Eskada-M gets tax charge worth over UAH 9mn dropped

Tax issues: Inspections by state tax and fiscal agencies Rivne region

Subject of complaint: Main Department of State Fiscal Service (MD SFS) in Rivne Oblast
Complaint in brief: On February 8, 2017, a wood-processing company called TOV Eskada-M located in Rivne Oblast requested that the BOC help challenge the results of a scheduled tax audit by the Rivne Oblast SFS office. Based on the conclusions of the audit, the Complainant was expected to pay additional tax invoices and penalties worth over UAH 9mn. 
Actions taken: Having examined the substance of the complaint, the BOC investigator discovered that, when drawing up the formal conclusions of the tax audit, SFS official without justification refused to recognize the Complainant’s production costs, which dramatically increased the company’s tax liabilities and led to penalties. On February 13, the BOC investigator wrote to the SFS head office, pointing to the unjustified nature of most of the penalties imposed on the Complainant by the Rivne Oblast SFS office.
On February 27, the BOC investigator arranged a meeting between Rivne Oblast SFS officials and the Complainant, where he once more presented the BOC’s position, as he had set out in writing.
On March 3, following the Council’s suggestions, the Complainant wrote to the main office of the SFS with a request to arrange a new audit of primary accounting documents to prove the actual expenses per unit. From March 20 to April 6, the Rivne Oblast SFS office carried out a repeat tax audit at the Complainant’s premises, as a result of which it reduced the penalty amount by UAH 2mn. However, the Complainant and the Council found this result equally unsatisfactory, since the Rivne Oblast SFS still failed to take into account all of the company’s production costs during the second audit.
On April 7, the Deputy Business Ombudsman and the investigator attended an administrative hearing of the Complainant’s case at the SFS’s main office.
Result achieved: On April 18, the Complainant informed the Council about the positive outcome of the hearing and about the dropping of the tax penalties practically in full. In its turn, Rivne Oblast SFS office sent a letter to the BOC with assurances that the persons guilty of violating the Complainant’s rights would be penalized. The case was successfully resolved.

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