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Clause 101.1 of Article 101 of the Tax Code of Ukraine stipulates that a bad tax debt is to be written off, including penalties and penalties accruing on such tax debt.
As stated in paragraph 101.2 of this article, the term “bad tax debt” means, in particular, the taxpayer’s tax debt for which the statute of limitations established by this Code has expired.

Clause 102.1 of Article 102 of the PC of Ukraine defines the statute of limitations – 1095 calendar days, and clause 102.4 of this Article provides that in the event of a monetary liability accrued by the controlling authority before the expiration of the limitation period specified in clause 102.1 of this Article, the tax debt incurred in in connection with the refusal to independently repay such a monetary obligation, may be charged within the next 1095 calendar days from the date of occurrence of the tax debt.
The obligation to pay a fine is linked to the obligation to pay off the tax debt. As the debt itself becomes a bad debt status, no interest is paid on the bad debt.
Thus, in the event that the 1095-day period from the date of occurrence of the tax debt expires, such debt is recognized as bad and is subject to write-off together with the penalty and penalties accrued for such tax debt. From now on, the tax authority has no right to take any measures to recover the amount of debt.
This conclusion was reached by the Supreme Court as part of the panel of judges of the Court of Cassation in its ruling of 06.02.2018 in case No. 807/2097/16.

Author: Ivan Ischuk

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