State Tax Service of Ukraine has prepared answers to actual questions of the taxpayers regarding audits, VAT, declarations, registration actions and transfer of indicators in the reorganization case of legal entities through transformation (change in the organizational and legal form of the enterprise).
First of all, the fact of transformation itself is not a basis for conducting unscheduled documentary audit according to Paragraph 78.1.7 Article 78 of the Tax Code of Ukraine. Unscheduled audits in the reorganization case are carried out when the legal entity is terminated, reorganization procedure is initiated (except for transformation), separate division is closed, bankruptcy case is initiated or application for deregistration is submitted. Decision regarding such audits is made only if there are tax risks in the payer’s activities.
At the same time, reorganization may be taken into account including enterprise in the schedule of scheduled audits, but not as a separate reason, but taking into account level of tax risks. Schedule includes payers with a high, medium or low risk of tax evasion. Priority is given to entities with the highest risks.
When the enterprise is transformed, tax number does not change and all data on the reorganization is received by the controlling authorities from the Unified state register. Therefore, it is not necessary to additionally notify the State Tax Service about the transformation if relevant registration actions have already been entered into the Register.
Enterprise created as a transformation result is considered newly created income tax payer and reports for the annual period starting from the transformation date and lasting until the end of the reporting year. Legal successor has a right to reduce financial result by the amount of negative value of the taxation object that was recorded in the enterprise that is being terminated, taking into account requirements of the Tax Code of Ukraine.
Regarding VAT: reorganization by transformation requires re-registration of the VAT payer. Payer must submit application Form № 1-VAT with a mark "Re-registration" within 10 working days after the transformation completion. As a re-registration result, registration date as the VAT payer and individual VAT payer’s number do not change. If entity is formed through transformation has not submitted application for re-registration within the established period, its registration as the taxpayer will be canceled by an independent decision of the controlling authority according to Article 184 of the Tax Code of Ukraine.
Reorganization by transformation is not subject to the VAT, and amount of negative VAT value can be transferred to tax credit of the legal successor upon the payer’s application and after confirmation by the documentary audit of the controlling authority. At the same time, aspect of classifying enterprise formed as a transformation result into category of "risky" VAT payers is considered by the regional commission on a general basis – based on the risk criteria and available tax information.
More information about individual aspects of the taxpayer transformation, is at the link: https://tax.gov.ua/en/new-about-taxes--hotlines-/956952.html.