Draft Law Analysis:
Greetings. As a lawyer with many years of experience, I have analyzed the submitted draft law regarding amendments to the Tax Code of Ukraine concerning VAT administration. Below is a detailed breakdown of the key aspects of this document.
### 1. Essence of the Draft Law
This draft law is aimed at optimizing the VAT administration process through digitalization and simplifying reporting mechanisms for certain categories of taxpayers. The project introduces tools for the automatic generation of tax reporting for individual entrepreneurs (FOPs) based on RRO/PRRO data and the electronic cabinet. The document also reviews the criteria for scheduling unscheduled tax audits and clarifies the rules for compiling summary tax invoices. The overall goal of the changes is to reduce the administrative burden and increase the transparency of interaction between businesses and tax authorities.
### 2. Structure of the Project and Main Changes
The project introduces targeted yet systemic changes to Sections II (Administration) and V (VAT) of the Tax Code of Ukraine:
* **Expansion of Electronic Cabinet Functionality:** A mechanism for pre-filling tax returns and tax invoices for FOPs who are VAT payers based on data regarding settlement operations has been implemented.
* **Audit Regulation:** The threshold for conducting unscheduled documentary audits during VAT refunds or when declaring a negative value is being changed—the amount is increased from 100,000 UAH to 1,000,000 UAH.
* **Change of Tax Period:** For FOPs who are VAT payers, the reporting period is set as a calendar quarter (instead of a month).
* **Invoice Optimization:** The possibility of compiling summary invoices for buyers who are taxpayers during rhythmic supplies is excluded; however, a new right to compile summary invoices for buyers who are non-VAT payers is added.
### 3. Key Provisions for Stakeholders
These changes have practical significance for various groups of participants in tax legal relations:
* **For Business (FOPs):** The most important factor is the transition to a quarterly reporting period, which significantly simplifies the tax calendar. The ability to automatically fill out reports through RRO/PRRO data minimizes technical errors, although it places responsibility on the taxpayer for verifying this data before submission.
* **For Legislators and Experts:** Important is the increase in the amount that serves as grounds for an unscheduled audit (up to 1,000,000 UAH), which is effectively a measure of decriminalization or reduction of administrative pressure on medium-sized business entities regarding the control of VAT refunds.
* **For Tax Authorities:** The project details the requirements for electronic document management, consolidating the right of the controlling authority to affix a seal/signature on extracts from databases, and also grants the right to receive information about other taxpayers with their consent, which is a step towards counterparty transparency.
* **For Citizens:** These changes indirectly affect the quality of fiscal administration, as the automation of processes should reduce the number of conflict situations arising from discrepancies between data in tax invoices and reports.
Analysis of the Explanatory Note:
Greetings. As a lawyer with 15 years of experience, I have analyzed the submitted draft law. Below I provide structured information that will help you understand the essence and consequences of these changes.
### 1. Essence of the Draft Law
This draft law is aimed at optimizing VAT administration and simplifying tax reporting for individual entrepreneurs (FOPs). The document provides for the transition of FOPs to a quarterly reporting period, the introduction of partial auto-filling of tax reports, and a significant increase in the “threshold” for scheduling unscheduled tax audits regarding budgetary VAT refunds.
### 2. Reasons for Necessity
In the opinion of the author of the explanatory note, the key incentive is the fulfillment of Ukraine’s international financial obligations to the EU and the IMF (according to the Memorandums of May and July 2026). This is not just a matter of tax discipline, but a condition for receiving macro-financial assistance necessary for financing social expenditures and supporting infrastructure. In addition to international pressure, there is an objective need to reduce administrative pressure on businesses under martial law in order to free up resources for the state’s defense needs.
### 3. Main Consequences for Business, the State, and Experts
The most important changes for society and business circles are as follows:
* **For FOPs (VAT payers):** Radical simplification of reporting — transition from a monthly to a quarterly reporting period and automation (pre-filling) of tax invoices, which will significantly save time and administrative costs.
* **For business as a whole:** Increasing the threshold for scheduling unscheduled documentary audits regarding budgetary VAT refunds from 100,000 to 1,000,000 UAH. This is a significant step toward reducing the risk of “unexpected” audits for compliant taxpayers.
* **For accountants and operations:** Legalization of compiling summary tax invoices no later than the last day of the month when working with buyers who are non-VAT payers (including advance payments), which will significantly simplify routine work on document processing.
* **For the State and the STS:** An increase in the quality of service and the level of voluntary fulfillment of tax obligations is expected, as well as the optimization of the work of tax authorities, who will be able to focus on more significant tax risks rather than minor administrative procedures.
Thus, this law is primarily “technocratic” in nature: it reduces the bureaucratic burden on taxpayers while fulfilling the requirements of our international partners.
Analysis of Other Documents:
Greetings. As a lawyer with 15 years of experience, I have analyzed the materials provided regarding the draft Law of Ukraine “On Amendments to the Tax Code of Ukraine regarding the improvement of value-added tax administration.” Here is my analysis:
### 1. Position of the Document Author
The author of the draft law is the Cabinet of Ministers of Ukraine represented by Prime Minister Serhii Koretskyi, which indicates full official support for the initiative by the government. The government views this project as an important tool for modernizing tax administration, reducing the bureaucratic burden on business, and increasing the effectiveness of VAT control.
### 2. Main Provisions of the Draft Law
This document is a significant step toward the digitalization of relations between taxpayers and the state. The most significant aspects to pay attention to are:
* **Automation for FOPs:** The project proposes to implement in the Electronic Cabinet the function of pre-filling VAT returns and specific indicators of tax invoices based on data from RRO/PRRO. This will significantly simplify the life of businesses by minimizing technical errors when filling out reports.
* **Change of Reporting for FOPs:** A quarterly VAT reporting period is established for individual entrepreneurs. This is a logical simplification that will allow for a reduction in the frequency of contacts between FOPs and the tax service.
* **Optimization of Invoice Issuance:** Taxpayers are granted the right to compile summary tax invoices when supplying goods/services to non-VAT payers or upon receiving advance payments from them. This will significantly reduce document flow for the retail sector.
* **Review of Audit Criteria:** The grounds for unscheduled documentary audits when claiming VAT refunds or declaring a negative value have been clarified. The threshold of 1,000,000 UAH becomes a clear benchmark that limits unreasonable interference by controlling authorities in the activities of compliant taxpayers.
* **Regulatory Transformation:** The list of acts requiring review clearly indicates that the Ministry of Finance and the STS will have to update orders regarding reporting forms and the functioning of the Electronic Cabinet within 6 months. This is a signal for software developers and accounting departments to prepare for updating accounting systems.
Overall, the project looks like an attempt to balance the state’s interests in high-quality administration and the business request for simplifying VAT administration through modern technological solutions.
