Who is a tax agent and what functions does he perform?.

The tax system in each country is quite complex and operates with a complex of various processes. This system has many participants, such as a tax agent. Understanding who a tax agent is significantly simplifies the understanding of the entire system. After all, this is an important participant in the process. Moreover, the tax agent has specific functions that they are obliged to perform. 

When dealing with the issue, it is important to understand that a tax agent is someone who ensures the correct calculation of taxes. Therefore, in theory, it is important for everyone to know who this is. 

Who is a tax agent? 

The tax system is not only complex but also incredibly interconnected for all participants. One of the key roles in this process is played by the tax agent. In 2024, the role of tax agents remains crucial for compliance with fiscal obligations and correct tax calculation. Initially, the entire system may seem complicated, but it can be understood relatively easily. Thus, a tax agent is a natural person or a legal entity that, according to the law, is obligated to withhold taxes and other mandatory payments from the income of third parties and transfer them to the state budget. That is, it acts as an intermediary. It ensures that the system operates seamlessly. Such an agent literally stands between the taxpayer and the government agencies. Thus, tax agents help the state receive tax revenues without the need to interact directly with each taxpayer.

To understand this system, it is worth taking a few examples. An employer, who organizes the work of a whole company or enterprise, is such an agent. The employer is required to withhold income tax from employees' salaries and transfer it to the budget. Banks (financial organizations) can also play such a role. When paying income on deposits, banks are required to withhold profit tax. Landlords can represent the simplest example. In some cases, landlords can perform tax agent functions by withholding taxes from rental payments. And there are quite a few such examples. 

What functions should a tax agent perform? 

Such an agent has its functions and is obliged to perform them. The main goal of all this is the withholding and payment of taxes. That is, this is the primary function of the agent. The tax agent is obliged to timely withhold taxes from the taxpayer's income. In order to fulfill its function, the agent must:

1. Calculate the tax that needs to be paid. 

2. Withhold tax during each income payment to the taxpayer.

3. Maintain records of the entire process. 

Again, for example, we can take the employer. They withhold taxes from employees' salaries and keep records of this process. Then, they transfer the withheld amount to the tax service.

In other words, the agent is obliged to transfer taxes to the budget. After withholding taxes, the tax agent must transfer these funds to the state budget. Strict deadlines are established for this, and violations can lead to penalties. That is, the employer must adhere to all deadlines. They cannot transfer taxes whenever they feel like it. The tax agent is also obliged to use the correct payment details so that the funds reach the appropriate governmental authorities.

As for reporting, it is also an obligation of the employer in this example. The tax agent is also responsible for maintaining accurate and complete tax reporting. This primarily concerns the preparation of reports on how much amounts have been withheld. These reports must then be sent to the tax authorities. This entire process must also be completed within the specified deadlines. The reporting includes data about the taxpayers, amounts of income, and taxes withheld from these incomes.

In terms of the agent's responsibilities, it also includes providing information to the taxpayer. That is, such an agent is obliged to inform the taxpayer about the amounts of taxes withheld. For example, an employer provides an employee with a certificate of income and withheld taxes in the form of 2-NDFL.

In addition to maintaining reports, the agent must keep all this documentation. This is necessary in case of audits. Ukrainian law also specifies how long documentation must be retained. 

The role of the tax agent involves significant responsibility towards tax authorities and taxpayers. Failure to fulfill their obligations can result in serious consequences for both the tax agent and the state.

Tax agents are required to transfer taxes to the budget within strictly established deadlines. Late or incomplete tax transfers can result in fines and penalties. These are the biggest risks for the agent, so it is better not to break the law.