Taxes paid — criminal proceedings may be closed: the BEB is preparing a new mechanism

The Bureau of Economic Security of Ukraine is working on introducing a mechanism for the pre-trial settlement of tax-related criminal offences.

The idea is that, under conditions prescribed by law, a business could voluntarily compensate the state for the damage caused during the pre-trial investigation, and the criminal proceedings could then be closed.

Certain mechanisms for exemption from criminal liability are already available.

The BEB provides an illustrative case.

An entrepreneur was suspected of evading more than UAH 10 million in taxes through so-called “business splitting.” According to the investigation, the scheme involved more than 30 controlled individual entrepreneurs.

During the pre-trial investigation, the entrepreneur:

• fully compensated the state for the losses;
• additionally transferred UAH 1 million to support the Armed Forces of Ukraine;
• brought the business operations into compliance with legal requirements.

As a result, the court, on the basis of Part 4 of Article 212 of the Criminal Code of Ukraine, released the entrepreneur from criminal liability.

This sends an important signal to businesses.

In tax-related criminal proceedings, the defence strategy should not always be limited to a long-running dispute with investigators.

In some situations, it is necessary to assess several options from the outset:

• whether the elements of a criminal offence exist at all;
• whether the calculation of tax losses is well-founded;
• whether intent can be disproved;
• whether there are grounds for closing the proceedings;
• whether compensating tax liabilities would be appropriate in order to use the mechanism for exemption from criminal liability.

However, it is important to understand that paying the amount determined by the investigation does not, by itself, automatically result in the closure of criminal proceedings.

Each situation must be assessed individually, taking into account the legal qualification, the stage of the proceedings, the evidence, and the conditions established by law.

That is why, in cases under Article 212 of the Criminal Code of Ukraine, the defence strategy should be determined at the beginning of the pre-trial investigation — not after the case has already reached court.

You can seek legal advice now, so that you do not later need legal defence services.

The BEB officially reports that a working group has already been established to develop legislative amendments, involving the BEB, the Office of the Prosecutor General, business associations, and the legal community. The proposals are expected to be submitted to the Cabinet of Ministers of Ukraine.

Primary source: the BEB case involving compensation of more than UAH 10 million.

If criminal proceedings for tax evasion have already been initiated against your business, it is important to determine the correct defence strategy at an early stage — from challenging the assessed damages and proving the absence of intent to evaluating the possibility of closing the criminal proceedings.

You can seek legal advice now, so that you do not later need legal defence services.

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📧 Email: info@uk-winner.com

Author: Ihor Yasko, Managing Partner at WINNER Law Firm, PhD in Law.