Fines have not been revised since 1996: the government is preparing tough changes to the Code of Administrative Offenses

The government is initiating amendments to the Code of Ukraine on Administrative Offenses aimed at increasing liability for violations of financial legislation. Draft law No. 15043 provides for both an increase in fines, which have not been revised for almost three decades, and an extension of the period of liability to one year.

The Cabinet of Ministers of Ukraine has registered draft law No. 15043 in the Verkhovna Rada, which provides for amendments to the Code of Ukraine on Administrative Offenses (CUAO). The initiative aims to increase liability for violations of financial legislation and improve the effectiveness of state financial control.

One of the key innovations of the bill is the extension of the period of administrative liability for financial offenses. It is proposed to amend Article 38 of the Code and establish that administrative penalties for such violations may be imposed within one year from the date of their commission.

The authors of the initiative explain that in practice, the current time limits are often insufficient. Many financial violations can only be detected during audits or inspections by state financial control bodies. In such cases, due to the limited time limits for bringing persons to justice, the guilty parties often escape punishment.

How fines will change

The draft law also provides for a significant increase in fines established by Article 164-2 of the Code of Administrative Offenses, which regulates liability for violations of financial legislation.

Currently, such offenses are punishable by a fine of 8 to 15 non-taxable minimum incomes, which is approximately 136–255 hryvnias.

After the amendments are adopted, the penalties may increase to 50-70 non-taxable minimum incomes, or approximately 850-1,190 hryvnias.

In the event of a repeat offense within a year after the imposition of an administrative penalty, the fine may be 60-80 non-taxable minimum incomes.

What violations are subject to liability

Article 164-2 of the Code of Administrative Offenses covers a wide range of violations of financial legislation. In particular, these include:

• concealment of foreign currency and other income in accounting records;
• absence of accounting records or maintenance thereof in violation of established procedures;
• entering false data into financial statements or failure to submit them;
• untimely inventory of cash and material assets;
• obstruction of employees of state financial control bodies during audits;
• failure to take measures to compensate for losses in case of shortages or embezzlement.

It should be noted that the amounts of fines for such violations have not been revised since 1996, when Law of Ukraine No. 328/96-VR on amendments to the Code of Administrative Offenses was adopted. Due to inflation and changing economic conditions, these sanctions have gradually lost their deterrent effect.

The explanatory note to the draft law states that limited time limits for bringing administrative liability and small fines create conditions for avoiding punishment and repeating similar violations.

If the bill is passed, companies and their managers should pay closer attention to compliance with financial legislation. Higher fines mean that even formal violations in the field of accounting or financial reporting can lead to more significant financial sanctions.

In addition, extending the period of liability to one year significantly expands the possibilities for state financial control authorities to hold officials accountable.

Experts advise checking the internal financial procedures of the enterprise now. In particular, attention should be paid to:

• correctness of accounting;
• timeliness of financial reporting;
• accuracy of data in accounting documents;
• conducting inventory of cash and material assets;
• readiness for inspections by state financial control authorities.

Lawyers emphasize that the increase in administrative fines is part of a broader trend toward strengthening financial discipline in the country. That is why businesses should adapt their internal processes in advance to possible changes in legislation.