Actual DTS check: checklist of actions for individual entrepreneurs and businesses

A factual audit is conducted without prior notice directly at a store, café, office, warehouse, pickup point, or another place of business activity. Inspectors may begin it only if there are grounds provided for by the Tax Code, a properly issued audit order, audit referrals, and official identification documents. The business owner should verify these documents, record the start of the audit, contact the responsible person, accountant, or lawyer, and not obstruct the inspectors’ lawful actions.

The main protection for a business is provided not by verbal explanations but by documents and proper records: correctly issued fiscal receipts, daily Z-reports, source documents for goods, inventory records, properly registered employees, valid licences, correct cash operations, the availability of cashless payment, and matching addresses in documents, ECR/РECR records, licences, and Form No. 20-OPP. Unlawful refusal to admit inspectors may result in an administrative seizure of property and, for sellers of excisable goods, termination of the licence.

What Is a Factual Audit?

A factual audit is conducted at the place where the taxpayer actually carries out business activities or where their business facilities are located. It may cover:

• settlement operations and the use of ECRs/РECRs;

• the provision of settlement documents to customers;

• cash operations;

• the availability of licences, permits, and other mandatory documents;

• the production, storage, and circulation of excisable goods;

• the availability of cashless payment;

• the formalisation of employment relationships with employees;

• the actual conduct of business activities without state registration;

• inventory accounting and documents for goods located at the place of sale.

A factual audit is not a documentary audit of all the business activities of an entrepreneur. Inspectors must not unjustifiably turn it into a full audit of tax returns, annual income, all banking transactions, or the company’s entire archive. At the same time, documents directly related to the subject of the factual audit may be requested and examined. Therefore, a categorical refusal to provide any documents is contrary to the taxpayer’s obligations.

Martial law itself does not prohibit factual audits. Audits conducted during martial law require safe conditions for access to territories, premises, documents, inventory, cash desks, and other audited items.

Grounds for a Factual Audit

An order for a factual audit may be issued only if at least one of the grounds expressly provided for in paragraph 80.2 of the Tax Code exists. These grounds include:

• information obtained during an audit of another taxpayer;

• information from a state authority or local government body concerning a possible violation;

• a written complaint from a customer regarding a violation of settlement procedures, refusal to issue a receipt, or refusal to provide cashless payment;

• failure to submit mandatory ECR/РECR reports or submission of reports with zero figures where information indicates that business activity is taking place;

• information about possible violations involving the production and circulation of alcohol, alcoholic beverages, tobacco products, liquids used in electronic cigarettes, or fuel;

• a violation identified during a previous audit;

• information about undeclared employees, payment of wages without taxation, or business activity conducted without state registration.

Before beginning a factual audit, inspectors may conduct a test settlement transaction. This means that a purchase may already have been made and the failure to issue a receipt may have been recorded before the audit order and referrals are presented.

First Actions When Inspectors Arrive

1. Stop all non-business conversations and call the manager, Sole Proprietorship owner, administrator, or another person authorised to represent the business.

2. Notify the accountant, lawyer, or another specialist responsible for supporting the audit.

3. Start open video or audio recording. The Tax Code expressly allows taxpayers to use open photo, video, and audio recording during an audit. The recording must not obstruct the inspectors’ lawful actions.

4. Ask the inspectors to present their official IDs and audit referrals and provide a copy of the audit order.

5. Record each inspector’s surname, position, ID number, and exact date and time of arrival.

6. Check whether all persons intending to conduct the audit are listed in the audit referrals.

7. Make copies or photographs of the audit order, referrals, and official IDs.

8. Register the audit in an internal log if the business maintains one.

A factual audit must be conducted by two or more State Tax Service officials in the presence of the manager, the taxpayer’s representative, or the person actually carrying out settlement operations.

Documents Inspectors Must Present

An audit referral is valid only for the officials listed in it. Replacement of an inspector, omission of their name, or inconsistency between their official ID and the referral requires a separate legal assessment.

The absence of at least one mandatory document or improper execution of the audit order, referral, or official ID may constitute lawful grounds for refusing admission. Refusal for other reasons is not permitted.

