FISCAL SERVICE) TO THE FOLLOWING CRITERIA:
1) the volume of the supply of goods /services specified in the tax invoice filed for registration in the Register is 1.5 times higher than the amount equal to the balance of the difference in the supply of the goods /services specified in the tax invoices / offset calculations registered from January 01, 2017 in the Register, and the volume of purchase in the customs territory of Ukraine and / or import into the customs territory of Ukraine of the corresponding product, dated January 1, 2017, in the received tax invoices / offset calculations, registered in the Register, and customs their declarations, and the predominance in such a balance of goods with codes according to UCCS(Ukrainian Commodity Coding System), which are determined by the SFS, more than 75% of the total balance and the absence of the goods / services specified in the tax invoice filed for registration in the Register in the information provided by the taxpayer by the established form, as a product / service, which is constantly supplied (manufactured);
2) the absence (cancellation, suspension) of licenses issued by the licensing authorities certifying the right of a business entity to manufacture, export, import, wholesale and retail trade in excisable goods (products) specified in clauses 215.3.1 and 215.3.2 of clause 215.3 of the article 215 of Section VI of the Tax Code of Ukraine (then- the Code), concerning goods indicated by the taxpayer in the tax invoice filed for registration in the Register.
LETTER TO SFS TO CONSIDER THE TERMINATION OF TAX INVOICES REGISTRATION
The taxpayer of value added, registration of a tax invoice / offset calculation of which in the Unified register of tax invoices on the results of monitoring was stopped, it may submit written explanations and documents for consideration to the SFS Commission within 365 calendar days following the date of the occurrence of the tax liability reflected in such tax invoice / offset calculation of the explanation and / or copies of the documents specified in subparagraph “b” of item 201.16.1 of item 201.16 of article 201 of the TC(Tax Code) of Ukraine.
The explanation should be provided in the form of the Notification on the submission of documents confirming the reality of transactions for refused TI / OC in the established form. The message is generated for each separate tax invoice / offset calculation, the registration of which has been suspended in the URTI, and to such a notice, copies of documents are submitted as separate applications in the established form in PDF format (the size of each application should not exceed 2 MB).
The SFS commission considers such a statement of the payer and decides within 5 days whether this transaction does not contain a risk sign, and then the consignment note is registered, whether it is a risky invoice and it stops. Based on the practice that has developed to date, consideration of the payer’s application is carried out in two stages:
- The first one – consideration within 3 days by the appropriate commission authority of the SFS region (for example, the GD SFS of Kyiv), which, after analyzing the documents, explanations, tables and the so-called «business passport», gives its preliminary findings on the registration /refusal of registration of the TI / OC ;
- The second one – consideration within 2 days by the Commission of the SFS of Ukraine, which, based on the information provided by the payer and preliminary findings of the Commission SFS in the region, will eventually take one of the decisions, register or refuse to register the respective TI / OC.
TI /OC registration of which is stopped are registered on the day when the Commission decides on registration of the TI / OC, as well as on the day of the legal decision by the court to register the TI / OC (in case of receipt by the relevant court decision of the SFS).
LIMITING LIST OF DOCUMENTS ACCOMPANYING A DECISION ON REGISTRATION OF TI / OC IN THE URTI:
- for the criterion specified in subparagraph 1 of paragraph 6 of the Criteria:
- contracts, including foreign economic contracts, with annexes, correspondence with counterparties;
- contracts, powers of attorney, acts of the taxpayer’s governing authority, which authorizes the persons who receive the goods in the interests of the taxpayer for conducting the economic transaction;
- primary documents on the supply /purchase of goods /services, storage ,and transportation, loading, unloading of products, warehouse documents (inventory descriptions), including invoices, acts of acceptance and transfer of goods (works, services), taking into account the availability of certain typical forms and industry specifics, invoices;
- settlement documents, bank statements from personal accounts;
- documents confirming the conformity of products (declarations of conformity, certificates of quality, certificates of conformity), the availability of which is provided by the agreement and /or legislation;
2) for the criterion specified in subparagraph 2 of paragraph 6 of the Criteria:
- contracts, including foreign economic contracts, with annexes, correspondence with counterparties;
- contracts, powers of attorney, acts of the taxpayer’s governing body, which authorizes the persons who receive the goods in the interests of the taxpayer for the conduct of the economic transaction;
- primary documents on the supply / purchase of goods / services, storage and transportation, loading, unloading of products, warehouse documents, inventory descriptions, including invoices / invoices, acts of acceptance and transfer of goods (works, services), taking into account the availability of certain typical forms and sector specifics, invoices;
- settlement documents, bank statements from personal accounts;
- documents confirming the correspondence of products (declarations of correspondence, certificates of quality, certificates of correspondence), the availability of which is provided by the contract and /or legislation.
