LAW OF UKRAINE STATE REVENUE SERVICE IN UKRAINE (Enacted by SC Resolution N510-12, of December 4, 1990) (In the wording of Law of Ukraine N3813-12 of December 24, 1993) (amended and supplemented by Laws of Ukraine N 287/94 of December 12, 1994; N 297/95 of July 7, 1995) N 203/96 of May 16, 1996) The law sets up the status of the state revenue service in Ukraine, its functions and legal grounds for activities. Part I. GENERAL PROVISIONS Article 1. State Revenue Service Structure The State Revenue Service shall be composed of the Chief State Taxation Inspectorate of Ukraine, state taxation inspectorates in the Republic of Crimea, regions, cities and city districts. Boards shall be organized in the Chief State Taxation Inspectorate of Ukraine, and the state taxation inspectorates in the Republic of Crimea, regions, cities of Kyiv and Sevastopol. The number of the board members of the Chief State Taxation Inspectorate of Ukraine shall be set up by the Cabinet of Ministers of Ukraine, and the number of board members of the state taxation inspectorate in the Republic of Crimea, regions, cities of Kyiv and Sevastopol - by the Chief State Taxation Inspectorate of Ukraine. Article 2. Tasks of State Taxation Inspectorates Main task of the state taxation inspectorates shall be the control over keeping with the taxation legislation, correctness of calculations, complete and timely payments to the budget, including taxes, collections and other payments and non-tax incomes (hereinafter - taxes, other payments), and deposits to the state funds, established in accordance with the Ukrainian legislation. Article 3. Legislation Guiding State Taxation Inspectorates In their activities the state taxation inspectorates shall follow the Ukrainian Constitution and laws, resolutions of the Supreme Council of Ukraine, decrees and orders of the President of Ukraine, decrees, resolutions and orders of the Cabinet of Ministers of Ukraine, decisions of the Supreme Council of the Republic of Crimea, and local councils of people's deputies. Article 4. Subordination of State Revenue Service and Its Interrelations with State Executive Bodies and Control Organs The state revenue service shall act within the Finance Ministry of Ukraine and be subordinate to it. The state taxation inspectorates in the Republic of Crimea, regions, cities and city districts shall be subordinate to superior state taxation inspectorates. The state taxation inspectorates shall cooperate with financial organs, banking institutions, courts and arbitration courts, the Security Service of Ukraine, internal affairs bodies and procurator's offices, control-revision service, other control organs. Article 5. Appointment of State Taxation Inspectorate Employees The Chief State Taxation Inspectorate shall be headed by the Deputy Minister of Finance, head of the State Taxation Inspectorate. Deputy Minister of Finance, head of the Chief State Taxation Inspectorate of Ukraine and his deputies shall be appointed by the Cabinet of Ministers of Ukraine. Heads of the State taxation inspectorates in the republic of Crimea, regions, cities of Kyiv and Sevastopol shall be appointed by the head of the Chief State Taxation Inspectorate of Ukraine, heads of the state taxation inspectorates in districts, cities and city districts - by heads of the superior state taxation inspectorates. Article 6. Funding for State Taxation Inspectorates Expenses for maintenance of the state taxation inspectorates shall be specified by the Cabinet of Ministers of Ukraine and covered at the expense of the state budget. The state taxation inspectorates shall allot for the development of the material-technical base 30% of the amount raised as a result of the documentary revisions on taxes, other payments and deposits, fines (excluding the amounts, which are returned to payees in accordance with their appeals to the state taxation inspectorates on the basis of the decisions taken by the court or arbitration court, as provided by the legislation). The procedure for use of the named money shall be established by the Finance Ministry of Ukraine. Article 7. Status of State Taxation Inspectorates The state taxation inspectorates are legal persons, have independent lists of expenses, current accounts in banking institutions, seal with the Ukrainian coat-of-arms and their names. Part II. FUNCTIONS OF STATE TAXATION INSPECTORATES Article 8. Functions of the Chief State Taxation Inspectorate of Ukraine The Chief State Taxation Inspectorate of Ukraine shall fulfil the following functions 1) directly realize and organize the work of the state taxation inspectorates connected with realization of control over keeping with the legislation on taxes, other payments to the budget and deposits to the state funds, legal character of currency transactions, procedure for payments for consumers with use of the control-cash machines and trade-cash record books, limits for the cash in control-cash machines for its use for payments for goods, jobs, services; realization