Forecasts in the tax area 2024

Similar adaptability was demonstrated by Ukrainian tax legislation, which underwent numerous changes throughout the year. The main changes included the resumption of certain types of inspections and the cancellation of several tax privileges. For a country facing a funding shortage, such measures appear entirely logical and justified. However, taxpayers' claims about the lack of clarity and predictability regarding the fiscal landscape, that significantly impacts business operations.

A separate cause for concern was the frequent and not always justified involvement of law enforcement agencies in investigating episodes of probable violations of tax discipline. If the dynamics and methods of operation of law enforcement agencies do not change, businesses will have fewer incentives to continue their activities in Ukraine, especially if there will be an option to relocate to neighboring countries with less pressure on entrepreneurs.

What we expect from the coming year:

It is reasonable to assume that two trends will dominate in the fiscal sphere next year - tax audits and transformational processes related to increasing tax transparency.

Regarding audits, the lifting of the moratorium on their conduct, combined with the fiscal authorities' right to audit periods from 2017 to the present, creates a volatile mix, the consequences of which even conscientious taxpayers are wary of. Potentially large amounts of tax assessments that will have to be contested in courts for years will drain resources from business development to its defense and preservation. In this context, we advise taxpayers to review their activities and identify problematic areas to work with before an audit is conducted. During the conduct of control and audit events, it is essential to ensure proper procedural interaction with inspectors, which can significantly impact both the results of the audit and the opportunities for successful defense of the position in court.

When we discuss tax transparency, a wide range of legislative changes is implied, including automatic exchange of information between countries, the full effect of already introduced rules regarding controlled foreign companies, etc. These changes make it impossible to use aggressive tax optimization schemes of past decades and hide assets in offshore zones. We have been working with clients for a long time to determine optimal business operation and asset ownership models aligned with their lifestyle and implement these changes in their lives. Such restructuring efforts are often quite labor-intensive and time-consuming, but inaction will cost much more given the potential fines and other claims from regulatory and law enforcement agencies. Therefore, we assume that in 2024, when careless taxpayers will fully feel the consequences of their passivity for the first time, there may be a sharp increase in demand for services in this segment.

This year may also be significant for virtual asset owners, as, in case of the parliament adopting already developed draft laws, this activity will receive proper legal regulation and likely emerge from the shadows. However, like any process of delimitation, it can be challenging and unpleasant.

It is also worth noting a certain positive trend in the growth of the tax culture among Ukrainians, some of whom are only now beginning to understand that patriotism includes, among other things, paying taxes. Therefore, we will make every effort to facilitate a dialogue between taxpayers and the state, aiming to transition their relationship into a partnership status.