Not every inaccuracy automatically makes an audit order unlawful. In its decision dated 26 March 2024 in case No. 420/9909/23, the Supreme Court stated that, under certain conditions, reference in an audit order to a specific subparagraph of paragraph 80.2 of the Tax Code may be minimally sufficient if that subparagraph provides for a single factual ground. The objective existence of the ground is assessed by the court. Therefore, a decision to refuse admission should not be based solely on the absence of a detailed description of all information received by the State Tax Service.

How to Document Admission or Refusal

The person admitting the inspectors signs the audit referral and indicates their full name, position, date, and time of familiarisation.

Refusal to sign the audit referral does not stop the audit. Inspectors draw up a statement recording the refusal to sign and may then begin the audit.

If lawful grounds for refusing admission exist, you should:

• specify in writing the particular defect in each document;

• refer to paragraph 81.1 of the Tax Code;

• provide the inspectors with a written decision or explanation stating the reasons for refusing admission;

• request your copy of the refusal report;

• maintain continuous video recording;

• not use physical resistance or conceal property;

• immediately provide the materials to a lawyer.

When admission is refused, inspectors prepare a report in two copies stating the reasons given for the refusal. One copy must be provided to the taxpayer or their representative. The taxpayer has the right to submit written explanations concerning the report.

Unlawful refusal to admit inspectors may serve as grounds for the administrative seizure of property. For businesses dealing in excisable goods, a report concerning unlawful refusal may also serve as grounds for terminating the licence.

What Inspectors May Do

Within the scope of a factual audit, State Tax Service officials may:

• observe sales and settlement operations;

• time business operations;

• inspect ECRs/РECRs, fiscal receipts, and Z-reports;

• inspect cash operations;

• require an inventory count of goods, fixed assets, and funds;

• determine the actual quantities of goods and cash balances;

• inspect source documents related to the subject of the audit;

• inspect licences and documents relating to excisable goods;

• inspect employee registration documents;

• use open photo, video, and audio recording.

The statement «we cannot open the safe because we do not have the keys» is not an independent means of protection. If a safe or another storage area is located on business premises and is used to store goods, revenue, or documents, refusal to provide access may be considered obstruction of the audit or inventory count. Private residences are not premises to which access is granted as part of an ordinary tax audit.

For licensees dealing in excisable goods, refusal to conduct an inventory count of goods and materials during a factual audit may constitute separate grounds for terminating the licence.

How to Answer Inspectors’ Questions

The taxpayer has the right to be present during the audit, provide explanations, review audit materials, receive the audit report, and sign it with reservations. The law does not require anyone to provide unverified or approximate answers.

When communicating with inspectors, follow these rules:

• provide only known and verified facts;

• do not guess or make assumptions;

• do not explain the actions of an accountant, employee, or contractor without first checking the documents;

• ask for complex questions to be submitted in writing;

• prepare written explanations after checking the facts and documents;

• do not sign text prepared by an inspector if its wording does not correspond to the actual circumstances;

• do not make statements about «unofficial» sales, personal funds, or undeclared employees without clearly understanding the question;

• do not knowingly provide false information.

Employees must truthfully state their name, position, employer, and responsibilities. An employee’s answers should correspond to the employment order, employment agreement, job duties, and working time records.

How to Provide Documents

Inspectors have the right to obtain documents related to the subject of the factual audit. During a factual audit, such documents are provided in response to a properly issued written request specifying the particular list of documents, legal grounds, and deadline for submission.

Documents should be provided under an inventory stating:

• the name of each document;

• its number and date;

• the number of pages;

• the form in which it is provided — original, copy, or electronic document;

• the date and time of transfer;

• the full name of the person who provided the documents;

• the full name of the inspector who received them.

It is advisable to provide properly certified copies unless the law expressly requires an original. Originals should not be left with inspectors without a document confirming their receipt.

If inspectors refuse to accept documents, copies may be submitted directly to the State Tax Service authority that ordered the audit or sent by registered mail with an inventory of the contents. Documents that were not accepted during the audit should also be attached to the objections to the audit report.

