New functions of the STS and expansion of powers: how the service will change in 2025

In autumn 2025, the Ministry of Finance released a draft of the new Regulations on the State Tax Service of Ukraine, significantly expanding the powers and functions of the STS in line with modern management standards, European best practices, and Law No. 4225-IX. The main goal is to unify mechanisms of internal control, audit, and civil protection, making the tax administration system more transparent and constructive.

Reasons and focus of the reform
The need to update the Regulations arose from new requirements of the Budget Code and integration with the Civil Protection Code. The STS will take on new tasks — implementing strict internal control procedures, organizing regular audits, and preventing the unlawful use of funds in subordinate institutions.
Special attention is given to financial discipline, the quality of reporting, and reducing corruption risks at the regional level.

New functions: what to expect in 2025–2026

• Ensuring internal control in every unit of the STS, territorial bodies, or subordinate organizations.
• Conducting internal audits not only for central entities but also for subordinate enterprises within the STS.
• Implementing civil protection mechanisms: risk analysis, emergency preparedness, staff recruitment, and response planning.
• Detecting and preventing unlawful, ineffective, or wasteful use of budget funds.
• Ensuring openness and transparency in tax administration, increasing taxpayer trust.
• Mandatory monitoring of financial flows, reporting cases of dishonest fund usage and suspicious transactions to state authorities, including NABU.

Implementation process and consequences
The draft is open to public discussion — businesses, professional associations, and experts can make proposals. The main debates concern:

• balancing control and service functions in the STS,
• limiting duplication of internal audit functions with the Ministry of Finance,
• ensuring accountability for accurate and timely reporting from both taxpayers and tax authorities.
  It is expected that changes and new functions will be approved in Q4 2025–Q1 2026 after anti-corruption review.

Expanded powers and impact on business
According to the new Regulations, the STS will administer related social payments — including disability employment contributions, monitoring unified social tax, and employment reporting. There will be tighter control of payments for goods/services by electronic means and direct administration of financial penalties for legal violations.
The STS gains authority to license production and supervise the circulation of alcohol, tobacco, spirits, and e-cigarette liquids.

Improvements in administration and service
Centralized taxpayer administration, automation of registers, faster and higher-quality decisions on tax notifications, and improved complaint handling are all included. The service role will be expanded, with STS required to reduce complaint resolution times and proactively inform businesses of innovations.

Conclusion: impact on the tax system and payers
Reforming the STS’s powers is a logical step towards transforming the tax service into a modern analytical center with control, audit, and service functions. The planned changes will boost financial transparency, reduce corruption risks, and ensure timely responses to challenges during wartime and economic volatility.
For taxpayers, this means better protection of rights and quicker services; for the state, better budget administration, less resource wastage, and increased official accountability at every stage of the tax process.

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