Tax issues, which previously led in terms of the number of appeals to the Business Ombudsman Council, now account for 71% of all complaints from entrepreneurs, the lion's share of which concerns the blocking of tax invoices, according to a fresh report from the organization. The scale is such that, in addition to current activities, the Council also conducted its own investigation and insists: without systemic solutions, the problem cannot be eliminated.

The essence of the problem: the tax service blocks your VAT invoice, the money deposited in the system is also blocked instead of becoming your working capital. The counterparty loses the tax credit and the desire to continue to cooperate with you. And your accounting department spends not hours, but days collecting a package of documents for unlocking. This is how the business climate! Not surprisingly, the business ombudsman intervened in the situation.

To unblock just one invoice, you need to submit several dozen documents. For large companies, this is a huge amount of work, diverting a large number of people from other duties, as well as money from circulation.. And then the tax office has to spend man-hours, or rather man-weeks, to check these papers.. And even if you are the lucky one who has been unblocked by the tax, there is no guarantee that history will not repeat itself next month..

The system for blocking tax invoices SMKOR is automatic and, in theory, is designed to find and block VAT schemes. But the criteria of the automatic system are still set by people, and they have been tightened to such an extent that automatic blocking has become massive.. Given that the decision to unlock is made not by the system, but by living people in manual mode, it already smacks of corruption.

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Implementation of fiscal changes hit almost half of Ukrainian business.

In December last year, the business ombudsman, on his own initiative, began investigating problems with the functioning of the VAT system.. The final conclusions will be published in a few weeks, but the Council has already published the preliminary ones, since the situation is urgent, because for half a year the business, in fact, has been operating in the mode of an ongoing tax audit..

What the Council found:.

Amendments to the legislation, in particular to the Resolution of the Cabinet of Ministers No. 1165, led to unpredictable and unpredictable results by the state - businesses are now forced to file a large amount of tax documentation.

The rush to change the algorithms of the work of the QMS is incomprehensible. The CMCM algorithms are also not accurate enough on their own, which leads to the tax filing of bona fide businesses. Submission of one package of documents takes an unreasonably long time.

Since the launch of the CMMS system, the source of problems has been the lack of proper justification of decisions by the tax authority (in particular, the reasons for blocking invoices, inclusion in the lists of risky payers, etc.).. Business is forced to spend time clarifying the circumstances of the case.

The state fills the budget at the expense of working capital of enterprises. The buyer of a good/service is not entitled to a tax credit until the invoice is registered, and the state does not reimburse the economic costs for this.

“In the fourth quarter of 2022, we saw the introduction of... fiscal changes that hit almost half of Ukrainian business, in particular, its law-abiding majority. Even before the publication of our final conclusions, it is clear that sparrows were fired from cannons here.. It is entirely within the power of the Ukrainian authorities to stop at least such shelling,” says Roman Vashchuk, Business Ombudsman..

Fuzzy, generalized and formal reasons for failures make the business "

In fairness, the Council notes that their inspectors also found that the State Tax Service is ready to expedite the resolution of certain problems.. But, unfortunately, the positive resolution of dozens of cases, while thousands are being blocked, does not eliminate the overall problem.. Special cases do not change the system. An individual approach, on the contrary, complicates the situation, only adding corruption risks of solving problems.

" There must be a principle of truce on this home front. It seems to me that it is precisely the process of digitalization, which has successfully taken place in many industries over the past three years, that needs to be widely applied to the customs and taxation spheres.. This will help to remove many issues that have arisen between business and the state.. We need to work openly, consult with the business community and fight against the temptation to retain the possibility of manual control,” says Roman Vashchuk.

The Council is in constant contact with the central and regional tax authorities, submitted proposals for improving the CMQR system, initiated the exchange of experience between our tax specialists and Polish colleagues using a similar system. The organization hopes that the solution to the problem is not far off, and it will not be symptomatic, but systemic.

Of course, the support of the Council is important not only in theory, but also in practice.. Well, there are already successful unlock cases.

For example, a manufacturer of welding wires complained to the Business Ombudsman Council about a massive blocking of tax invoices.. Trying to solve the problem, the company filed a taxpayer data sheet several times, but the tax authority each time refused to record it.. The degree of readiness of the tax authorities for a dialogue with business is such that only the Council, which submitted a complaint for consideration by an expert group with the participation of the State Tax Service, managed to find out exactly what information was missing to take into account the company's data table.

Another successful example is an enterprise from Kharkiv region engaged in the manufacture of pasta. The company also complained about the blocking of tax, and its inclusion in the list of risky payers. And although the applicant tried to independently explain to the tax office that it was not risky, the dialogue did not work. The council helped the company figure out the procedure and the list of documents that must be submitted to the tax service to eliminate riskiness, and after re-submitting the documents, the tax authorities no longer had any questions about the business.

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How to file a complaint with the Business Ombudsman Board.

Without a doubt, it is possible and necessary to use the assistance of the Council, and not only if your tax. The Council's assistance is free, but your complaint must meet a number of criteria in order to be accepted.. Namely:.

the complaint should relate to the relationship with the government agency: tax, customs, police, government regulators;

the complaint should not relate to a dispute that is being considered by the court, since the Council is an instrument of pre-trial settlement;

the conflict that caused the appeal arose no earlier than a year ago;

the applicant has already used the available administrative dispute appeal options (if any).

The complaint does not have to be anonymous, but if there is a valid reason, anonymity will be maintained so that the pressure on you does not increase. The review process itself is quite fast: a preliminary review lasts for ten days, during which you may be asked for additional information or documents in order to begin direct work.. As a rule, the consideration of the merits will last no more than three months.. As a result, the Council not only tries to solve the particular problem of a particular complainant, but also makes recommendations to government agencies on how to prevent further such violations, and makes sure that good advice is not ignored.

You can file a complaint online.

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Read more articles by Viktor Konev at the link.