However, although the list of documents sufficient to make a decision on registration of TI / OC in the URTI, which is approved by the order of the Department of Treasury №. 567, is limiting, based on the current practice, taxpayers must with adhere to certain rules when preparing and submitting a package of documents for consideration by the DFS Commission, among which:
- Messages and copies of supporting documents should be provided exclusively in electronic form. According to SFS statements: «Those documents that are submitted to us electronically, require much less time to prepare the appropriate decision. For the processing of documents that are submitted in paper form, it takes more time because of their large volume. Therefore, we strongly ask you not to send unnecessary documents, as it will facilitate our work and allow us to respond in a timely manner to all appeals»;
- All fields of the message are mandatory;
- An explanation of the essence of the business transaction should be provided as a separate annex to the Message, with a volume not exceeding 1 sheet of printed text. The column for explanations in the Form Notice can contain a limited number of characters, which deprives the payer of the opportunity to provide exhaustive and reasoned explanations;
- The table part of the notice must be filled in accordance with the table part of the tax invoice / offset calculation (with the corresponding marks);
- It is necessary to submit only those documents, which testify to the reality of the operation for the refusal of the tax invoice. A significant amount of documents provided that are not related to operations on blocked invoices will only increase the time of consideration of the explanation of the payer, and in no case affects the decision taken by the controlling authority;
- It is necessary to provide a taxpayer table that will substantially reduce the number of those tax invoices that will be stopped. The table should contain only the codes of the UCCS and the codes of the KVED(Classification of Types of Economic Activity) which really correspond to the activities of the payer, on which the tax invoice was suspended. In one table it is necessary to specify not more than five UCCS codes in the section 1 KVED.
- In the event of a suspension of the offset calculation for the reduction of tax liabilities, the Message shall be submitted by the taxpayer – the seller, which is specified in the offset calculation and the tax invoice, which is adjusted.
COMPLAINT ON DECISION ABOUT REFUSAL IN REGISTRATION OF TAX INVOICE OR OFFSET CALCULATION OF VAT
In the event that the SFS Commission has made a decision to refuse registration of TI / OC, the payer has the right within 10 days after receiving such a decision, to file a complaint against the decision of the Commission to the SFS. In the case when the last day of the term falls on a day off or a holiday, the last day of such a term is the first working day, which comes on a weekend or a holiday. The term for filing a complaint may be prolonged according to the rules and on the grounds determined in paragraph 102.6 of Article 102 of the TC of Ukraine.
REQUIREMENTS FOR COMPLAINTS TO TERMINATE THE TAX INVOICES REGISTRATION:
The complaint is made exclusively in writing and is filed by the taxpayer personally or through his authorized representative directly to the SFS or sent by post.
The complaint must contain:
1) the name or surname, name, and patronymic of the taxpayer submitting the complaint, his tax address;
2) the tax number or series and the passport number;
3) details of the appealed decision of the SFS Commission;
4) information on the reasons for the disagreement of the taxpayer with the decision of the SFS Commission;
5) information about the appeal against the decision of the SFS Commission to the court;
6) the requirements of the taxpayer submitting the complaint;
7) the address where the decision should be sent which is taken as a result of the consideration of the complaint.
