Cooperation with supervisory authorities during scheduled and extraordinary inspections

Purpose of inspections and powers of control authorities

Scheduled tax inspection, audit, revision by supervisory authorities are a headache for even those entrepreneurs who conduct business transparently in compliance with laws. A problem is confusing rules of document management, regular changes of forms, prejudices, and intentional hypercriticism. Even a small mistake may be seen as abuse or intentional violation of the law. And even if on the part of visitors everything is legal, consequences are inevitable.

A lawyer, who may undertake preparation for an enterprise inspection and monitor compliance with the procedure during its conduct, will save time, nerves and money for a Ukrainian entrepreneur – a lawyer will check and prepare documents in advance, will estimate when will the authorities carry out inspection according to the register book and what scopes and actions may be inspected (economic activity of a market participant, tax reports, staff documentation, compliance with labour laws), will establish a list of seized property, and will provide supporting documents to prove facts inspectors may be interested in, will tell an entrepreneur how to deal with scheduled and extraordinary inspection, and will develop an algorithm of appeals. The presence of a competent lawyer during an inspection will tie the hands of dishonest inspectors, will prevent attempts of machinations for any purpose.

Risks of an entrepreneur during carrying out an inspection

Supervisory and control authorities have quite broad powers. Even the smallest violations detected during an inspection, that allegedly may pose a threat to anybody, can cause business interruption until it is resolved. Examination of documents may cause even more problems. Commissions of different structures have a right to:

  • Impose fines or documental requirements entailing financial expenses;
  • Withdraw or suspend a license for activity;
  • Initiate additional proceedings, bring administrative or criminal cases.

The owner may suffer monetary and reputational losses. Even an indirect reminder of any problems with the laws may deprive of perspective contracts and partners` trust. Large companies for such cases have lawyers available. Smaller enterprises should involve a lawyer periodically. Employees of the Attorneys at Law “Bachynskyy and Partners” are ready to oversee an enterprise`s business comprehensively and be available if an inspection came suddenly, defending the rights of a client.

The assistance of a lawyer in preparation for a visit and during an audit

It is easier and more beneficial to prepare activities of an enterprise for inspection in advance, than to orientate regarding demands of inspectors on the go. Experienced labour, migration, tax law professionals, who possess the last forms and instruments, will check the state of activities, solve detected issues. Also, they will stop an arbitrariness if activities of a commission will have violations – it will allow avoiding illegal fines and even extortions.

A specialist may undertake the preparation of the entity’s employees for such events. He will provide conduction of a one-time or regular training regarding activities during inspections by tax service authorities or labour inspection, tell about rules how to fill in a register book of accounted funds in enterprise and explain in detail any law that falls within the competence of a responsible person. After such intensives employees will have a clear idea of what activities are expected and how to minimize possible negative impacts on yourself and your management. In future, a team will do everything by themselves according to a plan set by a specialist, however, it is possible to see a specialist at any moment.

Presence during a seizure of documents, a lawyer will exclude falsification and in real-time will say to the authorities what are they supposed to do and when inspectors abuse their powers. If miscalculations are detected during inspection, an attorney will quickly help to submit an appeal or reduce the size of sanctions, remove drawbacks, and achieve quick re-inspection to lift restrictions. A big collection of reviews and experience of extensive cooperation with representatives of small and medium business of a region prove the actuality of our company`s services. Extraordinary or scheduled inspectors and tax services visits will no longer be a nightmare for a businessman.

A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. No norms about the continuation of legal force of permission are set (we are expecting amendments or explanations from the Ministry of Digital transformation of Ukraine). Notably that non-residents must pay a far greater sum, than domestic companies. The Ukrainian legislator obviously encourages an internal market, getting rid of a strong foreign presence (that, in fact, coincide with modern politics of the state on the whole). Together with an application, the following documents must be prepared: The access code to the copy of the Statute of the company (or the foundation agreement) kept in an electronic file in the database of the Unified State Register of Enterprises and Organizations (USREO);  Funding sources of the statutory capital (where the money are taken from);  confirmation of the actual injection of money;  information about beneficiaries (special attention must be paid to business reputation);  the information about the director and founders;  the check about payment of state fee;  the internal regulations, in accordance with which ones, the privacy policy rules are regulated. In the terms of volume of necessary documentation of licensing is very alike with complete registration of legal entity. It is understood that the state wants the severe adjusting of activity of organizations that will engage in virtual assets. Is it already possible to get a license? The adoption of the law by the parliament is a significant step forward in adjusting and legal market of virtual assets creation in Ukraine. However, the new rules haven`t come into effect yet - their term of introduction depends on making amendments in the Internal Revenue Code. It is yet unknown, when a legislator will decide to enter the renewed system of taxation for such assets. Being "IT-hub" and territory, where cryptocurrency enjoys large popularity, the question of taxes must be decided maximally safely. Despite the presence of obvious gaps in interpretation, a new law on virtual assets gives the official narrative of what takes place and that, how the legal relationships related to cryptocurrency will be regulated. It is to be hoped that in the nearest time the Ministry of digital information will give out the detailed explanations concerning debatable norms.
We will
call you