Environmental tax return

Environmental tax is one of the mandatory payments provided for by the Tax Code of Ukraine, which is paid by business entities in the event of carrying out activities that affect the environment. In practice, a significant number of enterprises face problems in determining the obligation to submit a declaration, correctly completing reporting and correcting errors, which often leads to fines and tax disputes.

As a tax lawyer at “Prikhodko&Partners”, I would like to point out that even a minor error in the environmental tax declaration can be grounds for additional assessments, penalties, or an inspection. That is why it is important not only to submit the report on time, but also to correctly determine the object of taxation and fill out all annexes to the declaration.

Procedure for filling out a tax return for environmental tax

The tax return for environmental tax is submitted in a form approved by the Ministry of Finance of Ukraine and consists of the main part and relevant annexes depending on the type of pollution.

Environmental tax may be charged, in particular, for:

• emissions of pollutants into the atmosphere;
• discharges of pollutants into water bodies;
• waste disposal;
• generation and temporary storage of radioactive waste.

When filling out the declaration, it is necessary to correctly determine:

• STS authority code;
• type of declaration (reporting, clarifying, reporting new);
• tax period;
• volumes of emissions or waste disposal;
• tax rates;
• coefficients provided for by law.

Particular attention should be paid to the annexes to the declaration, since they reflect the calculations of tax liabilities. Errors in pollutant codes or units of measurement are one of the most common causes of disputes with the State Tax Service of Ukraine.

Deadline for submitting an environmental tax declaration

The environmental tax declaration is submitted quarterly.

The deadline for submission is within 40 calendar days after the end of the reporting quarter. Payment of the tax liability is made within 10 calendar days after the deadline for submitting the declaration.

For example:

• for the 1st quarter – by May 10;
• for the 2nd quarter – by August 9;
• for the 3rd quarter – by November 9;
• for the 4th quarter – by February 9 of the following year.

If the last day of submission falls on a weekend or holiday, the deadline is extended to the first business day.

Violation of submission or payment deadlines may result in:

• fines;
• penalties;
• blocking of the company’s tax history;
• conducting a documentary audit.

What is a clarifying declaration on environmental tax?

A clarification declaration is submitted if an error is detected in an already submitted report.

The most common fixes are:

• incorrect emissions;
• errors in tax rates;
• incorrect additions;
• arithmetic errors;
• incorrectly declared taxable items.

When submitting a clarifying declaration, it is necessary to:

1. indicate the correct figures;
2. reflect the amount of the increase or decrease in the tax liability;
3. in the event of an increase in tax, pay the amount of the underpayment and the penalty.

It is important to understand that voluntarily correcting an error is almost always more beneficial than having it discovered by the tax authority during an audit.

What to do if the declaration is filed incorrectly?

If an error is detected, you should not ignore the problem or wait for a tax audit. The algorithm for further actions depends on the nature of the error, the tax period, and the stage at which the error was detected.

In some cases, it is enough to submit:

• a new reporting declaration;
• a clarifying declaration;
• written explanations to the supervisory authority.

Before correcting an error, it is important to first assess possible tax risks, including:

• whether the error led to an understatement of the amount of tax liability;
• whether penalties and interest may be applied;
• whether the submission of a clarifying declaration will not become the basis for additional requests or inspections by the State Tax Service of Ukraine.

In practice, there are quite often situations where independent and thoughtless correction of errors creates much more risks for the taxpayer than the technical inaccuracy in the declaration itself. Incorrect determination of the correction method, incorrect filling in of clarifying indicators or errors in the annexes can become grounds for additional tax liabilities, fines and a documentary audit.

That is why, before submitting any clarifications, it is advisable to conduct a preliminary legal and tax analysis of the situation, assess the possible consequences, and form the correct legal position to minimize financial risks.

Example of calculating environmental tax

*The example given is conditional and is used solely to demonstrate the calculation procedure.

Legal support for filing an environmental tax declaration

As tax lawyers, we provide comprehensive legal support in the field of environmental taxation – from the initial analysis of the existence of the obligation to submit a declaration to the full representation of the client’s interests in disputes with the State Tax Service of Ukraine and during tax audits.

We help:

1. correctly determine the presence or absence of a taxable object;
2. conduct an analysis of economic activity for the emergence of an obligation to pay an environmental tax;
3. prepare and check a tax return and its annexes;
4. correct errors in reporting with minimal tax risks;
5. prepare clarifying declarations and a legal position on correcting errors;
6. appeal penalties and tax notices-decisions;
7. accompany documentary and in-office inspections;
8. prepare responses to requests from regulatory authorities;
9. minimize financial and reputational risks for the business.

In practice, a significant number of disputes arise precisely because of incorrect definition of the object of taxation, errors in the annexes to the declaration, or untimely correction of inaccuracies in reporting. In many cases, enterprises become aware of the problem only after receiving the inspection report or tax notice-decision.

That is why correctly submitting an environmental tax declaration is not only a formal fulfillment of the requirements of tax legislation, but also an important mechanism for protecting a business from fines, additional charges, inspections, and significant financial losses in the future.

If you need advice or legal support regarding environmental taxation, contact our lawyer or fill out the form on the website and a lawyer will call you.