Companies sometimes find themselves in a situation where they can not timely pay the declared taxes due to lack of funds. The result is known − fine, penalty, tax lien... At the same time, the Tax Code of Ukraine (hereinafter − TCU) quite officially allows taxpayers to postpone the established term for taxes payment to a later one by instalment or deferral of monetary obligations or tax debt. How can this opportunity be used?
The procedure for deferring payment of taxes is prescribed in Art. 100 of TCU and regulated by the Procedure of instalments (deferral) of monetary obligations (tax debt) of taxpayers, approved by the order of the Ministry of Revenues and Duties of Ukraine of 10.10.2013, № 574 (hereinafter − Procedure № 574). It should be warn that it is not free. It is necessary to pay interests for the payment deadline postponing. The interests are charged by the supervisory authority in accordance with the rules similar to that for charging penalties: the amount of interest is equal to the size of 120% of the annual interest rate of the National Bank of Ukraine acting on the day of the decision of the supervisory authority on instalments, deferral of monetary obligations or tax debt.
Instalments, deferred tax debt do not exempt the taxpayer’s property from the tax lien.
What should a taxpayer do to defer the taxes payment?
First of all, he/she must apply with a written application to the supervisory authority at the place of his/her registration or at the place of registration of the corresponding monetary obligation (tax debt). The form of such a statement is given in Appendix 1 to Procedure № 574. The following should be indicated in the application:
- the amount of taxes, fees, penalties and fines, the payment of which the payer requests to defer (instalments);
- the term of such instalment (deferment);
- periods of payment.
At the same time, the amounts, the term of payment of which has not yet come, and the deadline for the payment of which has already expired, should be indicated separately.
A taxpayer, who applies to the supervisory authority with a statement on instalments, deferral of monetary obligations, is considered to have agreed the amount of such a monetary obligation.
However, the statement itself is not enough. It should be necessary added by the business case consisting of:
- a list of circumstances that indicate the existence of a threat of occurrence or accumulation of a tax debt, and evidence of the existence of such circumstances;
- analysis of financial condition;
- schedule of repayment of deferred (instalments) amounts;
- calculations of the forecast incomes of the payer, guaranteeing the fulfilment of the repayment schedule (para.3.1 of the Procedure № 574).
Thus, in order to receive instalments (deferment), it is not enough for the payer to have only desire. He/she must provide sufficient evidence of the existence of circumstances that indicate the existence of a threat of occurrence or accumulation of tax debt.
The list of such circumstances was approved by the Cabinet of Ministers of Ukraine of 27.12.2010, № 1235. Circumstances that are the basis for instalment and deferment of monetary obligations or tax debt are determined separately in it.
Grounds for instalments (deferment) of tax debt
So, quite justifiable grounds for instalment are considered to be the following:
- untimely provision or failure to provide budgetary allocations;
- threat of insolvency (bankruptcy);
- seasonal nature of production;
- the applicant’s implementation of the plan for the reorganization of its own production and/or changing its organizational structure, which leads (may lead) to a significant decline in production for a certain period;
- the applicant’s implementation of research, design, as well as socially oriented works, providing for the creation of jobs for the disabled people, environmental protection or technical re-equipment of own production, etc.
At the same time, it is determined by what specific documents each of such circumstances should be confirmed.
In turn, only the circumstances of force majeure, which can be caused by exceptional weather conditions and a natural disaster (hurricane, storm, closure of sea straits that occur on the usual sea route between ports of shipment and unloading, etc.) or unforeseen situations, which occur independently of the will and desires of the applicant (war, blockade, strike, accident) can be recognized as the grounds for deferment. Evidence of the existence of such circumstances is either the conclusion of the Chamber of Commerce and Industry (hereinafter − CCI), or the decision of the President of Ukraine to declare certain areas of Ukraine a zone of an emergency environmental situation.
Full powers of the CCI for certification of force majeure circumstances are determined by Part 3 of Art. 14 of the Law of Ukraine “On Chambers of Commerce and Industry of Ukraine” of 02.12.1997, № 671/97-ВР (hereinafter − Law № 671). According to Art.14-1 of Law № 671, the CCI and the regional CCIs authorized by it confirm force majeure and “issue a certificate of such circumstances within seven days from the date of the business entity’s application at cost price. The certificate of force majeure for small businesses should be issued free of charge”.
The tax authorities in the letter of the Ministry of Revenues and Duties of Ukraine of 01.07.2014, № 15472/7/99-99-25-01-17 during the ATO recommend to taxpayers, who have the possibility of late payment of taxes, fees (mandatory payments) or have no possibility to pay them due to unforeseen circumstances, to use the procedure for deferring monetary obligations (tax debt).
