VAT, GST and Sales Tax in Ukraine

Summary

Name of the tax Value-added tax (VAT)
Local name Podatok na dodanu vartist (PDV)
Date introduced 1-Jan-92
Trading bloc membership None
Administered by State Fiscal Service of Ukraine (http://www.sfs.gov.ua)
VAT rates
Standard 20%
Reduced 7%
Other Zero rate and exempt
VAT number format Tax identification number (TIN): 12, 10 or 9 digits, depending on type of entity
VAT return periods Monthly (quarterly for certain groups of taxpayers)
Thresholds
Registration Taxable supplies in excess of UAH1 million during preceding 12 calendar months
Recovery of VAT by non-established businesses No

Scope of the tax

VAT applies to the following transactions:

  • Supply of goods if the place of supply is within the customs territory of Ukraine including the transfer of title to pledged property to the creditor, transfer of title to goods under a com­modity loan and transfer of a financial lease object to a lessee
  • Supply of services if the place of supply is within the customs territory of Ukraine
  • Import of goods into Ukraine
  • Export of goods from Ukraine
  • Supply of services with respect to the international transporta­tion of passengers, luggage and shipment of cargo by railway, automobile, sea and air transport
  • Deemed supplies in cases specified by law

The following transactions are exempt from VAT (the list is not exhaustive and conditions may apply):

  • Supplies of certain types of software (temporarily, until 1 January 2023)
  • Most banking services
  • Insurance and reinsurance services and services of securities traders
  • Transfer of property with respect to pledges or operational leases
  • Mergers and acquisitions
  • Certain transactions under the product-sharing agreements when the taxable person maintains special tax accounting

In general, supplies of goods and services, where the place of supply is within the customs territory of Ukraine, are considered taxable by Ukrainian VAT.

Place of supply of goods. The following goods are deemed to be supplied in Ukraine:

  • Goods located in Ukraine at the moment of their supply, if they are not shipped, transported, assembled or installed
  • Goods located in Ukraine at the moment when shipment or transportation begins
  • Goods assembled or installed in Ukraine, if such assembly or installation is performed by the seller or on its behalf

Place of supply of services. The following are the rules for deter­mining the place of supply of services:

  • Services related to movable property (for example, repairs and services auxiliary to transportation), services in the areas of culture, art, education, science, sport and entertainment, orga­nization of training courses and seminars and certain other services: the place of their actual supply
  • Services related to immovable property: actual location of the immovable property
  • Consulting, engineering, legal, accounting, audit, secondment, advertising, forwarding, information technology, data process­ing, telecommunication, broadcasting and certain other servic­es: the place where the service recipient is incorporated
  • Other services: the place where the supplier is registered

Who is liable

A VAT taxpayer is any legal entity, individual (entrepreneur) or representative office of a nonresident that meets any of the fol­lowing conditions:

  • The person that is registered as a VAT taxpayer or is subject to a registration as a VAT taxpayer
  • The person imports goods into Ukraine in amounts subject to taxation (provided such person is liable for payment of taxes on the import of goods)
  • The person maintains accounting under joint activity (JA) arrangements
  • The person performs asset management
  • The person disposes of seized, abandoned or unclaimed prop­erty as well as property inherited or transferred to the state (regardless of threshold and tax status of such person)
  • The person is liable to administer tax with respect to services supplied by railway transportation companies

If an importer is not registered as a VAT taxpayer and imports goods in amounts subject to tax, it pays VAT during customs clearance without registration.

If a nonresident entity (including a permanent establishment of a nonresident that has not registered for VAT) supplies services with a place of supply in Ukraine, the service recipient must accrue and pay VAT to the treasury.

A legal entity, individual entrepreneur (except for an entrepre­neur who uses the simplified taxation system and belongs to certain groups) or representative office of a nonresident must register as a VAT taxpayer if its taxable supplies exceeded UAH1 million (net of VAT) during the preceding 12 calendar months.

A person that does not reach the threshold may still opt for vol­untary VAT registration.

