Tax authorities inspect fewer individual entrepreneurs but issue more fines
8 November 2024 11:59
This year, the number of tax audits of individual entrepreneurs (IEs) in Ukraine has decreased, but the total amount of fines has increased significantly. This is evidenced by data from the State Tax Service, "Komersant Ukrainian" reports.
Thus, in the first nine months of 2024, the State Tax Service (STS) conducted 5,483 documentary audits, which is 26% less than in the same period of the previous year.
However, the amount of additional fines increased 5.7 times year-on-year to UAH 2.33 billion.
Despite such high fines, entrepreneurs managed to appeal a significant portion of them. After appealing against the STS decisions, the amount of fines was halved to UAH 1.06 billion. This indicates that businesses are actively using the appeal process, especially considering that last year, entrepreneurs were able to appeal only a third of additional charges.
The data also shows a general decrease in the number of tax audits of individual entrepreneurs in recent years. In 2021, the State Tax Service conducted a record 31,178 inspections, or about 2.6 thousand per month, while this year the number of such inspections has decreased to 600 per month.
Typical violations recorded by the STS during inspections:
- underreporting of income
- overstatement of expenses;
- misuse of tax benefits;
- violations in the field of VAT;
- late submission of reports;
- cooperation with risky counterparties;
- non-compliance with currency legislation;
- incorrect accounting of tax differences.
It is worth recalling that the moratorium on documentary inspections of sole proprietorships of the first and second groups is scheduled to end in December 2024, which may lead to an increase in the number of inspections in the future.
As reported by , more than 120 thousand sole proprietorships closed in Ukraine in 2024, a third of them in the first year of operation.
