On 21 April 2015 the Verkhovna Rada of Ukraine adopted Law of Ukraine No. 344 “On Amendments to Article 69 of the Tax Code of Ukraine regarding Simplification of Doing Business” (the “Law”) aimed at simplification of business activity in Ukraine.
The Law simplifies the procedure for registration with Ukrainian tax authorities when Ukrainian taxpayers (both companies and private businessmen) open accounts with Ukrainian banks, specifically via the following methods:
- The banks will be required to immediately notify the tax authorities on opening a taxpayer’s bank account. In contrast, currently the banks are required to send such notification by the next business day.
- A taxpayer will be entitled to start expense transactions via its bank account from the date the bank notifies the tax authorities without needing to wait for any confirmation in reply from the tax authorities (unless registration is denied). The tax authorities will be required to publish confirmation or denial of account registration on its website within one day. As a consequence, companies and private businessmen should be able to freely use their bank accounts from the day of opening. In contrast, currently any expense operations via bank accounts are allowed only once the bank receives the tax authorities’ notification of the account’s registration, and the tax authorities are required to send such notification by the next business day following notification from the bank.
Thus, the amendments to the account opening notification procedure will reduce the waiting period of several business days during which bank accounts cannot be fully used by taxpayers.
The Law also foresees a reduction of the term for value added tax registration from three business days to just one.
The amendments described above are in line with widely discussed and long anticipated overall deregulation of business activity in Ukraine. It is anticipated that the introduction of the above amendments will improve Ukraine’s position in the World Bank’s Doing Business 2016 report, particularly in the category of Starting Business.
The Law becomes effective on May 14, 2015.
It should be noted that further simplification is also expected in tax regulation in Ukraine. In particular, the Verkhovna Rada of Ukraine has recently passed the first reading of a draft law aimed at decreasing the tax burden on taxpayers in Ukraine by amending the rules on tax audits and tax assessment.