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Integrated measures to shade the fuel market, or How to attract revenue to the state budget Back

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Counsel, Head of the Corporate practice TEFFI Law Firm



After the entry into force of the provisions of the Law of Ukraine “On Amendments to the Tax Code

Ukraine and some other legislative acts of Ukraine on improvement of administration and

of reviewing the rates of individual taxes and fees ”of 23.10.2018 № 2628-VIII (hereinafter – Law 2628-VIII)

the activities of fuel business representatives have undergone significant changes, as has the Tax Code itself.

Well. Let’s go back to the sources and talk about the shading of the fuel market in Ukraine, because

the very implementation by the state of integrated control over the production and turnover of fuel, as well Ensuring the balance of budget revenues in 2019 were the main goals a bill developed on the initiative of the Ministry of Finance.


According to the financial and economic forecast, the Ministry of Finance expected to receive funds in the amount of 6.3 billion UAN to the consolidated budget, of which  5.9 billion UAN – directly to the state. Except other provisions that are affected by the Act, the projected amounts should reduce losses by 40% state and local budgets flowing through the shadow fuel market in 2018 amounted to approximately 10 billion UAN.


What are the key “integrated measures” that Ukrainian business needs to overcome in the future

the legal conduct of “combustible” activities and the attraction of revenues to the treasury, we will tell below. In addition to introducing new and updating the existing definitions of the terms “excise duty”, “implementation fuel “,” excise warehouse mobile “,” manager of excise warehouse “, etc., also provided a number of obligations for excise tax payers for non-compliance with which penalties are offered. The change was expected to expire on July 01, 2019


And here in the explanatory note to the bill among the justification of the need for adoption

such a law and the description of its positive prospects were two theses that attract special attention, a

namely: “the bill does not need public discussion” and “there are no provisions in the bill that

contain discrimination features. ”

However, there were discussions about the project. Only edits that at least comforted the business,

little was done. Yes, agrarians and companies that will tell you well about discrimination

sell excisable goods, which are not inherently fuel, but are covered by the UKT FEA code



And here comes the “long-awaited” July with key moments of change that we would like to dwell on

more info:

1) from 01 May to 01 June 2019 it was necessary to register in the Electronic System

administration of fuel sales (SEARP) all excise warehouses managed by payers

excise tax became effective as of July 1, 2019;

2) licensing of production, storage, wholesale and retail trade in fuel;

3) step-by-step registration of excise invoices / adjustments to them in the Unified

the State Register of Excise Bill of Lading (EDRAN) and reporting on fuel balances and turnover.

Yes, registration may not have taken place. Initially, on April 18, 2019, the DFS press service announced

that there is no approved procedure for electronic administration of fuel and fuel sales

ethyl alcohol and registration of taxpayers – excise warehouse / excise tax managers

Warehouses, Excise Warehouses / Excise Warehouses in SEARP, and Application Forms

registration of such.


Then the Order was approved by the Cabinet of Ministers Resolution No. 408 of 24.04.2019, but brought to the masses only 25.05.2019, and for the remaining days (6) there were no registration forms from the Ministry of Finance. In fact, it is a real possibility to register excise warehouses through E-cabinets

appeared only 19.06.2019. Our customers were able to receive a successful message the same day

completed the registration, given that the requirements for completing the form were met in advance.


For those who do not have time on the first day after the appearance of electronic forms (applications), you can was to find several informational announcements that the liability for untimely there will be no registration of excise warehouses by their managers, however, clauses 128-1.2 of Art. 128-1 TCs somewhat about the rest. At the same time, we believe that the key phrase “because of the taxpayer”, which in the situation with there is a delay in providing physical tax payers with registration, there is

a decisive factor in this matter.


In general, the registration of excise warehouses was not all that difficult as it was issued at the stage

discussion of the bill. Who knew in January 2019 that it would be a much bigger problem licensing of activities in production, storage, wholesale and retail trade in fuel?