A registrant is assigned a tax identification number (TIN), which is 12 digits for legal entities and permanent establishments of nonresidents (except those for which a 9-digit number applies – see below) and 10 digits for private entrepreneurs. A 9-digit TIN is assigned to the following entities:

  • Entities paying tax from a joint activity without establishing a legal entity
  • Property managers under property-management agreements
  • Investors under product-sharing agreements
  • Permanent establishments of nonresidents that do not have an identification number in the Unified State Register of Enterprises and Organizations of Ukraine
  • Permanent establishments of nonresidents created through:
    • A building site, construction, assembly or installation pro­ject if it lasts more than six months
    • Employees/other personnel hired by a nonresident for the provision of services (excluding provision of personnel) if these activities last more than six months within any 12-month period
    • Residents authorized to act exclusively on behalf of a given nonresident

Group registration. Not applicable.

Non-established businesses (foreign legal entities). In general, VAT registration of the non-established business is not possible. If a nonresident falls under mandatory VAT registration require­ments or wishes to opt for voluntary VAT registration, it must first establish business presence in Ukraine.

No VAT recovery mechanism is available for non-established businesses.

Registration procedures. Newly registered entities may register voluntarily through applying in writing to the state registrar who then passes this application to the tax authorities.

Existing entities that are subject to a mandatory registration file registration request by the 10th day of the calendar month follow­ing the month in which the threshold (UAH1 million) was achieved.

Existing entities willing to register voluntarily file a registration request not later than 20 calendar days prior to tax period from which these entities would qualify as VAT taxpayers. Such enti­ties may indicate the date from which they would qualify as VAT taxpayers in their application.

It is possible to file the registration application electronically provided the requestor registered a valid electronic signature in accordance with acting legislation. The request must be submit­ted personally by the individual (entrepreneur) or the company’s director/representative.

The tax authority includes the entity in the register of VAT tax­payers within three working days after receipt of the registration request or from the date indicated by the requestor (in case of voluntary registration). The tax authority issues the VAT registra­tion certificate.

Information about registered VAT taxpayers and entities de-reg­istered as VAT taxpayers is available online at the following link: https://cabinet.sfs.gov.ua/cabinet/faces/public/reestr.jspx.

Late-registration penalties. Late registration or violation of other tax registration requirements may trigger a fine of UAH170 for self-employed persons and UAH510 for the legal entities or JA tax agents. For a repeated violation, the amount of the fine increases to UAH340 and UAH1,020, respectively.

If the tax authorities determine that late registration caused tax understatement and reassesses the taxpayer’s tax liability, general fines for tax understatement apply. The fines are imposed at the following percentages of the understated tax liability:

  • 25% for the first violation
  • 50% for a repeated (within 1,095 days) violation

An interest penalty may also apply.

In addition, the taxpayer is not eligible for a VAT credit or refund with respect to input VAT incurred before VAT registration.

Tax representatives. Not applicable.

Reverse charge. Not applicable.

Digital economy. There are no specific rules relating to the taxa­tion of the digital economy.

Deregistration. An entity registered as a VAT payer for the past 12 months may apply for deregistration if the value of its taxable supplies for the past 12 calendar months was below UAH1 million. Deregistration is also available at the request of the VAT payer or the tax authorities in cases such as the following:

  • The entity took a decision to liquidate.
  • The VAT payer has been registered as a single taxpayer, which does not envisage payment of VAT.
  • The VAT payer has not been filing VAT return for 12 consecu­tive months and/or has filed VAT returns evidencing absence of taxable supplies/purchases.
  • A court judged the entity’s statutory documents to be invalid.
  • A court ruled to liquidate the legal entity due to bankruptcy.
  • The taxpayer is liquidated under a court decision, or the entity is relieved from VAT under a court decision.
  • The individual entrepreneur has died.
  • A joint activity or asset management or production sharing agreement expires.

Once deregistered, the entity is not allowed to credit input VAT and invoices.

VAT rates

The following VAT rates apply:

  • Standard rate: 20%
  • Reduced rate: 7%
  • Zero rate (0%)

The standard rate of VAT applies to all supplies of goods and services falling within the scope of VAT, unless the law provides a zero rate, 7% rate or VAT exemption for a specific transaction.

