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Blocked VAT invoices and risky taxpayer status

Updated: November 2026
 
When registration of a VAT invoice is suspended, the buyer cannot claim input VAT, and the supplier risks its relationship with the counterparty. For importers, distributors and manufacturers with large volumes of supplies, a single blocked invoice can mean millions of hryvnias of frozen input VAT. It is therefore important not only to unblock a particular invoice but also to remove the reason why the system suspends registration.
 
Legal framework
The suspension mechanism is set out in paragraph 201.16 of Article 201 of the Tax Code of Ukraine (in Ukrainian). It is detailed in the Procedure for suspending registration of a tax invoice / adjustment calculation and the Procedure for reviewing complaints, approved by Resolution of the Cabinet of Ministers of Ukraine No. 1165 of 11 December 2019 (in Ukrainian). The latest significant amendments were made by Resolution No. 1048 of 26 August 2025 (in Ukrainian), effective from 27 September 2025. They updated the criteria for unconditional registration, the indicators of positive tax history and the criteria for risky transactions.
 
How the system decides
Each VAT invoice goes through an automated check in several stages:
  • unconditional registration — if the invoice meets at least one of the criteria set out in the Procedure, it is registered immediately;
  • risky taxpayer — if the taxpayer is on the list of risky taxpayers, registration is suspended;
  • positive tax history — this allows the invoice to be registered even without meeting the unconditional registration criteria;
  • risky transaction — if the transaction meets the risk criteria, registration is suspended.
This leads to two different scenarios: either a particular transaction is blocked, or the taxpayer itself is classified as risky. The strategy depends on which applies.
 
Unblocking a VAT invoice
After suspension, the taxpayer submits written explanations and documents confirming the reality of the transaction to the regional commission. These usually include the contract, primary and transport documents, documents on the origin of goods, and information on staff, warehouses and fixed assets. The commission decides to register or refuse within five working days.
 
The quality of the explanations is decisive. The documents must address the specific ground on which the invoice was suspended rather than be a standard package. Incomplete or inconsistent documents are the most common reason for refusal.
 
To prevent repeated blocking, it is advisable to submit a taxpayer data table. It lists the types of activity and the codes of goods or services the taxpayer regularly supplies. Once the table is accepted, the corresponding transactions are no longer treated as risky.
 
Challenging a refusal
A regional commission’s decision to refuse registration may be challenged before the State Tax Service of Ukraine within 10 working days. The central commission reviews the complaint within 10 calendar days. If the taxpayer chooses to participate in the review by videoconference, the period is 30 calendar days.
 
A refusal may also be challenged in an administrative court, either after the administrative appeal or directly. Courts usually go beyond annulling the commission’s decision and order the State Tax Service to register the invoice as of the date it was originally submitted.
 
Removal from the list of risky taxpayers
A decision that a taxpayer meets the risk criteria is sent to its electronic cabinet, stating the specific criterion. To have it cancelled, the taxpayer submits explanations and documents about its activities. The commission reviews them within seven working days.
 
In practice, risky status often arises from formal reasons that are easy to remedy. One of the most common is incomplete information on taxable objects in form No. 20-OPP, in particular on warehouses and production premises.
 
After removal from the list, previously suspended invoices may be registered automatically under the conditions set out in the Procedure. If this does not happen, their registration is pursued separately, through explanations, a complaint or in court.
 
Firm experience
  • 2025: the firm secured registration of a VAT invoice worth UAH 3.4 million for an importer of wine products from the Republic of Moldova. The invoice was registered following review of explanations and documents, without going to court. Details.
  • 2024: the Kyiv District Administrative Court upheld the claim of SMART TIM LLC concerning decisions refusing registration of VAT invoices worth UAH 6.3 million. Registration had been suspended because the company was classified as risky under criterion 8 of the risk criteria. The court found the commission’s decisions unlawful, in particular because they were unclear. The firm also submitted evidence of the reality of the business transactions. Details.
Our services
  • Analysing the grounds for suspension and preparing explanations and supporting documents for the regional commission.
  • Preparing and submitting the taxpayer data table.
  • Challenging refusals to register VAT invoices before the State Tax Service of Ukraine and in administrative courts.
  • Removal from the list of risky taxpayers, including remedying formal grounds for risky status.
  • Obtaining court orders obliging the State Tax Service to register VAT invoices.