THE ASSOCIATION OPPOSED THE DRAFT LAW OF THE CABINET OF MINISTERS OF UKRAINE ON AMENDMENTS TO THE TAX CODE OF UKRAINE

The Cabinet of Ministers of Ukraine has submitted to the Parliament of Ukraine the Draft Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Peculiarities of Taxation during the Period of Martial Law” (Reg. No. 11416 dated 18 July 2024), which, in particular, provides for the expansion of the tax base defined in the Tax Code of Ukraine and an increase in certain tax rates for individuals, individual entrepreneurs and legal entities.

Without addressing the question of the expediency or inexpediency of these particular government initiatives, the Association notes the following.

Paragraph 1 of Section II “Final Provisions” of the mentioned draft law provides for its entry into force “on the first day of the month following the month of its publication”.

At the same time, the Cabinet of Ministers of Ukraine violated one of the principles on which Ukrainian tax legislation is based, namely stability, since according to subparagraph 4.1.9 of paragraph 4.1 of Article 4 of the Tax Code of Ukraine “changes to any elements of taxes and fees may not be made later than six months before the beginning of the new budget period in which the new rules and rates will be in force. Taxes and duties, their rates and tax privileges may not be changed during the budget year”.

Taking into account the above provision, the amendments to the Tax Code of Ukraine proposed by the Cabinet of Ministers of Ukraine in the draft law under Reg. No. 11416 dated 18 July 2024 regarding the increase of certain tax rates should take effect at least from 1 January 2026, and not “from the first day of the month following the month of its publication”.

1. Paragraph 2 of Section II “Final Provisions” of the mentioned draft law stipulates that “the requirements of the Law of Ukraine “On the Principles of State Regulatory Policy in the Field of Economic Activity” do not apply to the procedure for the preparation and adoption of regulatory legal acts adopted to implement the requirements of this Law”.

In the Association’s opinion, this provision should be reflected directly in the Law of Ukraine “On the Principles of State Regulatory Policy in the Field of Economic Activity”, since Article 3 of this Law clearly states all relations that are not covered by the said regulatory act.

Otherwise, inconsistencies may arise between the Law of Ukraine “On the Principles of State Regulatory Policy in the Field of Economic Activity” and the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Peculiarities of Taxation during the Period of Martial Law” (if adopted), which will further lead to a conflict of provisions and difficulties in their application, which in turn will require consideration of this issue by the judicial authorities.

2. Pursuant to Article 113 of the Constitution of Ukraine, the Cabinet of Ministers of Ukraine shall be guided in its activities, inter alia, by the laws of Ukraine, and pursuant to Article 116(1) of the Constitution of Ukraine, it shall ensure the implementation of the laws of Ukraine, but not their non-compliance or violation.

According to paragraph 1 of § 120 of the Regulations of the Cabinet of Ministers of Ukraine, approved by the Resolution of the Cabinet of Ministers of Ukraine No. 950 dated 18 July 2007 (as amended by the Resolution of the Cabinet of Ministers of Ukraine No. 1156 dated 9 November 2011), “the Cabinet of Ministers shall withdraw a draft law submitted to the Verkhovna Rada in case of its loss of relevance or for other reasons”.

The Association considers that the violation of the current legislation of Ukraine when the Cabinet of Ministers of Ukraine developed the draft law on the registry. No. 11416 dated 18 July 2024 are the “other reasons” for which the draft law submitted to the Parliament of Ukraine should be withdrawn.

Therefore, the Association appealed to the Cabinet of Ministers of Ukraine with a request to withdraw the Draft Law of Ukraine “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Peculiarities of Taxation during the Period of Martial Law”, which was submitted to the Parliament of Ukraine and registered under No. 11416 of 18 July 2024, as it was developed in violation of the current legislation of Ukraine, and in the future, when preparing draft laws on raising taxes and rates, to strictly comply with the requirements of the legislation of Ukraine regarding the timing of their introduction.

At the same time, taking into account the fact that the draft law under reg. No. 11416 dated 18 July 2024 has not yet been included in the Agenda of the eleventh session of the Parliament of Ukraine of the ninth convocation, approved by the Resolution of the Parliament of Ukraine No. 3562-IX dated 6 February 2024, the Association appealed to the Parliamentary Committee on Finance, Taxation and Customs Policy, which is designated as the Main Committee for consideration of this draft law, with a request not to consider it in the proposed version.