of revisions, revisions for the purpose of revealing reduced incomes, taxes and other payments; revelation, accountancy, estimation and realization of confiscated property, property received as legacy by the state; realization of revisions in view of controlling over the payment of the state tax, and tax payments of the population; 2) work up and release instructions and methodical documents on the procedure for application of the legislative acts on taxes, other payments to the budgets, deposits to the state target funds and normative acts with regard to compiling the State Register of Natural Persons-Payers of Taxes and Other Statutory Duties; 3) approve the forms for tax payments, reports, declarations, and other documents to the budgets, deposits to the state target funds, the model card of natural person-payer of taxes and other statutory payments, and also the forms for reports on the carried out work; 4) through the means of the mass media explain the procedure for fulfilment of the legislative and other normative acts on taxes, other payments to budgets, deposits to the state funds, and organize the realization of this work by the state taxation inspectorates; 5) realize measures on choice, appointment, professional training, advanced training of specialists for the state taxation service; 6) submit to the state taxation inspectorates methodical and practical assistance in organization of work; revise their activities; 7) organize work on establishing the information system, automatic working places and other automatic and computer means for the work of the state taxation inspectorates; 8) work up the main directions, forms and methods for holding tax revisions, set up tasks and powers for divisions of the taxation inspectorates, coordinate and control their activities; 9) within its competence reveal illegal actions of enterprises, establishments, organizations and citizens, which may testify to criminal activities, or create conditions for these activities, and submit the information on these issues to the respective special organs for measures against criminality; 10) submit to the law and order organs the materials on facts of violations, be under criminal liability; 11) submit to the Finance Ministry of Ukraine a report on received taxes, other payments to the budget, deposits to the state funds; 12) prepare proposals on intergovernmental agreements for avoiding dual taxation for incomes and property, and preventing from escaping taxes. 13) give identification index numbers to the natural persons-payers of taxes and other statutory duties and send a card containing the identification index number to the state taxation inspectorate at the natural person's place of residence, or place of his earning income, or place of location of a taxable object. Article 9. Functions of State Taxation Inspectorates in the Republic of Crimea, Regions and Cities The state taxation inspectorates in the Republic of Crimea, regions and cities shall realize functions, as provided by article 8 of this Law, except for items 2, 3, 8, 12 and 13. Where the named state taxation inspectorates exercise control of tax, other payments payees, and depositors to the state funds, they shall exercise in regard to these payees the same functions as the state taxation inspectorates in districts, city districts and towns. Article 10. Functions of State Taxation Inspectorates in Districts, City Districts and Towns The state taxation inspectorates in districts, city districts and towns shall fulfil the following functions 1) realize control over keeping with the legislation on taxes, other payments to budget, deposits to state funds; 2) provide the complete accountancy for tax payees and depositors, their duly and timely transfers, and also provide registration of natural persons-payers of taxes and other statutory duties; 3) control timely submitting by payees of accountancy reports and balances, tax declarations, payment reports and other documents connected with raising taxes, other payments to the budgets, deposits to the state funds, and also revise whether these documents duly specify the objects under taxes, other payments to the budgets, and deposits to the state funds; 4) control legal character of currency transactions, keeping with the established procedure for payments for consumers with use of control-cash machines, trade-cash record books, amounts of the cash and its use for payments for goods, jobs, services; 5) keep records of promissory notes for paying import and export tax, and exercise control over their clearing off; 6) provide timely raising of fines, as provided by this Law, other legislative acts on taxation, and also raising administrative fines for violations made by officials of enterprises, establishments, organizations, and citizens; 7) analyze reasons and estimate data on facts of violations of the legislation on taxes; 8) carry out revisions for facts of hiding and reducing tax amounts, other payments, and deposits to the state funds; 