The State Tax Service has improved strategic planning and approaches to assessing taxpayer risk: implementation of recommendations

The State Tax Service of Ukraine, in order to implement the recommendations of the Accounting Chamber, provided as a result of the audit of the effectiveness of «Appealing of State Tax Service decisions: impact on the economic activity of taxpayers», has identified priorities for its strategic development, begun improving approaches to assessing the riskiness of taxpayers, and strengthened control over the implementation of court decisions.

As a reminder, the audit found that the results of appealing State Tax Service decisions in administrative and judicial proceedings differ significantly: if during 2021-2023 and the first half of 2024 in In administrative proceedings, only 27% of decisions (for UAH 34.5 billion) were satisfied in favor of taxpayers, while in court proceedings - this figure is 75% (127.5 billion UAH).

The State Tax Service suspended the registration of about 8 million tax invoices/adjustment calculations (TAS/RC) for the VAT amount of UAH 144 billion, 23.4% of them - based on the riskiness criterion of the VAT payer based on the tax information available to the State Tax Service, which determines the riskiness of such a payer's business transaction. According to the auditors, the specified riskiness criterion is too general and gives discretionary powers to regional-level commissions that make the relevant decisions. Therefore, some of the decisions to suspend the registration of PN/RC were canceled by the courts due to insufficient justification.

In order to eliminate the identified shortcomings, the Accounting Chamber provided the State Tax Service with a number of recommendations.

To implement them, the State Tax Service, in particular, made amendments to its Regulations to improve interaction between tax authorities at the central and regional levels, updated the Directory of Tax Information Codes, which became the basis for considering the issue of compliance of the VAT payer with the taxpayer risk criteria, and improved the mechanism for resolving issues on the implementation by the State Tax Service of court decisions made in favor of taxpayers regarding the registration of PN/RC.

In addition, the State Tax Service approved the mission and Strategic Plan for 2025-2030, which provided for improving the support of court cases and the procedure for administrative appeals with a clear division of responsibility and deadlines.

Also to the passport budget program «Leadership and management in the field of tax policy» for 2025, effective quality indicators were included, covering the assessment of all types of tax decisions made by territorial bodies of the State Tax Service.

In general, the State Tax Service implemented seven out of ten recommendations of the auditors, three more - in the process of implementation. Therefore, the Accounting Chamber continues to monitor and analyze the status of their implementation and will inform the public about the results.

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