Tax reporting on value added tax (hereinafter - VAT) requires special attention, as even minor violations in its preparation can have serious consequences for the payer. The legislation clearly defines the requirements for filling out declarations, the procedure for self-correction of errors, and liability for violations. What risks and penalties may arise in the event of submitting reports with errors and how to avoid them, read below.
General requirements for preparing tax reports
In accordance with item 36.1 of the Tax Code of Ukraine (hereinafter - the Tax Code), a tax obligation is the obligation of a taxpayer to calculate, declare and/or pay the amount of tax and fee in accordance with the procedure and terms specified by the Tax Code and customs laws.
General requirements for preparing tax reports are defined in Article 48 of the Tax Code, which, in particular, stipulates that the tax declaration must contain the mandatory details provided for in Articles 48.3 and 48.4 of the Tax Code of Ukraine, and must also be signed.
According to item 48.7 of the Tax Code, tax reporting prepared in violation of the norms of Article 48 of the Tax Code of Ukraine is not considered a tax return, except in cases established by item 46.4 of the Tax Code.
The liability of taxpayers is defined in Chapter 11, Section II of the Tax Code.
Liability for violation of VAT legislation
For violations of laws on taxation and other legislation, the control over compliance of which is entrusted to regulatory authorities, the following types of legal liability apply: financial, administrative, and criminal (item 111.1 of the Tax Code).
The procedure for filling out and submitting tax reports on value added tax was approved by Order of the Ministry of Finance No. 21 of January 28, 2016 (hereinafter - Procedure No. 21).
The taxpayer independently calculates the amount of tax liability, which he indicates in the tax reporting. The data specified in the tax reporting must correspond to the data of the taxpayer's accounting and tax records (item 6, Section III of Procedure No. 21).
In accordance with item 20, Section III of Procedure No. 21, after submitting a declaration for the reporting (tax) period, the taxpayer has the right to submit a new declaration with corrected figures before the deadline for submitting a declaration for the same period.
At the same time, in accordance with item 50.1 of the Tax Code, if in future tax periods (taking into account the limitation periods specified in Article 102 of the Tax Code), the taxpayer independently (including based on the results of electronic verification) detects errors contained in the previously submitted tax return (except for the restrictions specified in this article), they are obliged to send a clarifying calculation to such tax return in the form valid at the time of submission of the clarifying calculation.
At the same time, if the fact of underpayment of tax liability is detected, the taxpayer must pay the amount of the underpayment and a penalty of 3% of such amount before submitting a clarifying calculation.
Item 120.2 of the Tax Code stipulates that failure by a taxpayer to comply with the requirements stipulated in paragraphs 3–5 of item 50.1 of the Tax Code regarding the conditions for independently making changes to tax reporting in terms of independently calculating and paying the fine stipulated in this item entails the imposition of a fine in the amount of 5% of the amount of the self-assessed understatement of tax liability (underpayment) and/or other liability, control over the payment of which is entrusted to the regulatory authorities.
If the taxpayer independently adds additional amounts of tax liabilities and/or other liabilities, the control over the payment of which is entrusted to the regulatory authorities, in compliance with the procedure, requirements and restrictions provided for in Article 50 of the Tax Code, the fines provided for in this Chapter 11 of the Tax Code shall not apply.
At the same time, in accordance with point 69.38 item 69 section, 10 chapter XX "Transitional provisions" of the Tax Code, temporarily, for the period from August 1, 2023 until the termination or cancellation of martial law on the territory of Ukraine, introduced by Decree of the President of Ukraine "On the introduction of martial law in Ukraine" No. 64/2022 of February 24, 2022, approved by Law of Ukraine "On Approval of the Decree of the President of Ukraine "On the Introduction of Martial Law in Ukraine" No. 2102-IX of February 24, 2022, in the event of independent correction by the taxpayer in compliance with the procedure, requirements and restrictions specified in Article 50 of the Tax Code, of errors that led to an underestimation of the tax liability, such a taxpayer is exempted from the accrual and payment of penalties provided for in item 50.1 of the Tax Code, and fines.
In accordance with item 123.1 of the Tax Code, the taxpayer's commission of actions that resulted in the determination by the controlling body of the amount of the tax liability and/or other liability, the control over the payment of which is entrusted to the controlling bodies, a reduction in the amount of the budget refund and/or the negative value of the taxpayer's VAT amount on the grounds specified in subparagraphs 54.3.1, 54.3.2 (except for cases of reduction in the amount of personal income tax declared before the refund from the budget in connection with the exercise of the right to a tax discount), 54.3.6 of the Tax Code, entails the imposition on the taxpayer of a fine in the amount of 10% of the amount of the determined tax liability and/or other liability, the control over the payment of which is entrusted to the controlling bodies, of the overstated amount of the budget refund.
Actions provided for in item 123.1 (except for actions provided for in item 123.21) of Article 123 of the Tax Code, committed intentionally, entail the imposition of a fine in the amount of 25% of the amount of the specified tax liability and/or other liability, the control over the payment of which is entrusted to the regulatory authorities, of the overstated amount of budget compensation (item 123.2 of Article 123 of the Tax Code).
Actions provided for in item 123.2 of the Tax Code, committed repeatedly within 1095 calendar days, entail the imposition of a fine in the amount of 50% of the amount of the specified tax liability and/or other liability, the control over the payment of which is entrusted to the regulatory authorities, of the overstated amount of budget compensation (item 123.3 of Article 123 of the Tax Code).
