Taxes - EU4PFM

Alignment with EU legislative/administrative framework in taxation:

Detailed list of EU legislation with recommendation on priorities for compliance with EU acquis on taxes is provided;
Main operational (IT) solutions operating in EU tax domain were presented and demonstrated in practice during the study visits to the Lithuanian and the Slovak Tax authorities;
The workshops were organized and recommendations on the implementation of the following legal acts were provided:
EU practice on application digital solutions to combat VAT fraud;
administrative cooperation and combating fraud in the field of VAT within the EU the practice of the implementation and application of the Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of VAT;
Council Directive (EU) 2020/262 of 19 December 2019 laying down the general arrangements for excise duty and relevant Commission Regulations concerning Tax warehousing;
EU practice on taxation and control over the use of raw materials from which excisable goods are produced;
on the preparatory stages and aspects that must be paid attention to when the country joins the computerized system of control over the movement of excise goods (Excise Movement and Control System, EMCS);
provisions of the EU excise tax legislation concerning guarantees, refund and exemptions;
Practice of applying the decisions of the EU Court of Justice for the consideration of tax disputes and application of the IT solutions for the administration of tax disputes;
Methodological recommendations on the application of the decisions of the Court of Justice of the European Union (CJEU) for the tax control measures, consideration of taxpayers’ appeals and resolving tax disputes were developed;
Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (ATAD1), review of General Anti-Abuse Rule (GAAR) and practice of its application;
neutralizing effects of hybrid mismatches;
application of Controlled Foreign Company (CFC) rules laid down in the ATAD (comparison of the CFC Models A and B);
Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union (EU Minimum Taxation Directive);
Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States;
EU Code of Conduct on Business Taxation;
Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation known as “DAC 7”;
Practical implementation of the EU Directive(s)on Administrative Cooperation and OECD legal framework on exchange of information;
Practice of implementation of the OECD Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy.
A comprehensive analysis of the harmonization of Ukrainian legislation on VAT with the EU VAT Directive in accordance with the Association Agreement with the EU was carried out;
The Comparative tables on compliance of the Ukrainian legislation with the EU Directives on tax are under preparation/have been prepared ((2006/112/EC, 86/560/EEC, 2007/74/EC, 2008/9/EC, 2006/79/EC, 2020/262, 92/83/EEC, 92/84/EEC, 2011/64/EU, 95/60/EC, 2003/96/EC, 2003/49/EC, 2011/96/EU, 2017/1852, 2011/16/EU, 2010/24/EU);
A number of recommendations and assessments of international experts were provided concerning EU practice of the implementation and application certain provisions of the EU Directives;
Expertise is being provided for the development of the draft amendments to the Tax Code of Ukraine aiming at implementation of the EU acquis in tax area (aligning of VAT incentives, ATAD and DAC 7 implementation).

Implementation of the OECD standards on automatic exchange of information (AEOI) under CbC and CRS standards:

International experience was presented and recommendations were provided by international experts regarding the development of business processes in the tax administration, application of IT solutions, use of information obtained within the framework of AEOI for the purposes of tax control;
Recommendations on the implementation of AEOI in Ukraine were provided and support in the development of a roadmap for the implementation of AEOI was provided;
Guidance was provided in drafting legal and normative acts on AOI implementation;
CRS primary legislation was drafted and adopted by Parliament (Law № 2970-IX);
Draft CRS sub -legislation has been drafted and adopted (MoF Orders №№ 282 dated May 26, 2023; 468 dated August 30, 2023; 516 dated September 25, 2023; 656 dated November 24, 2023, 674 dated December 7, 2023; CMU Resolution N 1011 from September 19, 2023);
CRS MCAA notifications were developed and sent to the Global Forum;
CRS/CbC draft methodologies for IT deployment were developed;
Functional requirements for the development and implementation of the Automatic Information Exchange IT subsystem (CbC/CRS) were developed;
Automatic Exchange of Tax Information IT subsystem as a component of the International Automatic Exchange of Information IT system has been deployed;
Draft methodologies of the STS on CRS procedures have been developed ;
Draft STS CRS Compliance Strategy is being developed;
Workshops on practice of the CRS application for other institutions and associations were arranged;
Practical workshop on the RFI’s compliance with the new CRS due diligence and reporting requirements was held for the STS HQ and territorial bodies;
The arrangement of the two days workshop with the OECD experts on the CRS rules and procedures was supported;2 online trainings on the first CRS reporting were supported:

https://www.youtube.com/watch?v=nzDaZBcFCV8;