9) on orders of special divisions for measures against organized criminality revise the documents on accounting and paying taxes to the budgets and state funds; 10) within their competence reveal illegal activities of enterprises, establishments, organizations, and citizens, which may testify to criminal activity, or create conditions for such activity, and submit the information to special organs for measures against criminality; 11) submit to law and order organs the materials on facts of violations subject to criminal responsibility, and also appeal to courts and arbitration courts against enterprises, establishments, organizations, and citizens on violations concerned; 12) carry out work connected with revelation, accountancy, estimation and realization of confiscated property, inherited by the state property; 13) control executive committees of rural councils of people's deputies to keep with the procedure for receiving and accounting of taxes, other payments from the population, timely and duly transfer of these amounts to the budget; 14) consider applications, proposals and appeals from citizens, enterprises, establishments and organizations on issues for taxation, and appeals against officials of the state taxation inspectorates; 15) submit to the respective financial bodies reports on tax incomes to the budgets, and deposits to the state funds. Part III. RIGHTS, DUTIES AND RESPONSIBILITY OF STATE TAXATION INSPECTORATES Article 11. Rights of State Taxation Inspectorates The Chief State Taxation Inspectorate of Ukraine, state taxation inspectorates in the Republic of Crimea, regions, districts, cities, city districts, towns shall have the right to 1) realize at enterprises, establishments and organizations, regardless their forms of property, and with citizens, revisions of payment documents, record books, reports, lists of expenses, declarations and other documents, regardless the form of submitting the information (including computers) connected with accountancy and payments of taxes, other payments to the budgets, deposits to the state funds, the documents on the state registration of economic entities, special permits (licenses, patents) for realization of business activities, and also receive from officials and citizens written explanations, information on questions during revisions; check identity documents of officials and citizens during revisions; make officials and citizens give explanations on questions for accountancy and payment of taxes, other payments to the budgets, deposits to the state funds, and also realize revisions of reliability of information obtained to be included in the State Register of Natural Persons-Payers of Taxes and Other Statutory Duties; 2) receive free of charge from enterprises, establishments, organizations, including the National Bank of Ukraine, commercial banks, other financial-credit organizations, and citizens information on activities, received incomes, expenses of enterprises, establishments and organizations, regardless their forms of property, and citizens under revision, on open and closed accounts, currency and other accounts, information of cash and cash circulation on these accounts, including on hard currency amounts not received from economic entities within the established terms, and other information, connected with accounting and paying taxes, other payments to the budgets, deposits to the state funds, enter any information systems, in particular, computer systems, in order to establish the object under taxation; 2.1) receive free of charge from enterprises, establishments, organizations regardless their forms of property, including the National Bank of Ukraine and its affiliates, commercial banks, and physical entities-subjects of business activity required information on sums of income paid to physical entities and taxes and other statutory payments raised from them, from bodies authorized to provide state registration (licensing) of physical entities-subjects of business activity, from the interior bodies - on citizens arrived for residence in respective settlement or left it, from the registry offices -on citizens who died to compile the database of the State Register of Natural Persons-Payers of Taxes and Other Statutory Duties; 3) revise any productive, storing, trade and other premises of enterprises, establishments and organizations, regardless their forms of property, and citizens, which are used for receiving incomes or connected with maintenance of objects under taxation, regardless the place of their location. Where leaders of enterprises, establishments, organizations, and citizens refuse from officials of the state taxation inspectorates to revise these premises, or the documents on received incomes and expenses, the state taxation inspectorates have the right to fix the income (profit) illegible to taxes on the basis of documents, which testify to received by them incomes, and as for citizens - with consideration of the experience of persons, who are involved