State Fiscal Service Reminded of Penal Sanctions for Tax Code Violation

State Fiscal Service in its letter № 9437/С/99-99-10-03-02-14 explained the process of application of the fine sanctions foreseen in paragraph 123.1 of article 123 of the Tax Code.

In accordance with article 109 of the Tax Code the tax violations are considered to be the unlawful acts (activity or inactivity) of the tax payers, tax agents, and/or their officials, as well as of regulatory authorities officials which led to nonfulfillment or inadequate fulfillment of the requirements designated by the Tax Code and other laws being controlled by regulatory authorities.

In accordance with paragraph 115.1 of article 115 of the Tax Code if the tax payer repeatedly violates the tax or other legislation which should be controlled by regulating authorities, the fines shall be applied for each single or continuing violation separately.

For one tax law violation the regulatory body may apply only one type of fine sanctions foreseen by the Tax Code and other laws (paragraph 116.2 article 116 of the Tax Code).

According to paragraph 123.1 of article 123 in case the regulatory authority at its discretion designates the amount of tax liabilities, the decrease of the amount of budget reimbursement and/or negative VAT value of the tax payer based on subparagraphs 54.3.1, 54.3.2, 54.3.4, 54.3.5, 54.3.6 of paragraph 54.3 of article 54 of the Tax Code this will lead to imposure on the tax payer of a fine at the rate of 25 % of the amount of certain tax liability, increased amount of budget reimbursement.

Over repeated in the course of 1095 days designation by the regulatory authority of the tax liability amount, the decrease of the amount of budget reimbursement it is foreseen to impose on the tax payer the fine at the rate of 50 % of the amount of the assessed tax liability, increased amount of budget reimbursement.

Therefore, the foreseen by paragraph 123.1 of article 123 of the Tax Code amount of the fine sanction is differentiated depending on the recurrence of the amount determination of the tax liability from this tax or decrease in the amount of budget reimbursement.

With regard to the abovementioned the signs of the recurrence appear in the event when the determination by the regulatory authority of the tax liability or the decrease of budget reimbursement take place after the regulatory body within the last 1095 days have already decreased the budget reimbursement or determined the tax liability concerning the same tax payer.