Significant changes to tax legislation continue. Introducing the "White Business Club"

Criteria for Joining the “White Business Club”

Without a doubt, this innovation could create significant competition among entrepreneurs. However, considering the specific conditions for inclusion as “special” taxpayers, not everyone will be able to gain the business advantages associated with this status.

The simultaneous compliance with the following requirements is mandatory:

1. Tax debt and/or arrears do not exceed 3,000 non-taxable minimum incomes of citizens, and no more than 30 days have passed since their occurrence.
2. Absence of arrears in the payment of the Unified Social Contribution (USC).
3. Compliance with the criteria depending on the chosen taxation system.

3.1. For those on the general taxation system:

The indicator of the corporate income tax payment level equals or exceeds the average indicator in the relevant industry for the last four quarters; The indicator of the value-added tax payment level equals or exceeds the average indicator in the relevant industry for the last 12 reporting (tax) periods; The indicator of the average monthly salary for the last four reporting (tax) periods is not less than the average salary in the relevant industry in the respective region, multiplied by a coefficient of 1.1, provided that the average monthly number of employees during the specified period is at least five persons.

3.2.Separately, for Diia City residents, the indicator of the tax payment level to the consolidated budget equals or exceeds the average indicator of the tax payment level to the consolidated budget of Diia City residents. 3.3. For those on the simplified taxation system and payers of the single tax of the third group, the indicator of the tax payment level to the consolidated budget equals or exceeds the average indicator in the relevant industry for the last four quarters, and the indicator of the average monthly salary for the last four reporting (tax) periods is not less than the average salary in the relevant industry in the respective region, multiplied by a coefficient of 1.1, provided that the average monthly number of employees during the specified period is at least five persons. 3.4. For individual entrepreneurs, the above norms apply together with the indicator of the level of personal income tax payment from business activities for the reporting (tax) year, which equals or exceeds the average indicator in the relevant industry.

4. Absence of facts of reporting and/or document (notifications) submission violations.

5. Absence of tax notifications-decisions regarding violations of the deadlines for settlements on export and/or import transactions during the last 12 months.

6. Absence of a decision regarding the taxpayer's compliance with the criteria of a risky VAT taxpayer.
7. Absence of an initiated procedure for the termination of a legal entity or the entrepreneurial activity of an individual entrepreneur.
8. Absence of a bankruptcy proceeding.
9. Absence of a decision regarding the application of special economic and other restrictive measures (sanctions) against the taxpayer and/or its founders (participants), ultimate beneficial owners.
10. Absence of citizenship of a state that carries out armed aggression against Ukraine among the taxpayer and/or its founders (participants), ultimate beneficial owners.
11. Absence of founders (participants), ultimate beneficial owners of the taxpayer, whose place of residence (location) is a state that carries out armed aggression against Ukraine.
12. Аbsence of changes in the main type of economic activity during the last consecutive 12 calendar months.

In case of compliance with the above criteria, the taxpayer will be notified about their inclusion/exclusion from the List of Taxpayers with a High Level of Voluntary Tax Compliance by sending an informational message through the electronic cabinet.

It should also not be forgotten that there is no specified time period during which the taxpayer will remain on such a List.

It is also important to note that there is no specific term for which a taxpayer will remain on this List. The law provides clear criteria for exclusion from the List of Taxpayers with a High Level of Voluntary Tax Compliance. If the controlling authority detects a fact of non-compliance with the criteria defined in points 9, 10, 11 of this article, such a taxpayer is excluded from the List of Taxpayers with a High Level of Voluntary Tax Compliance on the day such a fact is detected.

Current Changes Provided by Law No. 11084

This Law offers the following advantages:

1. The controlling authorities will not initiate:

On-site inspections regarding the licensing of activities related to the storage of fuel exclusively for own consumption and/or industrial processing. Certain types of unscheduled document inspections. Scheduled document inspections, except for inspections of taxpayers engaged in the production and/or sale of excise goods, organization and conducting of gambling in Ukraine, and taxpayers providing financial and payment services.

2. The duration of desk and documentary audits of the taxpayer is 5 and 10 working days, respectively, concerning claims for VAT refund amounts submitted during the period of inclusion in the List.
3. Individual tax consultations are provided within 15 calendar days, without the possibility of extending the review period.
4. Assignment of a compliance manager to the taxpayer.
5. The taxpayer receives, upon request, within five days, information on the tax data available to the controlling authority that may indicate tax risks in the taxpayer's activities, as well as consultations on eliminating such risks.

We expect this law to come into force on 1 August, 2024.

For additional information, please contact Vasyl Andrusyak, Partner, Head of Tax Practice, v.andrusyak@moris.law