Almost every day we observe how ordinary civilians and businesses are increasingly suffering from the aggressor’s shelling. And in general, since the beginning of the full-scale invasion, the war has made radical adjustments to the lives of every Ukrainian and the work of businesses. Including many entrepreneurs who found themselves in a situation where production facilities were destroyed, access to offices was blocked, and documents were lost.
The State Tax Service (STS) reminds of a completely legal mechanism that allows taxpayers affected by the war to legally postpone their tax obligations without the risk of receiving a fine.
Who is entitled to “tax holidays”?
Current tax legislation provides for the possibility of obtaining a “tax break” for a wide range of entities. The following can temporarily avoid paying taxes with available supporting documents:
- Individuals , including citizens and self-employed persons (SEOs).
- Legal entities (residents and non-residents).
- Separate divisions of companies (branches, representative offices).
Special attention is currently being paid to businesses from frontline areas and those that have suffered damage as a result of the war, including the right to temporary exemption from the obligation to pay tax for those whose assets have been destroyed, occupied, or are located in a combat zone.
What tax obligations can be temporarily waived?
The above-mentioned entities, provided that they can provide documentary evidence of their inability to work due to the war, are also allowed to legally postpone the deadlines for:
- Payment of taxes and fees .
- Submission of reports (tax, financial and other required by law).
- Registration of tax and excise invoices in the relevant registers.
- Submission of electronic documents regarding the circulation of fuel or ethyl alcohol.
- Application of RRO/PRRO (exemption from fines for violating the procedure for their use).
How to get a discharge: step-by-step instructions
The procedure is regulated by Order of the Ministry of Finance of Ukraine No. 225 dated July 29, 2022. To take advantage of the benefit, you must complete the following steps:
Step 1: Submitting an application. The taxpayer must submit an application in any form to his/her controlling tax authority. This can be done either in person at the territorial unit of the State Tax Service, by mail, or through the Taxpayer’s Electronic Account .
Step 2: Collection of supporting documents. The application must be accompanied by evidence of the impossibility of fulfilling tax and reporting obligations. Depending on the situation, this may include:
- Fire or destruction reports from the State Emergency Service .
- Extracts from the State Register of Real Rights on property ownership.
- Extracts from the ERDR on the registration of criminal offenses (for example, regarding looting or shelling).
- Bank statements confirming the lack of funds.
- Documents proving stay in an occupation or combat zone.
Step 3: Waiting for a decision. The tax authority considers the application within 20 calendar days . In case of a positive decision, you will receive a deferral in fulfilling tax obligations and submitting reports. If the documents are insufficient, the authority may request additional materials within an additional 10 days.
What happens after a decision is made?
If the decision is positive, the deadlines for fulfilling the obligations are postponed to a date after the end of martial law or until the payer’s ability to fulfill his obligations is restored. In the event that the resumption of the payer’s activities is impossible due to the war, he receives a legal 6 months after the lifting of martial law to fulfill all deferred tax obligations.
An important nuance: if you have resumed the ability to work earlier, you are obliged to report this to the tax office. This must be done no later than 60 calendar days from the first day of the month following the month of the restoration of such ability.
Why is this important for business?
Official confirmation of the impossibility of fulfilling obligations is currently the only legal way to avoid paying taxes and other obligations of the payer, while avoiding significant fines and other sanctions. If this was not done, then for untimely registration of invoices or failure to pay taxes during the war, you will be legally held liable for violating tax obligations.
Important to note: If your business has suffered as a result of the war, this does not mean that you are automatically exempt from paying taxes. Each decision is made by the tax service individually, taking into account all the circumstances and the causal connection between the war and the work of a particular business or individual entrepreneur (IEO).
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