ECR and РECR: What to Check Before the State Tax Service Arrives

A business entity required to use an ECR/РECR must:

• process the settlement transaction for the full amount;

• use a registered and properly configured ECR/РECR;

• provide the customer with a paper or electronic fiscal receipt;

• issue a receipt for an online order when the payment constitutes a settlement transaction;

• correctly specify the payment method;

• programme the product name, quantity, and price;

• process returns using the appropriate settlement transaction;

• generate a daily fiscal Z-report if settlement transactions were conducted during the day;

• notify the State Tax Service promptly of an ECR or РECR malfunction;

• comply with the rules for offline operation;

• retain the required control data and documents.

A fiscal receipt must contain all mandatory details specified in Regulation No. 13. Particular attention should be paid to:

• the correct name of the business entity;

• the name and address of the business unit;

• the tax number;

• the name of the product or service;

• the quantity, price, and total amount;

• the VAT or excise tax rate and amount, where applicable;

• the form and method of payment;

• the fiscal document number;

• the date and time of the transaction;

• the QR code and other details required by the current receipt format.

The name and address of the business unit on the receipt must correspond to the premises documents, the ECR/РECR data, and the information about the facility submitted using Form No. 20-OPP.

For excisable goods, the ECR/РECR must be programmed with the product subcategory code under the Ukrainian Classification of Goods for Foreign Economic Activity, as well as the product name, price, and quantity. When alcoholic beverages are sold at retail, the numerical value of the excise tax stamp barcode must be shown on the receipt in cases provided for by law.

For Sole Proprietorships that are single-tax payers and are not registered as VAT payers, the law allows a simplified product name indicating the relevant product group. This concession does not apply, in particular, to excisable goods, technically complex household goods subject to warranty repair, medicines, medical devices, and jewellery.

Online Sales and Delivery

The obligation to issue a settlement document also applies to goods and services ordered or paid for online. The customer must receive a paper or electronic receipt when receiving the goods or services in cases where the transaction is subject to fiscalisation.

For cash-on-delivery payments, the agreement with the postal or logistics operator should specify:

• who accepts the money from the customer;

• on whose behalf the operator accepts the payment;

• who is responsible for generating the settlement document;

• when the seller receives the money;

• which document the customer receives;

• how returns and refusal of a parcel are processed.

The mere transfer of goods to a carrier does not always exempt the seller from using an ECR/РECR. The payment and contractual model must be documented, and the order, receipt, shipment, and return data must be consistent.

Cash and Cash Operations

All cash received by a business entity must be recorded promptly and in full. Sole Proprietorships do not maintain a cash book but must keep income records in accordance with the Tax Code and comply with the rules governing the use of ECRs/РECRs. Legal entities maintain a cash book and establish a cash balance limit in accordance with National Bank of Ukraine Regulation No. 148.

Cash deposited at the place of settlement that is not sales revenue is registered through the ECR using the «cash deposit» operation. Cash removed from the place of settlement that is unrelated to a customer return is registered using the «cash withdrawal» operation.

A Sole Proprietorship owner’s personal funds do not automatically become revenue merely because they belong to the entrepreneur. However, storing personal cash in the cash drawer, store safe, or together with sales revenue creates a risk of dispute regarding the origin of the funds. Personal funds should be stored separately, their origin should be documented, and any amount placed at the settlement location should be processed as a «cash deposit».

The law does not impose a general obligation on every Sole Proprietorship to deposit all revenue with a bank every day. However, legal entities must comply with their established cash balance limit, and all business entities must comply with cash payment limits and cash-recording rules.

During an audit, it is advisable to have:

• the daily sales report;

• ECR/РECR data;

• information about cash deposits and withdrawals;

• cash collection documents;

• the legal entity’s cash documents;

• an explanation for each amount that is not sales revenue.

Inventory and Documents Confirming the Origin of Goods

Business entities must maintain inventory records and sell only recorded goods in the cases specified by the ECR Law. At the beginning of the audit, documents confirming the accounting and origin of goods located at the place of sale must be provided.

