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Over UAH 1 mn of additional payments for international packaging and protection equipment producer cancelled

05.08.2020

Complainee: State Tax Service (STS), Main Department of the State Tax Service in Zakarpattia region (MD STS) 

Complaint in brief: The Council received a complaint from a packaging and protection equipment producer. The company has 25 manufacturing facilities in European countries. It started to operate in the Ukrainian market in 2017. The enterprise complained about the results of the tax audit due to alleged violation of  tax legislation and disproportionate payments made from the unified social contribution (USC). It should be noted that the complainant imported spare parts after renovation under agreement with the non-resident company: the enterprise received maintenance and consultancy services from the foreign partner on a regular basis.
However, during the inspection the tax authority came to the conclusion that the company underestimated its income for the last two years and did not pay the cost of services provided to the non-resident. In particular, the STS imposed sanctions and additional payments (including the USC) on the complainant worth over UAH 2 mn. Disagreeing with the tax decision, the enterprise appealed to the STS. In parallel, the Business Ombudsman Council started consideration of the complaint.

Actions taken: The investigator of the Council acknowledged the complaint was substantiated and upheld the complainant’s position. The Council ascertained that the complainant accrued and paid the USC simultaneously with payment of salaries to the personnel. For unknown reasons, although processed by the bank, the amount of payments was not displayed in the e-office of the taxpayer, that led to USC arrears. Apart from that, the Council found out that the supervisory authority did not examine the circumstances and all the primary documents in the case to the full extent. The Council recommended the STS to ensure a full, comprehensive and impartial consideration of the complaint’s case.

Results achieved: The STS satisfied the complaint of the enterprise, though partially: additional payments worth over UAH 1 mn. were cancelled. Unfortunately, the supervisory authority left the decision regarding the USC unchanged. The case was closed.