in similar activities; 4) demand from leaders and other officials of enterprises, establishments and organizations, and also citizens, under revision to remove revealed violations on taxes, other payments to the budgets, deposits to the state funds, and the legislation on business undertakings, and control their fulfilment; and also terminate actions preventing from the officials of the state taxation inspectorates fulfilling exercising their powers; 5) terminate operations carried out by enterprises, establishments, organizations, and citizens on current, currency, other accounts in the departments of the National Bank of Ukraine, commercial banks, other financial-credit organizations, provided they refuse from the revision of the documents, or prevent from inspectorate of their premises used for receiving incomes, or other connected with maintenance of objects under taxation, refusal from submitting to the state taxation inspectorates the accountancy reports, balances, tax declarations, accounts, and other documents, connected with accountancy and paying taxes, other payments to the budgets, deposits to the state funds, or refusal from showing certificates on the state registration of economic entities, special permits (licenses, patents) for economic activities, and also where the list of objects under taxation is not provided; 6) take from enterprises, establishments, organizations the documents, which testify to unpaid taxes, other payments to the budgets, deposits to the state funds, and from citizens - businessmen, who violate the order for business undertakings, - the registration certificates or special permits (licenses, patents), with the further transfer of the materials to the organs, which issued these documents violating the legislation; 7) apply for enterprises, establishments, organizations, and citizens fines in the following forms double amount of the unpaid tax, other payment to the budgets, deposit to the state funds; provided the violation takes place twice during one year - five amounts of duly payment; 10% of the amounts of taxes, other payments to the state budget, or deposits to the state funds for refusal to submit of or untimely submitting to the state taxation inspectorates tax declarations, accounts, auditing results and other documents necessary for accounting the amount of taxes, other payments and deposits, and also for not submitting or untimely submitting to the banking institutions of letters of credit for paying taxes, other payments to the budgets, deposits to the state funds. Fines, as provided by this item, shall be used for taxes, other payments and deposits, which shall be obligatory submitted to the state taxation inspectorates; 8) raise for budgets and state funds additional taxes, other payments and deposits, be revealed after revisions, and also fines and other sanctions, as provided by item 7 of this article and other Ukrainian legislative acts; they shall be raised from enterprises, establishments, organizations, regardless their forms of property, and aftereffects caused by financial-economic activities - on the indisputable basis, and from citizens - on the court decision, or notary's executive orders; 9) for untimely fulfilment by banking institutions and other financial-credit organizations of orders of the state taxation inspectorates on unquestionable raising of taxes, other payments and deposits, and also letters of credit of enterprises, establishments, organizations, and citizens for paying taxes, other payments to the budgets, deposits to the state funds - to raise from banking institutions and other financial-credit organizations fine for every day of delayed payment (including the day of payment) in the amounts established by the legislation concerned 10) impose administrative fines for leaders and other officials of enterprises, establishments, organizations, be to blame in reducing the amount liable for taxes, other payments, or deposit, in hiding (reducing) objects under taxation, and also where there is no a record book on objects under taxes, or it is made with violations, or submitting untimely, or does not meet the established requirements as to its form, accountancy reports and balances, tax declarations, accounts, audit conclusions, other payment documents do not meet the requirements as to the established forms - from 5 to 10 tax-free citizens' income minimums; and where the same violation is repeated twice during one year - from 10 to 15 tax-free citizens' income minimums; for leaders and other officials of enterprises, establishments, organizations, including departments of the National Bank of Ukraine, commercial banks and other financial-credit organizations, which do not fulfil the requirements contained in items 2-5 of this article, set up by the state taxation inspectorates and their officials, - from 10 to 20 tax-free citizens' income minimums; for officials of enterprises, establishments and organizations, and also citizens - subjects of business undertakings, who