Support for the MoF was provided for the development of the letter explaining practical issues of the CRS application (16 guidelines and explanatory letters as well as the Draft generalized tax consultation);Support for the MoF was provided for the shooting the 4 videos to debunk key myths surrounding the CRS implementation;
The MoF and the STS were supported in supervision of Information security management assessment and Confidentiality and Data Safeguards Assessment conducted by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes;
The CDS Assessment Report on Ukraine was approved by Automatic Exchange of Information Peer Review Group (APRG) and by all GF member jurisdictions on June 26, 2024;
CbC sub -legislation is drafted and adopted (MoF Orders №№ 764 on CbC reporting dated 14.12.2020; 839 31.12.2020).

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Support for the improvement of the tax legal framework for the implementation of the EU/OECD practice in the field of taxation:

Methodological support was provided during the development and discussions of the provisions of the tax legislation on BEPS measures implementation;
Support was provided to the Ministry of Finance of Ukraine in the preparation of Generalized Tax Consultations on Taxation and STS Information Letters to taxpayers on new provisions of tax legislation implementing BEPS measures;
Recommendations were provided on the application of the “substance over form” principle, indirect taxation methods, distribution of responsibility;
Recommendations were provided on the implementation of EU practice on tax control measures for the informal economy, including e-commerce through electronic platforms, use of direct and indirect methods to reduce informal activity and practice on notification about violation;
Recommendations were provided on the application of indirect taxation methods: legislative provisions, court practice, as well as internal tax administration methodology on this initiative;
Recommendations were provided on the implementation of Mutual Agreement Procedures (MAP) and Advance Pricing Agreements (APA) practices;
Support was provided for the participation in the activities of the OECD Global Forum;
Expert support was provided to the Ministry of Finance of Ukraine during the review of the OECD Global Forum on the implementation of the Exchange of Information on Request (EOIR) Standard;
Legislation addressing OECD EIOR recommendations was drafted and adopted by Parliament in second reading;
Institutional capacity is built by financing access to international knowledge platforms and translation of documents;
A technical assistance was provided for the participation of the Ukraine’s representatives in the 16th Plenary Meeting of the Global Forum (Portugal, 2023).

Establishment of the tax risk management system:

High-level recommendations were provided on building a comprehensive tax risk management system;
Recommendations were provided on tax risk management functions, risk management strategy and risk identification methodology;
Tax Compliance Strategy was drafted and adopted;
Recommendations were provided on functional requirements and the structure of the Data Warehouse;
Support was provided for the development of functional requirements for Cash Register Information System (CRIS).

Introduction of electronic audit:

Recommendations were provided on the of electronic audit, its methodology and business processes within tax authorities;
Business processes review for the introduction of electronic audit was carried out;
Functional and technical requirements for electronic audit software were developed;
Methodological support and financing were provided for the development of the technical description of the standard audit file SAF-T UA. Find more information:
https://tax.gov.ua/baneryi/saf-t-ua/

Expertise is being provided for the development of draft SAF-T UA version 2.0;
E-audit methodology (audit tests) was developed;
the practice on national legislation, implementation of business processes and elaboration of the methodologies within the tax authority for the implementation of e-Audit tool were presented and relevant IT solutions e-Audit were demonstrated during the study visit of the STS officials to Lithuania.
IT system for the E-audit is being implemented.  Find more information:
https://tax.gov.ua/elektronna-zvitnist/xsd-viznachennya-shemi-xml/

Improvement of transfer pricing audit:

Support was provided in drafting of legal and normative acts on the application of the rules for ensuring compliance of the conditions of commodity controlled transactions with the arm’s length principle (MoF Order 19, from January 18, 2022; CMU Resolution №1221 from December 9, 2020, STS);
Business processes analysis of the control function of ensuring compliance with the conditions of controlled operations under the arm’s length principle was carried out;
Assistance was provided for elaboration of Technical requirements for IT system for the big data processing, transfer pricing risks assessment and identification;
IT system for the big data processing, transfer pricing risks assessment and identification is implemented.