Examples of goods and services taxable at 7%

  • Supplies within Ukraine and import into Ukraine of registered medicines and medical devices according to list approved by the government
  • Supplies within Ukraine and import into Ukraine of medicines, medical devices and/or medical equipment for use in clinical trials permitted by the Ministry of Health of Ukraine

Examples of goods and services taxable at 0%

  • Exports of goods (under customs regime of export, re-export (return of goods), duty-free shop and free customs area)
  • International transportation of passengers, luggage and ship­ments of cargo
  • Processing and repairs of imported movable property that is subsequently exported from Ukraine

Examples of exempt supplies of goods and services (conditions apply)

  • Supplies of certain types of software (temporarily, until 1 January 2023)
  • Health care and rehabilitation services
  • Supplies of baby nutrition
  • Educational services
  • Charity
  • Supply of land plots (except for those located under real estate objects and included in their value under legislation)
  • Supplies of housing (except for the first supply)
  • Supplies of periodical printed mass media (newspapers and journals), books, etc. of domestic production
  • Religious and funeral services
  • Supplies to embassies, consulates and representations of inter­national organizations (for their own needs) on a reciprocal basis
  • Imports of cultural items produced 50 or more years ago
  • Disposals by banks and financial institutions of property pledged by non-VAT taxpayers
  • Sales or purchases by banks of liabilities on deposits
  • Imports of energy-saving equipment and materials, etc. under the list approved by the government

Option to tax for exempt supplies. Under Ukraine’s tax code a taxpayer may elect to reject or postpone tax exemption for up to several months. However, in practice this is difficult to implement.

Time of supply

The Ukrainian VAT laws do not contain the concept of “time of supply.” Instead, the tax code contains detailed rules with respect to the time for recording VAT liabilities and recognizing VAT credits.

VAT liability. Under the general “first event” rule, VAT liability arises on the occurrence of the first of the following events:

  • The date on which goods or services are dispatched or rendered
  • The date on which payment is received with respect to a supply of goods or rendering of services

Special rules apply to certain transactions, including the following:

  • For the import of goods, VAT liability arises on the filing of the customs declaration for customs clearance.
  • For the import of services (where the place of supply is within Ukraine), VAT liability arises on payment or execution of the act of acceptance, whichever occurs first.
  • For long-term agreements, VAT liability arises on the delivery of the work results.
  • For financial leasing, VAT liability arises on the transfer of the lease object to the lessee.

VAT credit. Under the “first event” rule for VAT credit, the right to VAT credit arises on occurrence of the first of the following events (provided other conditions are met):

  • The date on which the taxpayer makes the payment for goods or services
  • The date on which the taxpayer receives the goods or services

Special rules include the following:

  • For the import of goods, the right to VAT credit arises on the payment (accrual) of VAT on the filing of the customs declara­tion for the customs clearance.
  • For the import of services, the right to VAT credit arises on the date the VAT invoice is self-issued and registered in the Unified Tax Invoice Register.
  • For long-term agreements, the right to VAT credit arises on the receipt of the work results (execution of the acts of work accep­tance).
  • For financial leasing, the right to VAT credit arises on the receipt of the lease object by the lessee.

Reverse-charge mechanism. A reverse-charge mechanism applies if a nonresident entity (including a permanent establishment of the nonresident that has not registered for VAT) supplies services for which the place of supply is within Ukraine.

In these cases, the VAT liability would arise for the service recipient under the reverse-charge procedure. The service recipi­ent accrues VAT liability on the payment for the services or the execution of the act of acceptance, whichever occurs first. The service recipient registered as a VAT taxpayer may record a VAT credit after registration of the VAT invoice in the Unified Tax Invoice Register.

Imported goods. Import of goods is subject to VAT at 20% rate or 7% rate (applies to a limited range of the goods) unless exemp­tion is available under current legislation. Tax base includes contractual value or customs value of the goods, whichever is higher, including excise tax and customs duty paid. VAT liabili­ties arise and VAT is paid during filing import customs declara­tion for customs clearance of the goods. It is not possible to delay payment of import VAT. The importer may credit import VAT in the tax return for a tax period in which import VAT was paid. VAT credit should be supported by import customs declaration.

Recovery of VAT by taxable persons

VAT credit. In general, VAT credit is available only for registered VAT taxpayers with respect to input VAT paid in connection with the acquisition or production of goods, fixed assets or services.

A VAT taxpayer may claim VAT credit with respect to the follow­ing transactions:

  • Purchases or production of goods and services
  • Purchases (building and construction) of fixed assets
  • Import of goods and/or fixed assets into Ukraine
  • Receipts of services supplied by nonresidents in the customs territory of Ukraine
  • Imports of noncurrent assets into the customs territory of Ukraine under lease agreements

A taxpayer must be able to confirm a VAT credit with a VAT invoice or a customs declaration. A duly registered VAT invoice is sufficient grounds for crediting input VAT and no other evi­dences are required.