are to blame in unduly transfer to the budgets of the amounts of income tax from citizens, transfer of tax at the expense of enterprises, establishments and organizations (except for the cases when such transfers are provided by the legislation), in providing no information or untimely information to the state taxation inspectorates at the established form on the citizens' incomes, - to the amount of 3 tax-free citizens' income minimums, and where this violation takes place more than once during one year - to the amount of 5 tax-free citizens' income minimums; for citizens to be to blame in not providing, or untimely providing of declarations on incomes, or providing distorted information, where there in no record keeping, or unduly record keeping for incomes and expenses -from 1 to 5 tax-free citizens' income minimums; for citizens involved in business undertakings, who are to blame in counteractions against officials of the state taxation inspectorates, in particular, preventing them from seeing the premises, used for realization of business undertakings and receiving incomes - from 10 to 20 tax-free citizens' income minimums; for citizens involved in business undertakings without the state registration, or a special permit (license), where it is provided by the legislation - from 3 to 8 tax-free citizens' income minimums, with confiscation of the produced goods, means of production and raw materials; for citizens who sell goods without patents, or violate terms of their validity, or sell goods, not specified in the declarations - from 1 to 10 tax-free citizens' income minimums, and for the same violations having place more than once during one year - from 10 to 20 tax-free citizens' income minimums; 11) while fulfilling their official functions freely use communication means, which belong to enterprises, establishments, and organizations, regardless their forms of property; 12) order the state control-revision organs to carry out revisions, provided there are found violations during the control over incomes in hard currency, realization of payments with consumers with the use of control-cash machines and trade-cash record books; 13) demand from leaders of enterprises, establishments, and organizations, be under revision, to realize inventory of the basic production funds, trade-material values, money and accounts; where necessary seal down cashiers, premises, store houses and archives. 14) provide information from the State Register of Natural Persons-Payers of Taxes and Other Statutory Duties to other state bodies according to the effective legislation. Rights, provided by items 1-4, 6, 11 and 13 of this article, shall be given to officials of the state taxation inspectorates, and rights, provided by items 5, 7-10, 12 and 14 of this article - only to heads of the state taxation inspectorates and their assistants. Article 12. Cancellation of Decisions of State Taxation Inspectorates The Chief State Taxation Inspectorate of Ukraine shall be entitled with the right to cancel the decisions taken by other state taxation inspectorates, and the state taxation inspectorates in the Republic of Crimea, regions, cities - the decisions taken to subordinate state taxation inspectorates, provided their actions do not meet the requirements of the legislation. Article 13. Duties and Responsibility of Officials of State Taxation Inspectorates Officials of the state taxation inspectorates shall follow the Ukrainian Constitution and laws, other normative acts, the public rights and legal interests of the citizens, enterprises, establishments, organizations, provide fulfilment of the tasks of the state taxation inspectorates and fully enjoy their rights. Where officials of the state taxation inspectorates not fulfil or unduly fulfil their duties, they shall be disciplinary, administratively, criminally, and materially responsible, as provided by the legislation in force. Losses caused by illegal actions of the officials of the state taxation inspectorates shall be compensated at the expense of the state budget. Officials of the state taxation inspectorates shall observe commercial and official secrecy. Article 14. Appeal Against Actions Undertaken by Officials of State Taxation Inspectorates Appeals against actions undertaken by officials of the state taxation inspectorates shall be submitted to the directly superior state taxation inspectorates. Appeals shall be considers and decisions shall be taken within one month since they are submitted. Decisions concerning appeals may by applied against during one month to superior taxation inspectorates. Where enterprises, establishment, or organization does not agree to the decision of the Chief State Taxation Inspectorate of Ukraine, it may be applied against in the arbitration court. Where citizens do not agree to the decisions thereof, they may apply against them in court. Submitted appeal shall not terminate actions of officials of the state taxation inspectorates. Appeals against actions of the officials