Tax reform: how the fines for late registration in URTI have changed

Law of Ukraine “On Amendments to the Tax Code of Ukraine to Improve Tax Administration, Eliminate Technical and Logical Inconsistencies in Tax Legislation” No. 466-IX of January 16, 2020 (hereinafter – Law No. 466) changes the approaches to determining fines for late registration in URTI. What VAT payers need to know about this – below.

Law No. 466 outlined in a new version:

• the first paragraph of item 120¹.1 of the Tax code of Ukraine (hereinafter – Tax Code) (contains fines for violation of terms of registration in the Unified register of tax invoices and adjustment calculations to them (hereinafter – URTI) in the amount of 10 to 50% of the value added tax (hereinafter – VAT);
• item 120¹.2 of the Tax Code (establishes fines for non-registration of tax invoices/adjustment calculations (hereinafter – TI/AC) in URTI, specified in the tax notice-decision (hereinafter – TND), drawn up based on the results of the inspection of the controlling body.

As a result, the specified norms do not apply to “special” TI/AC i.e.:

• “preferential” TI/AC (drawn up for transactions for the supply of goods/services that are exempt from VAT);
• “zero” TI/AC (drawn up on transactions that are taxed at a zero rate);
• “compensatory” TI (compiled in accordance with item 198.5 of the Tax Code) and AC to them;
• “distributive” TI (compiled in accordance with Article 199 of the Tax Code) and AC to them;
• which reach the Ministry of Defense TI (compiled in accordance with paragraph 11 of item 201.4 of the Tax Code).

Thus, the standard fines for late registration (non-registration) do not apply to the specified TI/AC.

But don’t get to excited. Instead, item 120¹.2 of the Tax Code has been supplemented by a new separate fine for non-registration of specified TI/AC in the URTI.

The amount of fine is:

• for violation of the deadlines for registration in URTI of the specified TI/AC – 2% of the volume of supply (excluding VAT), but not more than UAH 1,020, in case of registration in URTI:
• for non-registration of the specified TI/AC – 5% of volume of delivery (without the VAT), but no more than UAH 3 400.

However, a fine is imposed only on those TI/AC that were specified in the TND, drawn up based on the results of the inspection of the controlling body.

And that's not all. In the subdivision 2 of chapter XX of the Tax Code the legislators have decided to apply these fines to the “old” TI/AC, which are mentioned above (item 72, subdivision 2, chapter XX of the Tax Code). But this applies only to TI/AC, drawn up in the period from January 1, 2017 to December 31, 2019, under which the tax authorities as at May 23, 2020 imposed a fine for late registration, and for today these decisions are being appealed.

The fines provided for in item 120¹.3 of the Tax Code for errors in the mandatory details of the TI remains the same.