Liability of the tax agent for underreporting PIT: fines, penalty interest and sanctions in 2025

The liability of a tax agent for underreporting personal income tax (PIT) in Ukraine is among the strictest areas of financial and administrative control. A tax agent—be it an employer, entrepreneur, or other legal entity who accrues and pays income to individuals—must correctly calculate, withhold, and pay PIT as well as timely submit all reports.

Main regulations and duties for a tax agent
According to the Tax Code of Ukraine (Articles 167, 168, 176), tax agents are liable not only for miscalculation, but also for untimely payment and incorrect declaration of PIT. The State Tax Service, during an audit, analyzes documents, calculations, and reporting over three years (1095 days).

Types of liability for underreporting PIT
Financial liability – fines:
10% of the tax amount—for typical underreporting when paying income.
25%—for deliberate underreporting (proven by audit, where the agent intentionally concealed the basis or miscalculated).
50%—for repeat violations within 1095 days (3 years).
75%—a third or further violation within this period.

Late payment interest (penalty):
Accrued on the entire unpaid amount from the day after the payment deadline. The rate is 120% of the annual NBU key rate for each day of delay, including the day of payment fulfillment.

Administrative liability (CUoAP):
A warning or fine of 34–51 UAH (2–3 NMDG) for a first violation.
51–85 UAH (3–5 NMDG) for a repeat violation during the year.

Features of application
All fines are imposed solely on the tax agent; the income recipient is not held liable for the shortfall—except in cases defined by Section IV of the Tax Code (e.g., when income is received without a tax agent).
If the agent independently detects an error and recalculates PIT in the current year—fines are not applied (Art. 169.4 TC).
Additionally, the State Tax Service may initiate criminal proceedings for large sums or systematic evasion.

Mechanisms for avoiding sanctions
Continuous audits of PIT calculations, use of modern accounting software;
Self-correction of errors and submission of revised tax returns;
Timely response to tax queries, proper documentation, and accurate payroll reporting.

Impact on business and employees
For companies—this means a risk of significant financial and reputational losses, as PIT non-payment often leads to tax audits and complicates business operations.
For employees—guarantees of receiving ‘net’ salaries; the state does not hold them accountable if the agent is at fault.
From the state’s perspective—strict policies to minimize abuse, with active control automation and sanctions.

Conclusions
A tax agent’s liability for underreporting PIT covers a set of fines, penalties, and administrative sanctions ranging from 10% to 75% of the tax amount, plus interest for each day of delay. Independent correction of errors is the most effective way to avoid penalties. Consistent tax practices, use of electronic services, and adherence to established procedures are the key to business legal security.

Author — Maksym Bahniuk, Head of Tax and Customs Law Practice, Law Firm “WINNER”.