of the state taxation inspectorates, connected with administrative fines, shall be realized in accordance with the Ukrainian legislation on administrative violations. Part IV. OFFICIALS OF STATE TAXATION INSPECTORATES AND THEIR LEGAL AND SOCIAL PROTECTION Article 15. Officials of State Taxation Inspectorates Official of the state taxation inspectorate may be represented by a person, who has education in accordance with his occupation and meets qualification demands, set up by the Finance Ministry of Ukraine. A testing period from 6 months to a year may be established when a person is employed. Persons, who were subjects to criminal responsibility, cannot by employees by the state taxation inspectorates. Officials of the state taxation inspectorates do not have a right to be involved in business undertakings, and also work part-time at enterprises, establishments and organizations (except for scientific and teaching practice). Officials of the state taxation inspectorates shall undergo attestation. The procedure for attestation shall be set up by the Chief State Taxation Inspectorate of Ukraine. Officials of the state taxation inspectorates shall be conferred special titles chief state councillor of taxation service, state councillor of taxation service of 1 rank, state councillor of taxation service of 2 rank, state councillor of taxation service of 3 rank, councillor of taxation service of 1 rank, councillor of taxation service of 2 rank, councillor of taxation service of 3 rank, inspector of taxation service of 1 rank, inspector of taxation service of 2 rank, inspector of taxation service of 3 rank. Regulation on special titles and procedure for their confer, amount of additions given for the title shall be approved by the Cabinet of Ministers of Ukraine. There shall be prohibited to impose duties on the officials of the state taxation inspectorates, which are not provided by this Law and other legislative acts of Ukraine. Article 16. Protection of Personal and Property Rights of Officials of State Taxation Inspectorates The State shall guarantee the protection of life, health, honour, and property of officials of the state taxation inspectorates and members of their families from any illegal actions. Insult of official of the state taxation inspectorate, threat of murder, violence, and violent actions as to official of the state taxation inspectorate, and also purposeful damage to property, and other illegal actions shall bring to a responsibility in accordance with the law. Article 17. Compensation of Damage Caused to Official of State Taxation Inspectorate Realized by State In case of death of an official of the state taxation inspectorate occurred during fulfilment of his duties, his family shall receive a single aid totalling to 10 year salaries, which he got before the death; this payment shall be done at the expense of the state budget, with further raising of this sum from those guilty in his death. In case an official suffered serious damage to health while fulfilling his official duties, which prevent from his further work, he shall get the compensation totalling to 5 year salaries at the expense of the state budget, with further raising of this amount from those guilty in the damage. In case of light damage to the health of an official of the state taxation inspectorate while fulfilling his duties, he shall get the compensation totalling to 1 year salaries at the expense of the state budget, with further raising this amount from those who caused damage. Decision on paying the compensation shall be accepted by the head of the state taxation inspectorate at his place of work on the basis of the court decision, or resolution of the procurator's office. Damage caused to the property of an official of the state taxation inspectorate or his family shall be compensated in full at the expense of money from the state budget, with further raising of this amount from those to be to blame. Compensation for damage caused to the property of an official of the state taxation inspectorate or his family shall be realized on the basis of the court decision. For record keeping of real expenses connected with compensation of amounts for aids and compensation of damage to an official or his family there shall be open special accounts in the banking institutions for the state taxation inspectorates. Article 18. Compulsory State Personal Insurance of Officials of State Taxation Inspectorates Officials of the state taxation inspectorates shall be subject to compulsory state personal insurance at the expense of the state budget, in case of death - for 10 year salaries, in case of wound, trauma or crippling, illness or becoming invalid - from 6 months to 5 years salaries (depending on the level of health damage). Procedure and conditions for insurance of officials of the state taxation inspectorates shall be established by the Cabinet of Ministers of Ukraine. Chairman of the Supreme Council of Ukraine L.KRAVCHUK Kyiv, December 4, 1990 N 509-XII 41