Recently, according to the results of tax audits, fines were imposed on taxpayers for late registration of tax invoices made before 05/27/2022, however, the question arises whether such fines are legal?
Thus, the Law on Amendments to the Tax Code No. 533-IX dated 17.03.2020, subsection 10 of Chapter XX "Transitional Provisions" was supplemented with clause 52-1, which introduced a moratorium on the application of fines for violations committed during the period from 01.03.2020 to the last calendar the day of the month (inclusive) in which the quarantine ends. That is, the implemented changes actually freed taxpayers from liability if they could not register their tax invoices in time during the quarantine period.
Along with this, the Law on Amendments to the Tax Code No. 2260-Х of 12.05.2022 amended Clause 69 and established that in case of detection of violations of the law as a result of inspections, taxpayers are subject to liability in accordance with the Tax Code, laws, control over the implementation of which is entrusted to the controlling bodies, taking into account the circumstances provided for in paragraph 112.8.9 of paragraph 112.8 of Article 112 of the Tax Code, which exempt from financial responsibility. At the same time, the requirements of the legislation regarding the moratorium on the application of fines for the period of military, state of emergency and/or for the period of quarantine do not apply.
That is, these regulations stopped the quarantine moratorium effective from 05/27/2022, which was effective from 03/01/2020 in accordance with clause 52-1 and prohibited tax authorities from imposing fines on taxpayers for late registration of tax invoices.
This led to the fact that taxpayers found themselves in a situation of legal uncertainty, because at the same time the tax legislation contains two conflicting norms regulating the same legal relationship, namely:
• Clause 52-1 – establishes a moratorium on liability for untimely registration of tax invoices throughout the quarantine period;
• paragraph 69.1 of paragraph 69 – provides for exemption from the application of a fine for late registration of tax invoices for taxpayers who have the opportunity to register tax invoices until 07/15/2022, the deadline for registration of which was from 02/24/2022 to 05/27/2022.
At the same time, there is no mechanism that would determine the terms of registration of tax invoices that were not timely registered before the start of martial law in connection with the moratorium established as a result of the quarantine, and this leads to the imposition of fines on taxpayers.
In such a case, the controlling body and the court (in the event of an appeal against the control body's decision) must take into account the principles of tax legislation, namely the presumption of legality of the taxpayer's decisions, regulated by clause 4.1.4. clause 4.1. Article 4 and Clause 56.21 of Article 56 of the Tax Code, which determines that in the case when the norms of tax legislation contradict each other and imply an ambiguous (multiple) interpretation of the rights and obligations of taxpayers or regulatory authorities, as a result of which there is an opportunity to make a decision in favor of both the taxpayer and the supervisory authority, the decision is made in favor of the taxpayer.
After all, the proper application of this principle ensures the realization of one of the components of the supremacy of the right of legal certainty. It is the ability of the taxpayer to clearly understand and foresee the legal consequences of the actions taken that is of fundamental importance for the correctness of its application.
In view of the above, there is every reason to believe that the application of fines for late registration of tax invoices drawn up in conditions of legal uncertainty in the period from 01.03.2020 to 27.05.2022 is illegal and imposes an additional excessive burden on taxpayers.
Due to extensive experience in resolving such disputes, Dynasty Law & Investment lawyers will help not only to deal with conflicting laws, but also to ensure proper and effective legal protection in court.
Oleksandr Fedorko, attorney at Dynasty Law & Investment