The Tax Office expands control and opens access to banking data of Ukrainians

The Tax Service of Ukraine is stepping up efforts to expand control over the income of individuals, including access to bank information. As part of such initiatives as the "National Cashback" program and thanks to the international exchange of financial data, the fiscals get new levers for inspections and tax collection. What do these innovations mean for Ukrainians?

The Tax Code of Ukraine distinguishes several categories of income of individuals that determine their accountability:

1. Income from business activities , such as receipts on the accounts of a sole proprietorship or LLC.
2. Tax-exempt incomes are payments listed in Article 165 of the Tax Code, such as social assistance or some types of material support.
3. Other incomes of individuals taxed at the personal income tax rate (18%) and the military levy (1.5%).

Individuals must pay taxes on transfers to their card accounts, unless such funds are exempt from taxation.

In accordance with Cabinet Resolution No. 952, owners of cards used to participate in the "National Cashback" program agree to DPS access to data on the movement of funds on these accounts. This partially removes the restrictions of the Law of Ukraine "On Banks and Banking Activities" in terms of bank secrecy. Thus, tax officials can trace the receipt of funds to the cards used for the cashback program, although other accounts of citizens remain outside the zone of their direct access.

Information on the income of Ukrainian citizens abroad can be transferred to the Tax Office thanks to international agreements on the exchange of financial data (CRS). As part of such agreements, for example, Britain transfers information about financial payments to Ukrainian residents. This allowed the DPS to obtain data on the income of Ukrainian authors on the OnlyFans platform and already initiate the distribution of messages with an offer to pay taxes.

Disclosure of bank information to DPS may result in new audits and demands for tax payments on income previously considered private or untaxed. For citizens who receive regular income on personal accounts, this may mean the obligation to declare such income and pay taxes on it.