How and when will the tax authorities gain access to Ukrainian bank accounts?

The Cabinet of Ministers has approved the National Revenue Strategy until 2030, in which it presents a plan of changes, including in the tax area. The document states that the State Tax Service should be granted access to bank accounts of legal entities, individual entrepreneurs and individuals.

Why do the tax authorities need information on the movement of money on citizens' cards and when will these changes come into effect?

What is the National Strategy of Ukraine?

The National Strategy is not yet a law, but only a document that envisages a number of reforms in the tax and customs spheres. This plan can be amended based on the actual state of affairs. For example, in order to implement a certain reform, the government must first ensure the appropriate conditions, prepare the legislative framework, increase public confidence in the tax authorities, take anti-corruption measures, etc.

The National Strategy was adopted to accelerate Ukraine's accession to the EU. For European integration, it is necessary to adapt tax legislation and bring it as close as possible to EU standards.

On the basis of this document, the Ministry of Finance plans to introduce the principle of income declaration, which is used by all the Baltic countries and Poland. But what can Ukrainian businesses and citizens expect from the planned reforms?

A new approach to tax declaration

The main idea of the new strategy is that the tax authorities get access to the banking data of individuals, prepare their own income tax returns, and only then coordinate them with the taxpayer. Thus, the State Tax Service will be able to receive information on all card transactions on Ukrainians' accounts, namely:

• on payment for services and goods,

• about replenishing the card and withdrawing money,

• transfers to other cards and accounts,

• on regular mandatory payments, etc..

Specific conditions for granting tax access to bank accounts will be determined by a separate law.

This way, the State Tax Service will be able to see the status of citizens' accounts, calculate their income, and prepare a declaration and send it to a specific person for signature. Based on the results of the annual income, this person will have to pay a certain amount of tax.

Thus, the Ministry of Finance is gradually preparing to introduce a progressive personal income tax rate scale. What are the peculiarities of this reform?

The higher the income, the higher the tax

Today, the personal income tax rate is 18%. However, there is no progressively in setting the rate of this tax. This means that all citizens pay this rate on a monthly basis on their income, regardless of its amount. According to the Tax Code, an individual must declare his or her unofficial income and pay tax on it. But few people file such declarations today.

In this regard, the government has proposed to reform the personal income tax and abolish the 18% flat tax. The purpose of this step is to introduce a progressive scale, where higher incomes will be subject to a higher percentage of taxation. On the one hand, this will help increase the country's budget revenues, but on the other hand, this approach implies a very complicated administration, meaning that the tax authorities will have to strengthen control over the implementation of laws.

However, it is not yet clear what the new personal income tax rates will be. The National Strategy does not specify the amount of the tax. The document only states that in order to introduce a progressive scale, it is necessary to change the mechanism of personal income tax calculation and methods of tax control.

Mass declaration imminent?

The intention of the Ministry of Finance to give tax authorities access to the status of Ukrainian bank accounts is only a strategy for the next few years. Its essence is to obtain information about the turnover and amount of money on the cards of entrepreneurs, legal entities and individuals without opening criminal proceedings and without a court decision.

However, when changing the declaration system, it will be necessary to take into account that Ukrainians' cards also receive money on which the tax rate has already been paid or which is in principle exempt from taxation under the Tax Code. Therefore, when adopting the reform, the legislator should:

• eliminate corruption risks,

• eliminate the possibility of political pressure on business,

• maintain the confidentiality of citizens' personal information.

Plan for repayment of tax debt

The National Strategy envisages the development of new rules that will simplify control over debtors. Thus, from 2025 to 2027, it is planned to:

1. Expand the powers of the State Tax Service to collect debts and seize bank accounts without a court order.

2. Extend the statute of limitations for collecting tax arrears to 6 years.

3. Cancel the validity of the payment instruction until the debt is fully repaid.

4. Provide the State Tax Service with access to information on the status of bank accounts.

And a few numbers: the document states that out of 95% of debtors, about 70% are citizens who are not entrepreneurs. This means that future changes in tax legislation will affect everyone: both entrepreneurs and individuals.