Deferral of tax debt

We continue our series of articles on tax debt. In this article, we will tell you how to arrange an installment plan or get a deferral to pay your tax debt.

If you have a tax debt, you have the right to receive a deferral to pay it. The Tax Code provides for the possibility of postponing the payment of tax liabilities at an interest rate of 120% per annum of the NBU discount rate effective on the day of the tax decision.

Installment means repayment of the debt in equal installments starting from the next month after the right to installment is granted. Deferral means the possibility of paying the tax in equal installments, but from a specific date chosen by the tax authorities.

If you choose an installment plan with deferred payment, the first payment must be made within 12 months from the date of the tax debt.

If the tax debt to which the installment plan will be applied includes a penalty, then it is not taken into account when calculating interest.

Not all types of taxes can be paid in installments, for example, unified social tax cannot be paid in installments or deferred.

How do I get an installment plan to pay my tax debt?

Stage 1. Preparatory

No one will give you an installment plan to pay your tax debt out of the blue. To do so, you must first establish a link between the inability to repay the debt on time and the circumstances that led to it.

Such circumstances may include the following situations:

• the threat of bankruptcy in case of full lump-sum repayment of tax debt;
• the occurrence of a force majeure situation that makes it impossible to repay the debt.

Stage 2. Submission of documents

To get an installment plan, you have to file a tax return with the tax office:

1. Application for deferral of tax debt (submitted at the taxpayer's place of registration or to the tax office where the debt was incurred).
2. Economic justification of the installment plan (documents collected at the first stage; analysis of the financial condition; debt repayment schedule).

You can find out whether the tax authorities have registered your application in your personal account in the Register of applications for deferral, deferral of monetary liability and tax debt section.

Stage 3. Making a decision

Within 30 calendar days after submitting the application, the tax office will decide whether to grant you an installment plan or not.

If you are granted permission to defer your tax debt, the tax office will send a corresponding decision and enter the information into the Register.

If you have a tax debt for more than one tax, then applications are submitted for each tax and the fiscal service makes a decision on each tax separately.

If the amount of the tax debt is more than UAH 1 million, then in order to receive an installment plan, you will need to provide property equal to the amount of the debt (or higher) as collateral.

Stage 4. Conclusion of the contract

If the tax authorities have given the go-ahead to defer the tax debt, then you will need to enter into a deferral agreement.

The agreement must be concluded the next day after receiving a positive response at the taxpayer's place of registration.

Stage 5. Debt payment

After entering into the agreement, you need to pay the debt and interest on time and adhere to the terms specified in the agreement.

If you do not have the funds to pay the next installment, you can contact the tax office with which you have an agreement to defer payment.

If you have the opportunity to pay off your tax debt early, you can do so without any problems. Just remember to notify the tax office within three days after making the full payment (tax debt + interest).

In the next article, we will discuss whether the tax authorities can seize funds and property to repay tax debts?

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