SFS drops VAT demand against “Bravo” airlines worth UAH 8 million

Subject of complaint: Main Department of the State Fiscal Service in Kyiv Oblast (Kyiv Oblast SFS)
Complaint in brief: On July 19, 2017, Bravo Airlines turned to the BOC with a complaint concerning the Kyiv Oblast SFS. The enterprise disagreed with results of a tax audit, according to which it was liable for additional VAT worth UAH 8 million.
According to the SFS, the airline was leasing aircraft on the territory of Ukraine and therefore had to pay VAT. Meanwhile, the Complainant insisted that VAT should not be paid, since the craft were being leased on location from a leasing company registered in the Arab Emirates, Lebanon and Cyprus.
The enterprise sent reasoned objections regarding the conclusions of the tax audit to the SFS, but the tax agency ignored them.
Actions taken: The BOC investigator sent an official letter to the SFS and took part in a hearing of the airline’s case, where he argued in support of its position. The investigator noted that the SFS was incorrectly interpreting provisions of the Tax Code and that, in this situation, the presumption of legality should be applied to the Complainant’s decisions.
Result achieved: With the Council’s assistance, on October 27, the SFS accepted the airline’s challenge and canceled the decision regarding additional payments. The case was successfully closed.