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THE PECULIARITIES OF THE STATE TAX SYSTEM IN UKRAINE

I. Read and and translate the text:

Major taxpayers classified as large companies may be roughly divided into five groups:

-Power plants (including oil companies, mines, and hydroelectric plants);

-Transport companies;

-Telecommunications companies;

-Trading companies;

-Financial institutions.

Each large companies tax unit has established special teams for those industriesin its portfolio. Again, the tax liability is the determining factor for being classified a large company, not the company's size. The fiscal issues of taxpayers other than large companies are dealt with by the local tax offices.

Ukraine has several types (instruments) of tax, such as income tax, profits tax, value added tax, property tax, motor vehicle and road tax, excise, import duties, natural resources tax, local rates, and others (for more details, see paragraph 2.2.1). The local tax offices are organised according to tax instruments (such as value added tax, profits tax, and income tax). As a result a local office has, on average, separate teams for each of some 16 tax instruments of which the most important are value added tax and income tax (including profits tax). In addition to the units for the various tax instruments, a separate department is in charge of tax auditing. In principle, two types of examination are carried out: desk tests (for checking consistency of the tax returns) and audits on site. The audit unit and the relevant tax instrument unit consult each other frequently. If a company has to submit returns for each and every tax instrument, it must fill in and file at the local tax office up to 72 tax return forms each year. For all these tax instruments a separate test or audit can be carried out.

A tax audit can cover more than one tax instrument, and a taxpayer can be audited several times each year. A complex audit for all instruments can only be made once every year. Compared with what is customary in other countries, the audit frequency can be called high. For large companies it is about once each year; for small and medium-sized companies it is once every two years. In theory, a tax audit can cover the last three fiscal years or less if the previous audit took place on a more recent date as, in principle, the same fiscal period cannot be subjected to a tax audit twice. In practice the period covered by an audit is two years at most. Although the auditing period is thus restricted, there is no legal provision that limits the period for which additional assessments can be imposed. Thus in theory, the period for which corrections to tax returns can be made is indefinite. In practice, however, this is not the case, as at the latest a tax audit is carried out every two years and it is not permitted to include in an audit a period that was audited before. An exception is made for the term of supplementary levying of property tax. Under Section 18 of the Property Tax Act and subsequent changes and amendments taxpayers who have not paid taxes for their ownership of land, are not assessed for a period of more than two years ago.

Audits on site (field audits) can only be instituted with the approval of the head of the tax office.

Vocabulary list

the tax liability c '

the determining factor

several types (instruments) of tax

the local tax offices

according to tax instruments

is in charge of tax auditing

two types of examination

desk tests

consistency of tax return -

audits on site

tax instrument unit

has to submit returns

for each and every tax instrument

fill in and file

a complex audit

if the previous audit took place on a

the auditing period is restricted

additional assessments

supplementary levying

can only be instituted with the approval

II. Answer the following questions:

1. What 5 groups can major taxpayers be classified into?

2. How are local tax offices organised?

3. Who is in charge of tax auditing?

4. How many types of examination are carried out in Ukraine?

5. How many tax return forms must a company fill in and file at the local tax office each year?

6. How many times a year can a taxpayer be audited?

7. How many times a year can a complex audit for all instruments be made?

8. Can such audit frequency be called high or low as compared with what is customary in other countries?

9. What is in practice the period covered by an audit?

10. When can audits on site (field audits) be instituted?

III. Give the main ideas of the text, and write a short summary.

TAX MILITIA

I. Read and translate the text.

Each tax office has a Tax Militia Department. This department is authorised to contact the taxpayer more frequently. If signs of fraud reach the tax administration, the Tax Militia starts an investigation. This department also takes care of the collection of taxes and theseizing of money and goods. Interestingly, the department is authorised to sell or auction goods that it has impounded. The ,,militia" acts both upon request of the auditing department and on its own initiative. The way in which this militia is organised, is a state secret and furthermore nothing is disclosed about its internal procedures. What is known is that it is a military organisation, the departments of which are officially part of the local tax offices. The Act on the National Tax Administration defines the main structure of the organisation: it has a Principal Directorate, an investigationdepartment and an anti-corruption department. For the immediate execution of their tasks these departments are brought under the local offices. The Tax Militia reports to the Head of the State Tax Administration.

The fact that the Tax Militia has the set-up of a military organisation is evident from its legal hierarchy. The department is headed by generals and its ranks include those of lieutenant-general, major general (brigadier), (lieutenant-)colonel, major, captain and lieutenant. Also, there are non commissioned officers andprivates. The military lines of command exist not just on paper, but can be observed in everyday life. For instance, all officers and personnel wear legally prescribed insignia and uniforms which are defined by the government. Not only do members of this Tax Militia wear uniforms, but regular tax officers also have their own brand of uniform. The standard uniform is green, whereas the higher ranks have a grey uniform. The grades within the ordinary tax administration are not military, but are civil with titles such as inspector.

Vocabulary list

tax office

Tax Militia Department

signs of fraud

starts an investigation

the seizing of money and goods

to sell or auction

the impounded goods

internal procedures

a military organisation

a Principal Directorate

an investigation department

an anti-corruption department

are brought under

Head of the State Tax Administration

legal hierarchy

non-commisioned offices and privates

the military lines of command

legally prescribed insignia and uniforms

the civil grades

II. Answer the following questions:

1. What does each tax office in Ukraine have?

2. When does the Tax Militia start investigation?

3. What else does this department do?

4. When does the "militia" act?

5. What is a state secret?

6. What defines the main structure of the organisation?

7. Whom does the Tax Militia report to?

8. What can you tell about its legal hierarchy?

9. Why can we say that the military lines of command exist not just on paper?

10. What colour is the uniform of regular tax offices?

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