The taxpayer may add to the complaint explanations and copies of documents, certified in accordance with the established procedure, confirming the information specified in the TI / OC, to which the registration suspension procedure has been applied.
The complaint is signed personally by the payer who submits it, or by his authorized representative. If the complaint is signed by the authorized representative of the taxpayer, it shall be accompanied by an original or duly certified copy of the document certifying the powers of such a representative in accordance with the legislation.
The result of consideration of a complaint
The complaint of the taxpayer is considered by the Commission for the consideration of complaints within 10 calendar days from the day of receipt of such a complaint by the SFS and takes one of the following decisions:
- Complies with the complaint and cancels the decision of the SFS Commission;
- leaves the complaint without satisfaction and decision of the SFS Commission unchanged.
If a motivated decision on a complaint is not sent to the taxpayer within the time limit specified in paragraph 56.23 of Article 56 of the Tax Code, such a complaint is considered fully satisfied in favor of the taxpayer from the day following the last day of the specified period.
The satisfaction of the complaint is grounds for registration in the URTI TI / OC specified in the complaint, taking into account the requirements of clause 200-1.3 of Article 200 of the TC of Ukraine.
COMPLAINT OF THE TAXPAYER TO THE SFS COMMISSION ON THE ISSUE OF COMPLAINT CONSIDERATION
Please note that consideration of the complaint is carried out by a separate SFS commission, not the one that is considering the suspended tax invoices. According to the results of consideration by the commission, an appropriate decision is made – either about registration or confirmation of the decision to refuse in registration a tax invoice.
Currently, only about 30% of taxpayers complaints are met by the SFS Commission, the remaining 70% are non-existent.
The taxpayer’s complaint remains without consideration if an application for refusal of a complaint has been received by such a taxpayer for reviewing complaints to the Complaints Commission.
On leaving the complaint without consideration, the Commission for the consideration of complaints shall notify the taxpayer in writing, stating the reasons within 10 days from the day of receipt of such a complaint by the SPS.
The decision of the Commission on complaints is sent to the address indicated by the payer in the complaint, and in case of absence – to the taxpayer’s address of the payer taking into account the above term.
If a motivated decision on a complaint is not sent to the payer within the specified time, such a complaint is fully satisfied in favor of the taxpayer from the day that occurs on the last day of such a term.
The satisfaction of the complaint forms the basis for the registration of the tax invoices / offset calculations specified in the complaint in the URIT, taking into account the requirements of point 200-1.3 of Article 200-1 of the TC of Ukraine.
Further appeal The Commission’s decision on complaints cannot be subject to further administrative appeal and may be appealed against in court.
STATISTICS OF CONSIDERATION OF COMPLAINTS BY COMMISSION OF THE STATE FISCAL SERVICE
The State Fiscal Service of Ukraine emphasizes that artificially of August 2, 2017, the commission of the SFS has accepted for consideration almost 47.9 thousand tax invoices, which registration was suspended, from 5 thousand taxpayers. According to the results of the review, a decision has already been made on 16.5 thousand documents.
CAUSE OF REFUSAL OF TAX INVOICE REGISTRATION OR OFFSET CALCULATION OF VAT
Yes, positive decisions were made on almost 10 thousand tax invoices, it was refused in registration – 6,6 thousand. In the vast majority, the reasons of refusal to register – providing taxpayer copies of documents that are drawn up in violation of the law and /or are not sufficient for the adoption of the commission SFS decision on the registration of a tax invoice / offset calculation.
Among the payer’s tables which are sent to the SFS Commission, positive decisions were made on almost 8.7 thousand of them, the refusal was given on almost 5.6 thousand.
As a whole, as of August 2, 2017, in the Unified register of tax invoices, almost 20.4 million tax invoices / offset calculations were adjusted for almost 107.7 billion UAH in VAT refunds.From the total number of tax invoices / offset calculations, only 0.81% was suspended. Thus, in particular, on the first day of August, the number of suspended tax invoices amounted to only 0.34% of the total number of documents.