Introduction of a centralized service model by modernizing the STS contact center:

Existing business processes of the STS Contact Centre and service centers were analysed;
Best international practice regarding the development of business processes of a contact center of the tax administration was presented and the recommendations of international experts were provided;
Based on the analysis and recommendations of international experts, the Concept of a New Service Model for taxpayers for the STS Contact Center and service centers was developed;
Technical requirements for the modernization of the STS Contact Center were developed;
A modern concept of Contact Center has been implemented, including the acquisition of state of the art IT equipment and software;
A comprehensive communication campaign has been conducted to promote a services of the modernized Contact Center;
Draft Concept on Service Quality Measurement was developed (for modernized Contact Center).

Introduction of electronic cash registers:

Assistance was provided in drafting legal and normative acts on electronic cash registers;
Recommendations on the EU practice regarding the implementation of electronic cash registers, IT architecture and cash register operating procedures were provided;
Recommendations on the EU practice regarding the use of cash register data for risk management and tax control purposes were provided;
Recommendations on the EU practice regarding the legal regulation of cash registers’ operation were provided;
Guidance was provided for the development of new mobile cash registers application for IOS and web version and improvement of Android and Windows versions;
Technical requirements for the development new mobile cash registers application for IOS and web version and improvement of Android and Windows versions were elaborated;
Free mobile cash registers application for IOS and web and improvements of Android and Windows versions are developed;
A communication campaign to expand the scope of electronic cash registers application is being held;

Recommendations for communication of the tax administration on the implementation of electronic cash registers based on the best practices of Slovakia were prepared to be used in the communication campaign on electronic cash registers.

Find more information: https://tax.gov.ua/baneryi/programni-rro/

Creation of a single tax account:

Support was provided for drafting the sub-legislation on Single Tax Account introduction and operation;
Recommendations on the development of the operational model of the Single Tax Account and ranking algorithms were provided;
Support for preparation of functional and technical requirements for Single tax account general control module and technical requirements for modernization of the Tax Block for the accounting taxes paid on the Single tax account, broken down by territorial communities was provided.

Strengthening of tax disputes at appeal and litigation:

European legislative and judicial practice in taxation and tax disputes procedures as well as on the tax disputes prevention measures was presented;
Recommendations were provided regarding the procedure for resolving tax disputes through settlement agreement procedure and mediation;
Support was provided for the preparation of draft amendments to the legislation on improving the procedure of tax disputes;
Methodologies were developed for categories of cases in tax disputes;
Business processes review of the administrative appeal of tax disputes and their support in courts was carried out;

Functional requirements for the IT system for the administration of tax disputes at the stage of administrative appeal and court proceedings were developed and E-case IT-solution was developed.
Find more information: https://www.youtube.com/watch?v=eeYnabXsjT4

Improvement of the property tax administration:

Best international practices in the property tax administration were presented
Recommendations for improving the management of property taxes were provided

Improving the basis for the tax debt management:

Advanced international practice in the tax debt administration was presented;
Recommendations on improving the tax debt management were provided;
Draft functional and technical requirements for automatization of the administration of the tax debts have been prepared;
the practice on national legislation, implementation of business processes and elaboration of the methodologies within the tax authority for the optimization recovery of taxes function as well as relevant IT solutions for the debt administration processes automatization during the study visit of the STS officials to Lithuania.

Improvement of the excise duty administration:

Business processes review of the excise stamps administration was carried out;
Support was provided in drafting legal and normative acts governing the administration of excise stamps.

Ensuring a common approach to the tax legislation:

Assistance was provided to the STS in the preparation of STS Information Letters to taxpayers regarding the new tax legislation;
Assistance was provided to the Ministry of Finance of Ukraine in the preparation of Generalized Tax Consultations on the application of the tax legislation;
Business processes review of providing individual consultations was carried out.

Modernization of the electronic Cabinet of taxpayers:

A concept of the mobile version of the electronic Cabinet of taxpayers and proposals for expanding its functionality were developed.

Support for the transformation of the STS into a single legal entity which involves the improvement of internal procedures and the development of a new document management system (electronic document flow):

Business Process review of the STS’s document flow was carried out;
The functional requirements for the Electronic Document Management Software System were developed.