Such documents may include:

• sales invoices and consignment notes;

• acceptance and transfer certificates;

• purchase certificates;

• customs declarations;

• fiscal and sales receipts;

• documents relating to own production;

• internal transfer documents;

• inventory count sheets;

• other source documents confirming receipt of the goods.

The obligation under paragraph 12 of Article 3 of the ECR Law does not apply to Sole Proprietorships that are single-tax payers and are not VAT payers, except those selling excisable goods, technically complex household goods subject to warranty, medicines, medical devices, or jewellery.

Sole Proprietorships subject to the inventory accounting requirement maintain the Inventory Accounting Form approved by Order No. 496 of the Ministry of Finance. Records may be maintained in paper or electronic form. Entries are made on the basis of source documents, and the documents must be available at the place of sale.

If several Sole Proprietorships or legal entities operate in the same premises, they must ensure:

• separate inventory;

• separate documents for goods;

• separate ECRs/РECRs;

• separate accounts and payment instruments;

• clear marking of storage areas;

• that the seller specified on the receipt corresponds to the actual owner of the goods.

Cashless Payment

An entrepreneur must provide customers with the opportunity to pay without cash if they are subject to the requirements of Cabinet of Ministers Resolution No. 894. The phased schedule already covers merchants in settlements with populations of fewer than 5,000 people.

Until the end of the three-month period following the termination or cancellation of martial law, a postponement is provided, in particular, for:

• Sole Proprietorships that are first-group single-tax payers;

• sales through vending machines;

• mobile and street trading;

• the sale of self-grown or self-raised products.

Separate exceptions apply in combat zones and temporarily occupied territories, as well as for a specified period after the end of hostilities or de-occupation.

Information about refusal to accept a card or another electronic payment may serve as grounds for a factual audit. The entrepreneur must ensure that the payment solution is operational and train employees to process payments correctly and reflect them properly on the fiscal receipt.

Employees

An employee may not be allowed to start work without:

• a properly executed employment agreement;

• an employment order or instruction;

• notification of the State Tax Service before work begins;

• documents concerning working conditions and working time;

• calculation of wages, taxes, and the unified social contribution.

During a factual audit, inspectors may verify:

• the identities of employees;

• the actual duties performed by each person;

• employment agreements and employment orders;

• employment notifications;

• working time records;

• documents concerning the calculation and payment of wages;

• civil law agreements;

• documents of persons conducting sales or settlement operations.

A civil law agreement does not protect a business from claims if the person actually performs an ongoing employment function, follows the employer’s internal rules, works according to the employer’s schedule, and receives systematic payment for the work process.

For allowing an employee to work without a properly executed employment agreement, Article 265 of the Labour Code provides for a fine equal to ten minimum monthly wages for each employee. Legal entities and Sole Proprietorships that are first- to third-group single-tax payers receive a warning for the first such violation. A repeated violation within two years results in a fine equal to thirty minimum monthly wages for each employee.

Licences and Excisable Goods

When selling alcohol, tobacco products, liquids used in electronic cigarettes, or fuel, check:

• the availability of a valid licence for the relevant type of activity;

• whether the address of the place of sale corresponds to the licence details;

• whether licence payments have been made on time;

• the presence and authenticity of excise stamps;

• the correct programming of goods in the ECR/РECR;

• compliance with customer age restrictions;

• compliance with permitted trading times and locations;

• documents confirming the origin of goods;

• actual inventory balances;

• compliance with storage rules;

• compliance of the average monthly wage with the requirements of Law No. 3817-IX where those requirements apply to the licensee.

Law No. 3817-IX provides for licence termination, in particular, in the event of unlawful refusal to admit inspectors, refusal to conduct an inventory count, and a number of other violations specified in Article 46. A decision to terminate a licence may be challenged through administrative or judicial proceedings. If the decision is cancelled in favour of the licensee, the licence is deemed valid from the date on which it was terminated.

Duration of the Audit

The total duration of a factual audit may not exceed 10 days. It may be extended by no more than 5 days by decision of the head of the supervisory authority, in particular, following an entrepreneur’s request for additional time to provide documents or because of shift-based or summarised working time records.

