In the summer of 2024, the tax service in Volyn region assessed millions in additional taxes to a construction company based on audit results. The tax authority insisted that the company had made an error in the declaration period for obligations related to the sale of constructed real estate (apartments in a building). Initially, the tax authority conducted a planned audit, the results of which the company disagreed with, considering the tax assessments and penalties unjustified. The company filed an objection, which led to an unscheduled audit to examine the disputed issues in detail.
However, in June 2024, a new audit report was compiled based on this inspection. The main point of contention was the date of signing the act of acceptance and transfer of property rights for an apartment. The tax authority claimed that the act was signed in May 2022, while the company insisted it was signed in June 2022, citing a technical error by the state registrar when registering the apartment’s ownership. The company provided substantial evidence supporting its position, including the absence of a registered address for the building in May 2022, proof of incomplete payment for the apartment at that date, confirmation from the buyer, and an explanation from the notary regarding the technical error in the registry. However, the tax authority seemed to disregard these arguments.
Disagreeing with the decision, the company appealed it to the State Tax Service of Ukraine (STS) and sought assistance from the Business Ombudsman Council (BOC). After examining the complaint, the Council supported the complainant’s position and sent its recommendations to the STS.
At the end of August, a video review of the complaint materials was held at the STS, attended by company representatives and a BOC’s Investigator. In early September, the Council sent its proposals to the STS. This yielded a positive result: within a few days, the tax authority canceled both tax notification-decisions, satisfying the company’s complaint. The State Tax Service also obligated the regional tax authority to conduct a new audit in case disciplinary proceedings were initiated against the officials of the Main Directorate of the STS in Volyn region who conducted the relevant inspection.