If a VAT taxpayer failed to claim a VAT credit in the reporting period based on suppliers’ VAT invoices/corrections to VAT invoices registered in the Unified Tax Invoice Register, it may claim a VAT credit during the 365 calendar days beginning with the date of the issuance of the VAT invoice/correction to the VAT invoice.

A VAT credit is recognized regardless of whether goods or ser­vices or fixed assets were used in taxable transactions or whether the taxpayer performed taxable transactions in the reporting period.

Non-recoverable VAT (full and partial). At the end of the tax peri­od, the VAT payer must recognize VAT liability and register a VAT invoice in respect of 1) the goods, services or noncurrent assets that are designated for use or start to be used in nontaxable or nonbusiness transactions and 2) noncurrent assets converted into nonproductive assets. However, taxpayers may deduct such VAT for corporate profit tax purposes if certain conditions are met.

Items for which input tax is nondeductible. Input tax credits are not available for supplier invoices that are not registered in the Unified Tax Invoice Register, for imports that are not supported by customs declarations or on purchases that are not related to the business activity.

Items for which input tax is deductible. Input tax is deductible on all items related to a taxable business use.

Refunds. VAT due to the budget is calculated as a positive differ­ence between VAT liability (output VAT collected from the cus­tomers with respect to sales of goods and services) and VAT credit.

If a taxpayer has a negative difference, the difference may be used to decrease the tax debt or may be carried forward as a tax credit to the next reporting period or claimed as a tax refund in the amount not exceeding the threshold of VAT invoices’ registra­tion calculated when the VAT return is filed. A refund may be provided by way of remittance of funds to the taxpayer’s bank account or through offset against liabilities/debt on other taxes payable to the State Revenue.

From 10 January 2017, the tax authorities maintain a single reg­ister of VAT refund claims.

In the register, the refund is available in sequential order depend­ing on the date of relevant claim (i.e., the earlier the claim is included in the register, the earlier the refund will be provided). The register is publicly available via the tax authority website.

From 1 February 2017 in parallel to the regular register, there will be a temporary register of VAT claims submitted prior to 1 February 2016 and where tax was not refunded as of 1 January 2017. The government would split amounts designated by the State Budget Law for refund between the two registers.

Within 30 days after the deadline for submission of a VAT return and application for refund, the tax authorities perform a desk audit to check the data in the return. The tax authorities may perform a documentary tax audit where a VAT refund includes negative VAT amounts relating to transactions made prior to 1 July 2015 that were not covered by documentary tax audits or on purchase transactions made prior to 1 January 2016 for enti­ties that used the special VAT regime for agricultural producers. The taxpayers receive the refund after confirmation of the refund amount with the tax authorities after the tax audit. This confirma­tion is to be reflected in the register of VAT refund claims. The State Treasury of Ukraine must transfer funds to the taxpayer’s bank account within five days after confirmation of the refund amount in the register.

Penalty for late refund. Under the tax code, an amount of VAT that is not refunded on time is considered to be a debt of the state revenue. An interest penalty at a rate of 120% of the National Bank of Ukraine (NBU) rate applies to this debt amount until it is settled.

taxpayer must recognize the VAT liability and register a VAT invoice for the amount of VAT on purchases used to make exempt supplies, determined on a pro rata basis. The pro rata coefficient is generally based on the percentage of taxable supplies to total supplies in the preceding calendar year. Based on the current year results, the taxpayer must recalculate the pro rata coefficient according to actual volume of taxable and exempt supplies and adjust VAT credit in the tax return for the last tax period of cur­rent year.

Preregistration costs. VAT on purchases made prior to a buyer’s registration as a VAT taxpayer, is not creditable.

Recovery of VAT by non-established businesses

The Ukrainian tax law does not allow nonresident entities that do not have business presence in Ukraine to recover VAT.

Invoicing

VAT invoices. A Ukrainian VAT taxpayer (seller) must provide an electronic VAT invoice registered in the Unified Tax Invoice Register to the buyer. The VAT invoice must be issued on a date when the tax liability arises for the seller and is registered by the end of the month (for VAT invoice issued from the 1st to the 15th day of the calendar month) and by the 15th day of the following month (for VAT invoices issued from the 16th day of the calendar month). The VAT invoice must contain all of the necessary ele­ments and must bear a duly registered electronic signature. The seller must issue separate VAT invoices for VAT-exempt and VAT-able supplies.

