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Incorrect single tax accruals: tax officials reprimanded

26.08.2020

Сomplainee: Main Department of the STS in Dnipropetrovsk region (MD STS)

Complaint in brief: The Council received a complaint from a private entrepreneur from Kryvyi Rih who was excluded from the Register of Single Taxpayers. The complainant learned about the decision of the tax authority accidentally, when it did not accept her yearly tax reporting. According to the private entrepreneur, for unknown reasons she did not receive any letters on her exclusion from the Register of Single Taxpayers. Thus, the complainant decided to appeal to the MD STS via e-cabinet: she asked to restore the status of the single taxpayer in the Register having attached the documents proving  her payments to the budget. However, the complainant did not receive any response from the tax authority. Then the Business Ombudsman Council started consideration of the complaint.

Actions taken: Having examined the case materials, the Council’s team ascertained that the tax authority had excluded the complainant from the Register of Single Taxpayers without conducting a relevant inspection as required by the Tax Code of Ukraine. Therefore, neither the Council, nor the complainant understood true grounds for such a decision. Hence, primarily the Council asked the STS and the MD STS to explain why the complainant had been  excluded from the Register of Single Taxpayers. Later it turned out  that during two consequent quarters - from January till June 2019 - the tax authority accrued a debt to the entrepreneur. It arose due to non-payment of the fine for the incomplete and late payments of the single tax from February 2017 to June 2018.
Taking into account that the complainant learned about the tax decisions too late, she was denied  consideration of an administrative appeal by the STS since the 10-day deadline had expired.
Alongside, the Council continued consideration of the complaint. The investigators team of the Council found out that in 2017, Kryvyi Rih City Council reduced the rate of the single tax for private entrepreneurs of the Group II to 17%, which came into force in April 2017. Therefore, the Council asked the MD STS to provide detailed information on the entrepreneur's calculations with the budget for 2017-2020 and recommended to adjust the accrued single tax amounts in the complainant's integrated card (where the outdated rate of 20% was applied instead of the newly adopted 17%). The Council organized a teleconference discussion of the complaint with the participation of the STS administration. 

Results achieved: While processing the complaint, tax authorities provided all the information requested by the Council (including  scan copies of envelopes that confirmed the fact that the decisions which subsequently led to accrual of the tax debt and exclusion the complainant from the Register of Single Taxpayers, had been duly sent to the latter).
After the Council intervened, the MD STS made adjustments to the accrued amounts of the tax liability from the single tax in the complainant's integrated card, having adjusted them to 17% rate. The STS also informed the Council that the MD STS official was brought to responsibility for improper performance of functional duties. The case was closed due to exhaustion of available means of administrative appeal. The complainant appealed to court seeking cancellation of the decision to exclude her from the Registry of Single Taxpayers.