Tax debt will be written off automatically: what will change for business
18 November 04:35
Ukraine has launched a new system for automated write-off of tax debts from legal entities’ accounts. The software implemented by the State Tax Service has already proved its effectiveness: over UAH 100 million in debts have been collected in two months. This was reported by the acting head of the State Tax Service Lesya Karnaukh, "Komersant Ukrainian" reports
This amount of tax debt was collected from more than 2 thousand companies.
Lesia Karnaukh said that it is an automatic collection of tax debt from legal entities using electronic payment instructions.
This tool is envisaged by the National Revenue Strategy and has been in operation for only two months, but it is already showing stable positive dynamics.
What is this system and why was it introduced?
The new automatic tax debt collection tool is part of the National Revenue Strategy. Its key goal is to speed up and simplify the process of debt cancellation by eliminating delays and the human factor.
Previously, the procedure was entirely paper-based:
- the tax office recorded the debt for the company;
- sent a payment instruction to the bank;
- the bank had to fulfill the instruction if there were funds in the account.
In practice, this was often delayed due to lack of funds, administrative errors, or delays on the part of the financial institution.
“Before the launch of this system, for example, tax debt was accounted for by the company. We used to send a paper payment instruction to the bank where the debtor had an account to collect it. And the story would begin: there were no funds, or other difficulties,” Lesia Karnaukh said.
How automatic tax debt cancellation works
Now the entire algorithm is digital and without human intervention at the stage of writing off.
The system
- generates electronic payment instructions;
- automatically transmits them through the Treasury to the bank;
- the bank writes off the funds if they are on the account of a legal entity.
“Everything is generated, formed, and connected. A button is pushed, and it goes through the Treasury to the financial institution. It is in the account – it was collected,” the acting Head of the State Tax Service emphasized.
The new system minimizes the human factor, speeds up the process and increases the effectiveness of the fight against tax arrears.
What it means for business
Legal entities with tax debts should be prepared for the following:
- the debt may be written off automatically, without a separate notification to the bank;
- the existence of debts will now have faster consequences;
- the transparency of the process will make it impossible to delay the execution of tax decisions.
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