Legislative Updates, Issue № 3 (2025-W50)

ADOPTED LAWS
According to the database of the Verkhovna Rada of Ukraine, no new laws were adopted last week.
Issue № 3 (2025-W50)

REGISTERED DRAFT LAWS
No 14285 of 09.12.2025
Draft Law on Amendments to Section XX of the Tax Code of Ukraine Regarding the Moratorium on
Changing the Rules for Taxing Single Tax Payers – Individuals During Martial Law
Key points:
Objectives and Purpose of the Draft Law
The draft law has been developed to ensure the stability of taxation for individual entrepreneurs (IEs
/ FOPs) under the single tax system throughout the period of martial law in Ukraine, as introduced by
the President of Ukraine’s Decree “On the Introduction of Martial Law in Ukraine” dated 24 February
2022, No. 64/2022, approved by the Law of Ukraine “On Approval of the Decree of the President of
Ukraine ‘On the Introduction of Martial Law in Ukraine’” dated 24 February 2022, No. 2102-IX, and
until the end of the calendar year in which martial law is lifted or terminated.
General Description and Key Provisions of the Draft Law
The draft law proposes that, temporarily, for the duration of martial law in Ukraine, a moratorium
be imposed on changes to the taxation rules for individual entrepreneurs (FOPs) using the simplified
taxation system, if such changes could lead to an increase in their tax burden or impose restrictions
on the scope of their entrepreneurial activities.
No. 14296 of 12.12.2025
Draft Law on Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding
Mechanisms for Encouraging Individual Investment and Supporting National Issuers
Key points: International experience, particularly from the United Kingdom, Canada, and the United
States, demonstrates that an effective tool for mobilizing private capital is individual investment
accounts (e.g., Individual Investment Accounts, Tax-Free Savings Accounts, Individual Retirement
Accounts), which combine simplified investment mechanisms with tax incentives.
Purpose of the Draft Law
The draft law aims to:

Promote a culture of long-term investing among households and individual investors, thereby
increasing their adaptability to changes and their ability to save;
Attract significant investment into national markets;
Develop a culture of long-term investing within the Ukrainian financial system through the
use of individual investment accounts;
Support and develop the Ukrainian economy, and in the near term, create conditions for postwar recovery.
General Description and Key Provisions of the Draft Law
The draft law proposes amendments to the Tax Code of Ukraine and certain other legislative acts of
Ukraine regarding the introduction of individual investment accounts, specifically:
Define an individual investment account opened at an investment firm as an analytical account
within the firm’s internal accounting system, which records the rights to funds owned by a
Ukrainian resident (client) and the corresponding obligations. The account is opened by the
investment firm to enable the client to conduct investment activities and is maintained in
accordance with this Law and regulatory acts of the National Securities and Stock Market
Commission.
Establish that the period during which an individual has the right to transfer funds to the investment
firm for subsequent accounting in their individual investment account and to carry out investment
activities is 1,825 calendar days.
Provide a special tax regime for income earned by individuals through investment via individual
investment accounts. In particular, investment income from operations with funds credited and
accounted for in individual investment accounts, as well as income from securities purchased with
such funds (including dividends, interest, etc.), shall not be taxed and shall not be included in
the individual’s total monthly or annual taxable income, except in cases of early withdrawal
(prior to the expiration of 1,825 calendar days).
Judicial Practice (Key Cases of the Week)
Resolution of the Supreme Court (Panel of Judges of the Administrative Cassation Court)
Dated: 10 December 2025 Case No.: 520/9985/25 Administrative proceedings No.: K/990/46130/25
Issue: The taxpayer challenged additional VAT assessments imposed by the tax authority. The
reassessment was based on the tax authority’s conclusions regarding alleged deficiencies in the completion
of tax invoices (a special document mandatory in Ukraine, which must be issued and registered and serves
to confirm the accrual of VAT liabilities by the taxpayer).
Outcome:
The courts of first instance and appellate instance, when dismissing the claim, limited themselves to a
formal analysis of the content of the tax invoices and concluded that it was impossible to identify the
business transactions solely due to the manner in which the services were described in such invoices. At
the same time, the courts failed to examine the entire set of primary documents submitted by the parties,
did not verify whether the information contained therein corresponded to the claimant’s accounting
records, did not establish the factual circumstances of the freight forwarding operations, their scope,
content, economic substance, or their connection with the claimant’s business activities.
The Supreme Court emphasized that any document issued on behalf of a business entity (taxpayer) that
had not been deprived of its legal status at the time the document was issued has the legal force of a
primary document and, pursuant to Article 44 of the Tax Code of Ukraine and Article 9 of the Law of
Ukraine “On Accounting and Financial Reporting in Ukraine,” confirms the data of the taxpayer’s tax
accounting and/or that of its counterparties, provided that such document contains, in particular:

reliable information on the actually performed business transaction and reflects its economic
substance;
a handwritten signature or other data enabling identification of the person who participated in the
transaction.
At the same time, another taxpayer using such a document in its tax accounting must act reasonably, in
good faith, and with due diligence, and must have no doubts as to the reliability of the data entered in the
document by its counterparty, including with respect to possible defects in the counterparty’s legal status,
as well as the signature and other means of identification of the counterparty’s representatives who
participated in the transaction.
Tax legislation does not make the reliability of a taxpayer’s tax accounting data dependent on compliance
with tax discipline by its counterparties, provided that the taxpayer (buyer) incurred real income or
expenses in connection with the sale or acquisition of goods, works, or services intended for use in its
business activities. Violations of tax legislation or business rules by certain suppliers within the supply
chain cannot serve as grounds for concluding that the buyer (or seller) violated the law when forming
expenses or income. Accordingly, a taxpayer must not suffer negative consequences, including deprivation
of the right to recognize income or expenses, due to possible unlawful actions of its counterparty, unless
the court establishes facts evidencing the taxpayer’s awareness of such conduct and coordinated actions
between them.
When resolving disputes concerning the legality of the formation of tax accounting data by taxpayers,
particularly where the dispute concerns the reliability of primary documents and confirmation of the
reality of business transactions reflected in tax accounting, it must be taken into account that, pursuant to
Part Two of Article 77 of the Code of Administrative Procedure of Ukraine, in administrative cases
challenging the legality of decisions, actions, or omissions of a public authority, the burden of proving the
legality of such decisions, actions, or omissions rests with the defendant.
If the tax authority provides evidence which, taken together with other evidence in the case, indicates that
the documents on the basis of which the taxpayer formed its tax accounting data contain information that
does not correspond to reality, the taxpayer must refute such arguments. This follows from Part One of
Article 77 of the Code of Administrative Procedure of Ukraine, according to which each party must prove
the circumstances on which its claims and objections are based, except for cases provided for in Article
78 of that Code.
By supporting the position of the tax authority regarding the lack of a breakdown of the cost of freight
forwarding services in tax invoices by individual components, the lower courts effectively applied
requirements that are not expressly provided for by the Tax Code of Ukraine or subordinate regulations.
A tax invoice must reflect the nomenclature of supply, not the internal cost structure of a complex freight
forwarding service.
The Supreme Court stressed that, pursuant to Articles 9 and 90 of the Code of Administrative Procedure
of Ukraine, a court is obliged to establish all factual circumstances relevant to the correct resolution of the
dispute and to assess all available evidence in their entirety, rather than focusing solely on individual
elements of tax invoices.
The fact of a business transaction is confirmed not exclusively by a tax invoice, but by the entire system
of primary documents envisaged by paragraph 44.1 of the Tax Code of Ukraine and Article 9 of the Law
of Ukraine “On Accounting and Financial Reporting in Ukraine.”
In its established case law, the Supreme Court consistently holds that formal deficiencies in primary
documents alone are not sufficient grounds to deny the reality of a transaction if its content and scope can
be established from other documents. The reality of the services rendered and their connection with the
taxpayer’s business activities must be assessed taking into account all primary documents, contracts, acts,
reports, accounting data, information on the movement of assets, volumes of services rendered, the
method of their performance, and the actual result. The court must verify the consistency of tax reporting
data with accounting records and determine whether the submitted documents reflect a real business
transaction in its economic substance.
In this case, the lower courts failed to fulfill their duty to comprehensively clarify the circumstances, as
they did not assess:
the freight forwarding service agreement and its provisions regarding the structure of services;
the acts of completed works, forwarding reports, volumes of transported cargo, and the correlation
of such data with the taxpayer’s accounting records;
the procedure for settlements between the parties;
the movement of assets and the economic purpose of the transactions;
the explanations of the parties and other evidence submitted in the case.
Why it matters:
The decision once again confirms that the Supreme Court consistently and firmly adheres to the following
legal positions:

Individual deficiencies in a primary document cannot, by themselves, serve as grounds for nonrecognition of such a document and, consequently, for additional tax assessments.
Where a taxpayer challenges additional tax assessments in court, the burden of proving their
validity lies with the tax authority.
When considering a case, courts must assess all documents collected in the case in their entirety,
rather than focusing solely on the formal correctness of individual documents. Based on such
comprehensive assessment, the court must determine whether a business transaction actually took
place. If the answer is affirmative, any additional tax assessments are excluded.
One taxpayer must not bear responsibility for another taxpayer’s failure to comply with its tax
obligations.
Resolution of the Supreme Court (Panel of Judges of the Administrative Cassation Court)
Dated: 11 December 2025 Case No.: 340/2408/23 Administrative proceedings No.: K/990/12186/24
Issue: The taxpayer challenged additional tax assessments imposed on them, arguing that the tax authority
had failed to timely adopt a decision to revoke their “special tax regime” status.
Outcome:
The fact that the plaintiff violated the conditions for remaining on the simplified taxation system of the
second group, in accordance with subparagraph 6 of paragraph 298.2.3 of Article 298 of the Tax Code of
Ukraine — which requires the taxpayer to transition to other taxes and fees provided by the Code from
the first day of the month following the tax (reporting) period during which such activities were performed
or a change in legal form occurred — was established by the lower courts and is not disputed by the
taxpayer.
However, the chronological facts indicate inconsistent actions and decisions by the tax authority, which
leads to the conclusion of their illegality. Specifically, an inspection conducted in December 2022 revealed
that the taxpayer violated the conditions for remaining on the simplified taxation system of the second
group in 2019. In such a case, pursuant to subparagraph 299.11 of Article 299 of the Tax Code of Ukraine,
the revocation of the taxpayer’s registration in the single tax system (groups one through three) should
have been decided by the authority effective from the first day of the month following the quarter in which
the violation occurred, i.e., from 1 January 2020.
As noted, the tax authority did not adopt a decision to revoke the taxpayer’s registration in the single tax
system for groups one through three.
This is important because the law guarantees that in such a situation, the business entity has the right to
choose or re-enter the simplified taxation system after four consecutive quarters following the adoption
of the decision by the tax authority.
In other words, had the violation been timely detected and the appropriate decision adopted, the taxpayer
could have been subject to the general taxation system for four consecutive quarters, roughly during 2020,
and subsequently could have again opted for the simplified taxation system. In contrast, the tax authority
provided no justification for imposing assessments for 2021 and 2022.
The respondent’s reference to the revocation decision dated 31 August 2022 was rightly disregarded by
the appellate court, as that decision concerned the termination of entrepreneurial activity by the individual
entrepreneur and did not cover the period of the conducted inspection.
Based on the foregoing, the panel concluded that the appellate court correctly resolved the dispute while
adhering to the principle of formally establishing all factual circumstances relevant to the case.
Significance of the decision
Why it matters:
The Supreme Court reaffirmed two key points:
The tax authority is obliged to timely monitor and decide on the taxpayer’s status. If the authority
fails to act or acts untimely, the taxpayer cannot be held responsible even if they violated tax law
provisions.
The transition from one taxpayer status to another (in this case, from the “simplified taxation
system” to the general taxation system) does not occur automatically under the law but is based
solely on a decision of the competent tax authority.
Business & Market Legal Developments
Last week, Ukraine received several important signals for businesses and investors.
First, the European Union approved the indefinite freezing of Russian assets, eliminating legal risks for
a large package of financial assistance to Ukraine. These funds can be used, in particular, for economic
stability and investment programs. At the same time, international financial institutions and private
investors confirmed their readiness to work with Ukrainian businesses even under wartime conditions.
Second, on a practical level, Norway made an investment in the Dragon Capital fund to support small and
medium-sized enterprises, alongside new agreements between Ukrainian technology and defense
companies and European partners.
Third, the RAU Summit took place in Ukraine, demonstrating the return of international interest in the
Ukrainian market.
Experts note that, to attract large-scale investment, businesses need to more actively implement ESG
standards and transparent corporate governance rules. ESG refers to international standards for
evaluating business performance across three criteria:
E — Environmental: how a company impacts the environment; uses energy and resources; manages
waste, emissions, and ecological risks.
S — Social: how a company treats its employees (working conditions, safety); respects human rights;
engages with clients and the community.
G — Governance: how a company makes management decisions; prevents corruption; ensures
transparency in finances and ownership structure.
Overall trend of the week: investments are returning, but legal guarantees, investor protection, and
clear rules of the game play a key role.
We will continue to monitor the situation.