The Law of Ukraine “On State Regulation of Ethanol Production, Cognac and of fruit, alcoholic beverages, tobacco and fuel ”of 19.12.95 № 481/95-ВР (hereinafter: – Law No. 481/95-BP), as amended, in accordance with Law №. 2628-VIII of July 1 Licensing of the listed activities was introduced for all entities.


Here you need to understand the license requirements for the documents, the amount of payments for the licenses themselves, and the procedures the procedures themselves.


Yes, for the purpose of obtaining a license (except for production and manufacturing licenses)

wholesale fuel without wholesale places), the entity submits a lot

did not have 6 documents, namely:


1) description (if the documents are submitted by the applicant personally);

2) statement (by 10 June the DFS even posted on its official website recommended

forms of such);

3) the original receipt for payment for the license in the prescribed amount;

4) a copy of the document certifying the ownership / use of the land certified by the applicant

plot (simply to put it “under excise duty”), the intended purpose of which corresponds

the declared activity;

5) a copy of the act or other similar document on commissioning certified by the applicant

the object (simply to say: “excise duty”);

6) a copy of the license for performance of the high-security works and for operation certified by the applicant (application) of machines, mechanisms, equipment of high risk.

There were no additional questions with the first three points.

With regard to paragraph 4, the original idea of ​​combating the misuse of land was even noble and

the right mood, but remained simple romanticism due to the active spread of the public

dissatisfaction with the inability to fulfill this requirement. Thus, the Law of Ukraine No. 2725-VIII of

May 16, 2019, this section was amended to replace the word “appropriate” target

appointment to “any”.


Article 18 of Law No. 481/95-BP made it possible to combat paragraph 5 until 1 January 2022 and

allowed the business entities not to file such a document. However, this “panacea” is temporary.

For those who have excise goods warehouses from the time until independence, we recommend

to begin to deal with this issue now, as the necessary documentation or her has been restored

obtaining it for the first time can significantly delay the process of obtaining the license you need.

With regard to item 6, in our opinion, we should start with the fact that these are two separate State Labor permits (separatelyfor work and separately for machines), the order of issuance of which is governed by a decree of the Cabinet of Ministers 10/26/2011, No. 1107


Permits are issued on the basis of expert opinions that are the results of the examination the safety and labor environment of the entity. According to statistics prepared by our lawyers, preparation and direct examination takes from one to three months, depending on the entity’s occupational safety status. Yes, a significant number of entities that are subject to such licensing requirements, physically failed to comply with the license requirements as of July 1, 2019, though DFS services and claim otherwise. Thus fines remained: for production without licenses – 1 million UAH, for wholesale and storage – 500 thousand UAH, for retail trade – 250 thousand UAH.


If, according to the authorities, the taxpayers had enough time for fulfillment of the requirements of Law 2628-VIII, why at the same time was not enough the obligated state to provide the authorities with all the necessary in due time, including the SEARP, which would be fully operational, in the forms applications and electronic documents, clarifications and advice on adapting the activities of companies to new requirements?


However, understanding the “pain” of what is happening, the President signed the VRU adopted 04.06.2019 Law of Ukraine №. 2744-VIII, which amends Art. 18 of Law No. 481/95-BP as amended by

01.07.2019 regarding the licensing of storage of fuel, and temporarily, until 31.12.2019, dismissed

business entities from the envisaged Art. 17 of this Law of Liability, if not will be licensing this type of activity.


Therefore, “it is possible to store fuel, and to realize it is not present.” And here about Art. 164 of the Code of Administrative Offenses in general were silent …

After all, today we have:

1) possibility to register excise warehouses;

2) the ability to obtain licenses for production / retail / wholesale trade in

spot / no place of wholesale / fuel storage;

3) But here is the multifunctional SEARP and electronic accounting of residues and fuel turnover is still “on the approach”.

With regard to point 3, we expect both substantial progress and the “first blood” of economic entities in

the issue of timely reporting of residues and fuel turnover during formation

case law on the subject.