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Tax audit findings canceled

15.01.2022

Complainee: The State Tax Service (STS), Main Department of the State Tax Service in Kyiv (MD STS)

Complaint in brief:  The Business Ombudsman Council received a complaint from Mykolaiv wind power plant. The company disagreed with the tax audit findings. According to the tax service, the wind farm overstated a VAT budget refund amount by UAH 14 mn due to allegedly insufficient installed equipment amount. Tax officers concluded that the complainant had not installed purchased equipment as of 31 August 2021 (tax audit end date). Therefore, VAT total sum amounting to UAH 14 mn paid upon its purchase cannot be claimed for a budget refund. Considering the tax authority’s decision to be illegal, the company turned to the BOC for help.

Actions taken: The investigator examined the case file and agreed with the validity of the company's position. The Council recommended that the STS ensure a full, comprehensive and impartial consideration of the company's complaint. The BOC noted that the complainant fulfilled all the necessary conditions for receiving a budget VAT refund: the company paid VAT to the state budget, declared the amount not exceeding the registration limit and had no tax debt. The conditions set by the Tax Code did not contain requirements for full use and installation of purchased goods/services at the time of claiming the respective tax amount for a budget refund. In particular, inspectors had no  claims regarding validity of documents confirming the reality of transactions for purchasing equipment from foreign importers.

Result achieved: The STS followed the Council’s recommendations and canceled the audit results. The case was successfully closed.