You should record:

• the date and time the audit begins;

• the inspectors’ daily time on the premises;

• breaks;

• the list of actions carried out;

• all written requests;

• the date and grounds for any extension;

• the actual completion date.

How to Sign the Audit Report

The factual audit report is prepared in two copies, signed by the inspectors, and registered no later than the next business day after completion of the audit. It is also signed by the person who conducted the settlement operations, the taxpayer, or their legal representative.

Refusal to sign the audit report does not invalidate it or prevent the State Tax Service from making a subsequent decision. If you disagree with the findings, it is advisable to sign the report with a reservation, for example:

«The audit report has been received. I disagree with its findings and the circumstances stated in it. Written objections and additional documents will be submitted within the period provided for by the Tax Code of Ukraine».

Before signing, you should:

• read the entire report and its appendices;

• check the number of pages;

• cross out any blank spaces;

• specify missing documents and explanations;

• describe procedural violations;

• obtain your copy;

• record the date of receipt.

Objections and Appeals

Objections, additional documents, and explanations must be submitted to the State Tax Service authority that conducted the audit within 10 business days beginning on the day after receipt of the audit report. The objections may include documents confirming the absence of fault, mitigating circumstances, and circumstances exempting the taxpayer from financial liability.

The objections should separately describe:

1. violations committed when ordering the audit;

2. defects in the audit order or referrals;

3. actions by inspectors that exceeded the scope of the audit;

4. an incorrect description of the factual circumstances;

5. documents disregarded by the inspectors;

6. incorrect legal classification;

7. calculation errors;

8. absence of fault;

9. a request to remove unsupported findings from the audit report.

The audit report itself does not create an obligation to pay a fine. Financial sanctions are imposed by a tax assessment notice or another decision of the authorised authority.

An appeal against a tax assessment notice must be submitted to the higher-level supervisory authority within 10 calendar days following the date of receipt of the decision. Judicial appeals are conducted under the rules of administrative proceedings. The applicable deadlines depend on the chosen method of protection, so legal advice should not be delayed after receiving the decision.

Main Sanctions That May Apply

The full amount of liability for ECR violations applies again after the end of the period during which reduced sanctions were temporarily in effect. A separate exemption from liability for violations of the ECR Law applies to transactions conducted in territories defined by law as temporarily occupied territories or combat zones, except for violations involving the sale of excisable goods. Application of this exemption depends on the territory’s official status and the period in which the violation occurred.

Internal Business Readiness Checklist

For each place of business, it is advisable to prepare a separate folder or secure electronic directory containing:

• an extract or information confirming state registration;

• documents for the premises;

• confirmation that Form No. 20-OPP has been submitted;

• ECR/РECR registration details;

• valid licences;

• the latest Z-reports;

• instructions for an ECR/РECR malfunction;

• source documents for goods;

• the Inventory Accounting Form, if mandatory;

• internal transfer documents;

• inventory count materials;

• employee hiring orders;

• confirmations of notifications submitted to the State Tax Service;

• working time records;

• documents relating to the payment terminal or another cashless payment instrument;

• contact details for the manager, accountant, and lawyer;

• brief written instructions for sales staff.

Daily internal control should include reconciliation of sales, fiscal receipts, payment methods, the Z-report, returns, cash deposits and withdrawals, actual cash, inventory balances, and documents confirming the movement of goods.

How to Prepare Your Records in Torgsoft

Torgsoft supports integration with fiscal registrars and software ECRs. The software allows you to generate fiscal receipts for sales and returns, perform the «Cash Deposit» and «Cash Withdrawal» operations, cancel an incorrectly issued receipt, and generate a Z-report. To use a РECR in Torgsoft Hybrid, a separate software ECR connection and configuration are required.

For inventory accounting, Torgsoft provides goods receipt, supplier return, internal transfer, write-off, and inventory count operations. The software displays the status and movement of goods, the register of incoming invoices, the warehouse document log, the list of receipts and expenditures, and the Inventory Accounting Form. These data allow you to reconcile actual balances with source documents and trace the movement of each product item.

To control cash, you can use the daily cash report, cash flow report, cash desk totals, and denomination-based cash balance check. Cash check results are retained, while employees’ rights to view balances and perform specific operations can be restricted through role settings. The user action log and document change log help identify who performed an operation and when.

