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Finance Business Service

Ministry of Finance Reforms Institution of Financial Liability for Tax Violations


Recently the Ministry of Finances of Ukraine, together with the experts from the interactive tax platform TaxLink, has developed a bill “On Amendments to the Tax Code of Ukraine regarding the improvement of the prosecution system for violation of tax laws”. The essence of the document is to reform the liability for tax violations provided by the current legislation.

First of all, the bill introduces more effective mechanisms for the settlement of tax disputes in cases when the violation of tax law happened not due to the fault of the payer. In addition, it is proposed to introduce the principle of fault liability of taxpayers which is inherent in all branches of Ukrainian legislation, in contrast to the current liability of the payer without fault. Therefore, the last one will be considered guilty if found guilty that he was able to comply with the relevant rules and regulations, but did not take the necessary measures for this. In this regard, when considering the verification materials by the supervisory authority, the documents of the taxpayer may be subject to the examination that show his due diligence.

Another significant innovation is the introduction of the system of mitigating circumstances and circumstances that release from liability for violation (for example, failures of electronic reporting systems).

The bill also provides for the introduction of a clear mechanism of compensation by the state for unlawful decisions of supervisory authorities with the possibility of application of a simplified procedure. Thus, in the case if an injured person has difficulties in proving the amount of actual damage caused, he can receive a reimbursement in a fixed amount.

An essential change is significant expansion of the requirements for the content of the tax notice-decision. Its integral components should be a detailed statement of properly confirmed facts of the case and justification of its motives by the supervising body for applying sanctions to the taxpayer.

The ultimate version of the bill will be ready after the modification taking into account the international experience, which the appropriate working group established under the Ministry of Finance is currently working on.

Ролан Бондарец
Lawyer in tax disputes
Finance Business Service