If a VAT invoice is improperly completed or is not registered in the Unified Register, the buyer does not have the right to a VAT credit, but the seller must report VAT liability. If improper com­pletion of the VAT invoice (except for mistakes in the HS code of the goods) still allows identification of the transaction, such VAT invoice should be allowed for registration.

From 1 July 2017, the authorities may block registration of VAT invoices based on the risk assessment system that automatically monitors all VAT invoices. In this case, the authorities would request additional explanations/documentation (to be submitted within 365 calendar days after arising tax liabilities reflected in the tax return) sufficient for unblocking registration of VAT invoices.

In some cases, the buyer has the right to a VAT credit without the VAT invoice on the basis of the following documents:

  • Transport ticket or an invoice for hotel or communication ser­vices
  • Checks for goods or services for an amount not exceeding UAH200 per day
  • Customs cargo declaration for the import of goods

Foreign-currency invoices. VAT invoices are issued in Ukrainian currency, which is the hryvnia (UAH).

Proof of exports. Export of goods should be supported by duly executed export customs declaration certified by customs to evi­dence that the goods actually left customs territory of Ukraine.

VAT returns and payment

VAT return. Entities that use the month as a tax period file tax return within 20 calendar days of the following month. Entities that use the quarter as a tax period file the tax return within 40 calendar days of the following quarter. Tax is payable within 10 days after the filing deadline.

Special schemes. For tourist operators who sell tourist products for use in or outside of Ukraine, 20% VAT is applied on a margin calculated as a difference between the value of the tourist product and expenses incurred in relation to creating such a tourist prod­uct. For tourist operators acting as intermediaries for foreign tourist service providers and for Ukrainian tourist agents, 20% VAT is levied on a remuneration payable to such entities. Input VAT on services included in the tourist product is not creditable whereas input VAT on any tourist services not included in the value of the tourist product is creditable.

The supply of works of art (HS headings 9701-9706) by dealers is subject to a marginal profit tax scheme if they were purchased from:

  • Entities not registered as VAT taxpayers
  • VAT taxpayers where the supply is exempt or not subject to VAT
  • VAT taxpayers using a marginal profit tax scheme
  • Authors of works of art or their legal successors

The taxable base includes the seller’s marginal profit (excluding VAT). The VAT rate is 20%. The dealer (seller) is not required to issue a VAT invoice. The dealer who buys works of art from the above entities is not entitled to credit input VAT. Export of works of art is not subject to zero VAT during export (i.e., input VAT, if any, is not recoverable). The dealer is required to maintain sepa­rate accounting of transactions involving purchase and sale of works of art.

Electronic filing and archiving. All registered VAT taxpayers must file tax declarations electronically.

Beginning in 2015, a system of electronic VAT administration is based on the interaction of the Unified Tax Invoice Register (UTIR) with the special VAT accounts.

VAT accounts are free for all VAT taxpayers in the State Treasury of Ukraine. Under this system the supplier is able to register a VAT invoice in UTIR for an amount that exceeds its VAT credit only when the taxpayer pays the corresponding amount of money into its VAT account. The VAT invoice registration threshold is calculated according to a formula. The formula also includes an allowed overdraft calculated as the average monthly amount of VAT that was declared as payment for the past 12 months (over­draft is to be recalculated quarterly). This overdraft is not avail­able to taxpayers registered for VAT for less than 12 calendar months as of 1 January 2016 or registered as VAT payers after that date and becomes available in the quarter following the quar­ter in which the 12-month VAT-registration period has been achieved.

Taxpayers will be able to replenish their VAT accounts or transfer funds remaining after settlements with budget to their regular bank account (in the latter case, the VAT registration threshold would be reduced but a negative amount is not acceptable). Taxpayers will not be able to transfer money from the VAT accounts at their discretion. Neither funds from customers nor VAT refunds are transferred to the VAT account.

If a VAT taxpayer’s registration is cancelled, its VAT account will be closed and the net balance of the account will be transferred to the state revenue.

The treasury communicates data about the net balance of the VAT account to the Unified Register online. If the total of input VAT and VAT account balance is insufficient, the taxpayer will not be able to register the issued VAT invoice with the Unified Register. Consequently, the customer of the VAT taxpayer in question will not be entitled to recognize VAT credit.

