December 21, 2023, 16:06

A new NACP approach to selection and verification of tax return declarations: what has changed

The legislative change approach to verifying and validating declaration information was effected, from now on it will become flexible and risk-oriented. In particular, at one stage, each declaration will undergo a fully automated verification process.

Artem Sytnyk, Deputy Head of the NACP, made this announcement, at a briefing at the Media Center Ukraine – Ukrinform. 

He noted that at a time when the mandatory filling out of the tax declaration forms and full audits were suspended, we devoted our efforts to monitoring the lifestyle of high-ranking government officials, and besides, built a large database, and designed IT products that could ensure risk-based approach applying.

“Speaking of a drastically new approach, the NACP services will process all declaration forms that will be submitted during the tax season. In fact, all income tax declarations will be primarily subjected to automated verification screening. The information products enable the declarations to be verified through a multi-step procedure: checking with state registers and databases and establishing compliance or inconsistency with the data of these registers, then the declaration is assessed for unjustified assets, namely, the system focuses on illicit enrichment detection. This way, having no discrepancies and no signs of unjustified assets reported, this declaration is considered to have passed the automated verification,” he explained.

However, according to Artem Sytnyk, automatic verification does not indicate the declaration has been fully verified in the sense defined by the law. However, it does mean that the declaration has a minimum risk factor, and upon automatic verification, a relevant notification will be available in the declarant’s electronic office.

According to him, out of the million declarations the NACP is about to receive during one tax season, about a third of the declarations will be processed automatically.

Those declarations failing to comply with the automated verification requirements will be assigned a risk factor without delay. The higher the risk coefficient of a tax declaration, the more likely it is that it will be subject to a tax auditing process.

“We predict that we will first deal with those declarations that present obvious risks. That’s why the percentage of response to those tax return forms that will be subject to a full audit will be much higher than it used to be when the earlier approach was valid before the relevant legislative changes were effected,” added Artem Sytnyk.

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