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The decision in favor of the grain trader – the STS reviewed audit findings

02.10.2020

Complainee:  The Main Department of the STS in Kyiv (MD STS)

Complaint in brief: The Council received a complaint from a big grain trader headquartered in Geneva, Switzerland. The company has been present on the Ukrainian market of grain and oilseeds since 2017.

The company disagreed with the tax audit findings. During the inspection, the tax authority found that the company had not timely paid income tax. The problem was that company indicated the budget classification code 11021000 (income tax of private enterprises) instead of 11020300 (income tax of enterprises established with the participation of foreign investors) in the income tax payment order. A month later, based on the company’s letter, the MD STS corrected payment of these tax liabilities, but later imposed fines over UAH 50k on the company for their late payment. Considering the tax decision illegal, the company turned to the Business Ombudsman Council for support.

Actions taken: The investigator found the company's complaint substantiated. The Council upheld the company's position and recommended that the State Tax Service of Ukraine (STS) ensure a full, comprehensive and impartial consideration of the grain trader's case. Referring to the current case-law of the Supreme Court in the respective category of cases, the investigator concluded the supervisory authority had no reason to impose a fine on the company because the complainant had not evaded taxes: an error in defining the budget classification code is not the same as non-fulfillment of his tax obligation.

Results achieved: The STS accepted the Council’s recommendations and overturned the disputed decision. Additional payments for the complainant were dropped. The case was successfully closed.