Law of Ukraine No. 3050-ХХ as of 11.04.2023 "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding exemption from payment of the environmental tax, land payment and tax on immovable property other than land for destroyed or damaged immovable property" (hereinafter - Law) entered into force on 06.05.2023.
According to the Law, the List of territories where hostilities are (were) conducted or temporarily occupied by the russian federation (hereinafter - List of territories) is determined according to procedure established by the Cabinet of Ministers of Ukraine (Sub-paragraph 69.16 Paragraph 69 Sub-section 10 Section XX "Transitional Provisions" of the Tax Code of Ukraine (hereinafter - Code).
Procedure for determining some issues of forming the List of territories was approved by Resolution No. 1364 of the Cabinet of Ministers of Ukraine as of 06.12.2022 (hereinafter – Resolution), Paragraph 1 of which delegated powers to the Ministry for Reintegration of Temporarily Occupied Territories to:
approval of the List of territories;
definition of components of the List of territories,
determination of the record format by which territories are reflected in the list;
approve form of the List of territories.
Therefore, the List of territories, approved by Order of the Ministry for Reintegration of the Temporarily Occupied Territories of Ukraine No. 309 as of 22.12.2022, registered in the Ministry of Justice of Ukraine on 23.12.2022 under No. 1668/39004 (hereinafter - Order), is used to determine territories of active hostilities or temporarily occupied by the russian federation (hereinafter - Territories), including the environmental tax payment.
section I includes two parts:
territories of possible hostilities (part one);
territories of active hostilities (part two);
section II - temporarily occupied territories of Ukraine.
Therefore, Part 2 of Section I and Section II of the Order are applicable for the environmental tax payment.
Right not to accrue and not to pay environmental tax for a period from January 1, 2022 to December 31, 2022 is granted to payers who, during their activities in Territories included in the List of territories by Order in 2022, are subject to the environmental tax, established by Sub-paragraph 69.16 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Code.
Right not to accrue and pay for a period from January 1, 2023
In 2023, starting from January 1, no environmental tax is accrued or paid for the taxation objects arising from:
Territories included in the List of territories;
land plots contaminated with explosive objects, or which have been recognized as potentially contaminated with explosive objects.
Right not to accrue and pay the environmental tax for payers for the taxation objects arising in Territories shall cease on the first day of a month following date specified in the column "Date of the end of hostilities" of the corresponding List of territories of the Order.
Right not to accrue and pay the environmental tax for payers for taxation objects arising on land plots contaminated by explosive objects begins on the first day of a month following the month in which active hostilities or temporary occupation of relevant territory is completed (including if the beginning date of the survey of dangerous territory by the operators of mine countermeasures comes after the ending date of hostilities or temporary occupation in relevant territory) and ends on the last day of a month in which such land plots are recognized as suitable for use.
Period when land plots are considered to be potentially contaminated with explosive objects is defined as a period starting from the first day of a month in which date of decision of the local self-government body - village, settlement, city council, military administration or military-civilian administration (hereinafter - Body) on the provision of tax benefits for payment of local taxes and levies based on the taxpayer's application and ends on the last day of a month in which one of the following dates falls to the:
last day of a period for which exemption from payment of local taxes and/or levies was granted according to the adopted decision (including taking into account changes made to such decision);
date of cancellation of relevant decision;
beginning date of the survey of the land plot by operators of mine action activities or the recognition of land plot as suitable for use, depending on which of them comes first:
At the same time, non-accrual and non-payment of the environmental tax by the payer for taxation objects arising on sites contaminated by explosive objects, or which have been recognized as potentially contaminated by explosive objects, occurs in case of mandatory fulfillment of two conditions:
submission of application to the Body about the potential contamination of the land plot with explosive objects;
adoption by such Body of decision on exemption from the land tax payment for the land plot specified in such application.
Since the Code establishes that the land plot is a part of the earth's surface with established boundaries, a certain location, target (economic) purpose and with defined rights in relation to it (Sub-paragraph 14.1.74 Paragraph 14.1 Article 14 of the Code), decision on recognition of such land plot as potentially contaminated with explosive objects is accepted only in the part of formed land plots that have cadastral numbers.
Please note that the effect of the norm of Sub-paragraph 69.16 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Code in 2022 and 2023 applies to taxpayers whose objects and base of environmental tax taxation are defined in Sub-paragraphs 242.1.1 - 242.1.3 and 242.1.5 of Paragraph 242.1 Article 242 of the Code.
Clarification of the environmental tax obligations
1) For taxation objects located in Territories included in the List of territories approved by the Order.
Environmental tax payers who, prior to the date of entry into force of the Law in tax periods of 2022-2023, declared tax liabilities for taxable objects located in Territories included in the List of territories approved by the Order, guided by Paragraph 50.1 Article 50 of the Code, may clarify such tax obligations by submitting appropriate clarifying tax declarations.
For 2023, tax obligations are specified according to periods of the beginning and completion of hostilities or temporary occupation in relevant Territories.
2) For taxation objects located in other territories
Environmental tax payers registered (accounted for) at the location of stationary sources of pollution, for generation of radioactive waste and temporary storage of radioactive waste on land plots contaminated by explosive objects, or which were recognized as potentially contaminated by explosive objects, who, before the date of entry into force of the Law, declared tax obligations for 2022 and/or 2023, have a right to adjust the environmental tax amounts calculated for these periods by submitting clarifying tax declrarations.
Clarification of tax obligations is carried out for periods during which land plots, at the location of pollution source, were recognized as contaminated or potentially contaminated with explosive objects. Recognition of territories as contaminated (potentially contaminated) by explosive objects is confirmed by the adoption by the Body of a decision on exemption from the land payment for the land plot.
Taxpayers who in 2022-2023 did not declare their tax liabilities for taxation objects located in Territories approved by the Order must declare the corresponding tax liabilities, if they exist.
Application of fines and penalties
During the martial law, the environmental tax payer fulfills obligation, in particular, with regard to compliance with payment terms of taxes and levies, submission of reporting, established by Sub-paragraph 69.1 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Code. In accordance with the Fourteenth clause of this Sub-section, in the case of self-correction of errors that led to an understatement of tax liability in reporting (tax) periods falling during the martial law, such payers are exempted from the calculation and payment of fines provided for in Paragraph 50.1 Article 50 of the Code, and a penalty.
That is, the environmental tax payers, who will submit to the controlling bodies clarifying tax declarations for the reporting (tax) periods falling during the martial law, will not be charged with fines and penalties.