Software data must be regularly reconciled with fiscal data, bank statements, the payment terminal, and source documents. The presence of an operation in the accounting software does not replace a properly issued invoice, fiscal receipt, licence, or another document required by law.

Official Sources

1. Tax Code of Ukraine dated 02 December 2010 No. 2755-VI
   Key provisions: Articles 17, 20, 44, 75, 80–86, and 94; paragraph 69 of Subsection 10 of Section XX.
   https://zakon.rada.gov.ua/go/2755-17

2. Law of Ukraine «On the Use of Registrars of Settlement Operations in Trade, Catering, and Services» dated 06 July 1995 No. 265/95-VR
   Key provisions: Articles 2, 3, 5, 9, 15, 17, and 20; paragraphs 14 and 15 of Section II.
   https://zakon.rada.gov.ua/go/265/95-%D0%B2%D1%80

3. Order of the Ministry of Finance of Ukraine dated 21 January 2016 No. 13 «On Approval of the Regulation on the Form and Content of Settlement Documents/Electronic Settlement Documents…»
   Key provisions: Section II of the Regulation and fiscal receipt forms.
   https://zakon.rada.gov.ua/go/z0220-16

4. Order of the Ministry of Finance of Ukraine dated 14 June 2016 No. 547 «On Approval of Procedures for the Registration of Registrars of Settlement Operations and Settlement Transaction Record Books»
   Key provisions: use of ECRs and the «cash deposit» and «cash withdrawal» operations.
   https://zakon.rada.gov.ua/go/z0918-16

5. Order of the Ministry of Finance of Ukraine dated 03 September 2021 No. 496 «On Approval of the Procedure for Maintaining Inventory Records by Individual Entrepreneurs, Including Single-Tax Payers»
   Key provisions: Sections I–II and the Inventory Accounting Form.
   https://zakon.rada.gov.ua/go/z1411-21

6. Resolution of the Board of the National Bank of Ukraine dated 29 December 2017 No. 148 «On Approval of the Regulation on Cash Operations in the National Currency of Ukraine»
   Key provisions: paragraphs 11 and 38–39, as well as other rules governing the recording of cash, cash books, and cash balance limits.
   https://zakon.rada.gov.ua/go/v0148500-17

7. Resolution of the Cabinet of Ministers of Ukraine dated 29 July 2022 No. 894 «On Establishing the Deadlines by Which Merchants Must Provide the Ability to Make Cashless Payments»
   https://zakon.rada.gov.ua/go/894-2022-%D0%BF

8. Order of the Ministry of Finance of Ukraine dated 09 December 2011 No. 1588 «On Approval of the Procedure for Registering Taxpayers and Fee Payers»
   Key provisions: Section VIII and the notification submitted using Form No. 20-OPP.
   https://zakon.rada.gov.ua/go/z1562-11

9. Labour Code of Ukraine dated 10 December 1971 No. 322-VIII
   Key provisions: Articles 21, 24, and 265.
   https://zakon.rada.gov.ua/go/322-08

10. Resolution of the Cabinet of Ministers of Ukraine dated 17 June 2015 No. 413 «On the Procedure for Notifying the State Tax Service and Its Territorial Authorities of the Hiring of an Employee»
    https://zakon.rada.gov.ua/go/413-2015-%D0%BF

11. Law of Ukraine dated 18 June 2024 No. 3817-IX «On State Regulation of the Production and Circulation of Ethyl Alcohol, Alcohol Distillates, Bioethanol, Alcoholic Beverages, Tobacco Products, Tobacco Raw Materials, Liquids Used in Electronic Cigarettes, and Fuel»
    Key provisions: Articles 35–46, including Article 46 on licence termination.
    https://zakon.rada.gov.ua/go/3817-20

12. Decision of the Supreme Court dated 26 March 2024 in case No. 420/9909/23, proceedings No. K/990/67/24
    Legal position concerning whether the grounds for a factual audit are sufficiently stated in the audit order.
    https://reyestr.court.gov.ua/Review/118274531