Now tax amnesty - a win-win topic for getting into the TOP news, which is used by media representatives. Government officials and ideologues of this project are actively invited to TV channels. However, the clarifications provided are still insufficient to draw generalized conclusions as to whether or not to take the opportunity to "whiten" their wealth.
We advise you to consider each situation regarding the submission or non-submission of a special declaration under the tax amnesty separately. It is necessary to carry out a preliminary analysis of previously received income to identify violations of tax legislation, as well as to assess the risks for a particular declarant, to weigh on the scales "pros" and "cons".
What is a tax amnesty and why was it introduced?
Tax amnesty Is a program to legalize assets acquired previously without paying statutory taxes. During the period from September 1, 2021 to September 1, 2022 any natural person (resident or former resident of Ukraine) may disclose information about his assets, from which taxes have never been paid before. Instead, such a person is guaranteed exemption from administrative and criminal liability under articles related to tax evasion.
Tax amnesty was introduced by Law №1539-IX on the introduction of one-time (special) voluntary declaration by individuals of their assets and payment of a one-time fee to the budget - the submission of the so-called "Zero declaration".
The ideologues of the tax amnesty justify the need for such a measure of "laundering of shadow income" for the following reasons:
- potential accession of Ukraine to the Common Reporting Standard (CRS) from September 2023, as well as bringing the legislation in line with global trends of deoffshorization - adopted "anti-offshore law" (antiBEPS) and "FATCA laws";
- In the near future, Ukraine plans to introduce stricter methods of monitoring citizens' compliance with tax legislation, in particular, the Ministry of Finance took 9 months from the entry into force of Law 391539-IX to develop a bill "on indirect methods of tax control."
Thus, ideally, individuals have the opportunity to prevent "meticulous attention" from the tax, honestly disclosing information about their property and savings. The state promises not to deal with the sources of origin of such wealth. This can be a salary "in an envelope", income from unregistered business, funds from work abroad or cryptocurrency trading, and so on. The main thing is that the assets are not of criminal origin.
What is taxable and at what rate?
Real estate and movable property, currency values, securities, corporate rights are subject to taxation. These are assets both in Ukraine and abroad. At the same time, the state automatically "forgives" (allows not to declare) an apartment up to 120 sq m, funds up to UAH 400,000 and so on.
Tax rate it depends on the following factors:
- where the assets are located - the rate on foreign assets is higher;
- when the declaration is filed - the lowest rates from September 1, 2021 to March 1, 2022;
- application of installments - the tax rate will be higher if the fee is paid in three payments by 2024.
Therefore, the tax rates are as follows:
- from 2.5 to 3% on funds, invested in bonds of Ukraine purchased from September 1, 2021 to August 31, 2022;
- from 5 to 6% for assets in Ukraine;
- from 7 to 11.5% for assets abroad.
Example. An individual wants to declare funds in the amount of 100,000 US dollars, which were previously kept at home. To do this, you need to: a) open a special account in the bank by filling out a questionnaire and a statement on the non-criminal origin of these funds; b) get a certificate from the bank, fill out an electronic declaration and send these documents to the tax office; c) pay within 30 calendar days a fee in the amount of USD 5,000 (in hryvnia equivalent) or within three years make three payments of USD 2,000 (in hryvnia equivalent).
Possible consequences of not submitting a "zero declaration"
It's just that now there are no consequences of not submitting a special declaration under the tax amnesty. Whether or not to use this legislative means of "bleaching" assets, everyone decides voluntarily.
However, the consequences may occur after the introduction of indirect methods of tax control. Obviously, you will have to explain the origin of funds for the purchase of real estate or other valuable property, if the official income (from which taxes are paid) does not cover such costs. As a result, you will have to "pay" previously unpaid taxes. It is also possible to bring to administrative or even criminal responsibility.
in return there are also risks in the case of filing a "zero declaration". For example, the procedure of financial monitoring from the bank in which the special account is opened. The bank will check the client within the generally accepted compliance procedure and KYC (know your customer). No one guarantees that the funds, for example, will not be blocked, ie the client will not lose the opportunity to freely dispose of them for some time.
On October 2, 2021, the resolution of the Board of the National Bank №97 of September 30 came into force, which established the possibility for banks to apply to state and law enforcement agencies, as well as to registrars with inquiries about the origin of the declarant's income. In this case, persons who have decided to submit a "zero declaration" will personally consent to access to information about themselves.
Another big risk - prosecution under Article 209 of the Criminal Code "Legalization (laundering) of property obtained by criminal means." After all, state guarantees apply only to non-prosecution under articles related to tax evasion. And this is not all the risks.
To file a "zero declaration" or not? This question has only an individual answer for everyone. As any decision can have quite serious consequences, it is desirable to use professional legal assistance.