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Court decision’s entry into force — the STS promptly registers company’s tax invoices

08.12.2020

Complainee: The State Tax Service of Ukraine (STS of Ukraine)

Complaint in brief: Inclusion in the risky taxpayers’ list and, as a result, tax invoices suspension further became the reason for a Kharkiv logistics company’s appeal in court. According to the tax office, the complainant made risky business transactions, as long as in August-September 2019 it supplied more goods (services) than purchased. Thus, the enterprise's contractors were unable to form a tax credit under the relevant transactions amounting in total to  UAH 65k.

The Court acknowledged the tax decisions had been illicit and obliged the STS of Ukraine to register the complainant’s tax invoices.

The current legislation contains strict (and even to some extent unrealistic) norms for the tax authorities concerning deadlines for enforcement of such court decisions, that is the day of the court decision’s entry into legal force upon its receipt by the controlling authority. Therefore, after entry of the court decision on tax invoices registration into force, the complainant lodged a complaint to the BOC challenging the inactivity of the STS of Ukraine. The Council’s team started the relevant investigation.

It is important to point out that the STS of Ukraine developed internal acts that regulate an issue of tax invoices registration following the court decisions in a more realistic way. The Council ascertained that the real period for the STS structural departments to normally perform all the internal procedures aimed at enforcing a court decision on registration of tax invoices, is 15-20 working days from the date of receipt of such a court decision by the tax authority. However, even this deadline, according to the Council's observations, is not always met in practice.

Actions taken:  Having examined the case materials, the investigator in charge recognized the complaint as substantiated and supported the company’s position. The Council recommended the STS of Ukraine to cease the alleged malpractice of the tax authority and register the complainant’s tax invoices. In particular, the Council sent the STS two official letters and also organised the company’s case discussion at the Expert Group meeting with the participation of the STS representatives under the Memorandum of Partnership and Cooperation between the Council and the STS of Ukraine. Given the Council’s experience, the meetings of such expert groups enhance the effective interaction with state bodies and speed up consideration of entrepreneurs’ cases.

Furthermore, in the recent Systemic Report of the Council “Administration of Taxes, Paid by Business” the issue of non-enforcement of court decisions of this category of cases had been acknowledged to be systemic, hence the Council issued a set of systemic recommendations to the STS of Ukraine and the Ministry of Finance of Ukraine aimed at resolving the situation as such at large.

Result achieved: The STS of Ukraine implemented the Council’s recommendations and promptly registered the company’s tax invoices. In particular, the complainant’s tax invoices were registered within one month since the relevant court decision entered into legal force. The case was successfully closed.