At the end of the reporting period, the tax on the added value generated by such supplier should be accumulated in its VAT account. VAT payable to the state revenue at the end of the report­ing period will be settled by means of funds in the VAT account.

Annual returns. Not applicable.

Penalties

The Ukrainian tax law provides for the financial sanctions described below for violations of the VAT law.

The following are the penalties for failure to file or late filing of the VAT declaration:

  • UAH170 for each violation
  • UAH1,020 for repeated violations within a year

If a failure to properly file the tax return results in the understate­ment of tax liabilities, additional fines apply.

Penalties are imposed for the overstatement of a VAT refund or the understatement of VAT liabilities if the tax authorities increase the amount of VAT liabilities or decrease the VAT refund. The penalties are imposed at the following percentages of the reassessed tax liability or overstated VAT refund:

  • 25% if the violation was made the first time within a 1,095-day period
  • 50% if the violation was repeated within a 1,095-day period

It is not clear whether an overstatement of negative VAT result (that does not lead to tax understatement or the overstatement of VAT refund) is subject to a fine.

The following are the penalties for the understatement of tax liabilities if the taxpayer corrects the mistake made in the VAT return:

  • 3% of the understatement of tax liabilities if it submits an adjustment calculation
  • 5% of the understatement of tax liabilities if it corrects the mistake in the tax return for the next reporting period
  • 5% of the understatement for the failure to submit an adjust­ment calculation

The following penalties are imposed for late payments:

  • 10% of unpaid liabilities if the period of delay is up to 30 days
  • 20% of unpaid liabilities if the period of delay exceeds 30 days

The following penalties are applied for failure to timely register VAT invoices (that must be issued to buyers) in the UTIR:

  • 10% of VAT amount if the delay is up to 15 calendar days
  • 20% of VAT amount if the delay is from 16 to 30 calendar days
  • 30% of VAT amount if the delay is from 31 to 60 calendar days
  • 40% of VAT amount if the delay is 61 days to 365 calendar days

If tax authorities detect failure to register a VAT invoice, they will issue the tax-notification decision and apply a penalty in the amount of 50% of the VAT amount. This penalty will not be applied where a VAT invoice is registered prior to tax audit.

The above penalties (10%-50%) are not applied where the VAT invoice is registered within 10 calendar days after receipt of the tax-notification decision.

If the tax authorities block registration of a VAT invoice based on the risk assessment system, the above penalties are not applied for the duration of the blocking period.

A failure to register a VAT invoice after 10 calendar days follow­ing the receipt of the tax-notification decision may attract a penalty in the amount of 50% of VAT.

The following fines are applied for mistakes in a VAT invoice detected by the tax authorities during a documentary out-of­schedule tax audit at the buyer’s request:

  • UAH170 and obligation to correct the mistake
  • 10% of the VAT amount if the mistake is not corrected within

15 calendar days

  • 20% of the VAT amount if the mistake is not corrected within

16 to 30 calendar days

  • 30% of the VAT amount if the mistake is not corrected within 31 to 60 calendar days
  • 40% of the VAT amount if the mistake is not corrected within 61 to 90 calendar days
  • 50% of the VAT amount if the mistake is not corrected within 91 to 120 calendar days
  • 60% of the VAT amount if the mistake is not corrected within 121 to 150 calendar days
  • 70% of the VAT amount if the mistake is not corrected within 151 to 180 calendar days
  • 100% of the VAT amount if the mistake is not corrected after 181 calendar days

These penalties are not applied until 31 December 2017 for mis­takes in a VAT invoice regarding indication of the tariff code of goods or code of services under the State Classifier of Products and Services.

In addition to the above, the interest penalty may apply for tax understatement and late payment.

The interest penalty for late payment applies from the first busi­ness day on which the tax liability becomes overdue (that is, after expiration of the deadline for settling the tax liability indicated in the tax return or in the tax-notification decision issued by the tax authorities). The interest penalty for tax understatement applies to the whole period of understatement of the tax liability, even though the taxpayer may have recourse to the administrative or court appeal procedure.

The rate of the interest penalty equals 120% of the yearly NBU discount rate for each day of tax understatement.

In addition to financial sanctions, administrative or criminal lia­bility may apply.