The majority of individual entrepreneurs, who using the simplified taxation system (STS), do not use payment transactions recorders (PTRs). It is not surprising that large and medium companies are trying to do the same, but in another way, thereby lowering declared earnings. So, the Draft Law “On Amendments to the Tax Code of Ukraine and the Law” On the Application of Payment Transactions Recorders in the Sphere of Trade, Catering and Services “(the Draft Law) is aimed specifically at removing from the shadow turnover the high-value segment goods and cash from retail trade.

According to the Draft Law the main consequences for business should be:

  • losing the opportunity to conceal the real amount of proceeds from the sale of goods and services;
  • reducing the volume of counterfeit and contraband goods;
  • tax optimization and raise the level of tax discipline;
  • reducing the number of verifiers for honest sellers;
  • leveling the economic competition conditions between sellers who do not apply STS;
  • gradual reduction of unfair competition;
  • monitoring by state authorities for PTRs and ensuring trust to public institutions.

It should be noted that the size of fines for business is rather high. Such additional responsibility may affect small and medium-sized businesses, and for individual entrepreneurs, it may be “non-performing” amounts in general. Of course, there may be abuses from the buyers’ side during the course of complaints’ submission to the controlling bodies. In any case it is important for the buyer to realize their rights and the ability to get compensation from the state. Business, in turn, will try to sell only high-quality goods and set higher prices, covering the risks of abuse and payment the higher tax amounts, and sometimes fines. In such situations, the buyers should be compensated such expenses, so not only the buyers’ requirements will increase, but also the cost of goods.

Kateryna Breduliak, senior associate, banking and finance, exclusively for The Ukrainian Journal of Business Law