Qualifying period for steel plant employees recognised

Tax issues: Other issues Dnipropetrovs'k region

Complainee:  The State Tax Service of Ukraine (STS)
Complaint in brief: The Business Ombudsman Council received a complaint from a steel plant that manufactures metal equipment for cars and railway components. The enterprise that is located in Mariupol went through hard times due to the Anti-Terrorist Operation (ATO) in the region: markets loss, forced suspension of manufacturing and even a bankruptcy threat.
However the plant faced a one more challenging experience that forced it to turn to the Council for help. The enterprise disagreed with the tax decision about a simultaneous existence of the UAH 52 mn of overpayment and a debt for payment of the single social contribution (SSC) that reached UAH 37 mn. It turned out that the tax authority detected an arrear at the time of the opening the bankruptcy proceeding against the complainant earlier in March 2017.
Overpayment arose due to adjustment of the SSC amounts by the complainant following a right of the enterprise with manufacturing capacities in the ATO zone not to accrue and pay a SSC.
Hence, the enterprise adjusted the previously accrued SSC amounts having reflected that in the tax reporting. Moreover, the complainant had not reduced its tax liability by the SSC amounts deducted from the plant’s employees.The enterprise asked the STS to settle the dispute multiple times, since the overpayment fully covered the debt amount. Nevertheless, the tax authority refused to recognise the overpayment of the SSC amount.
Such inconsistency in the tax audit system could result in non-recognition of the retirement employment period of the plant’s employees and provoke social tensions in the team. The Council commenced immediate consideration of the complaint.
Actions taken: The investigator acknowledged the complaint was substantiated. The Council appealed to the STS and asked to correct the data regarding existence of tax arrears and repay the enterprise’s SSC debt for the disputed period.
The Council initiated the complaint’s consideration at the meeting of the expert group with the STS participation under the Memorandum of Partnership and Cooperation between the BOC and the STS.
Result achieved: The STS upheld the Council’s recommendations. Shortly after the expert group meeting the complainant contacted the investigator in charge and thanked the Council for its help: “Thanks to joint cooperation of the Business Ombudsman Council and the enterprise’s administration, the settlement of the disputed issue concerning recognition of a qualifying period of the plant’s employees till June 2020 inclusive was possible to achieve. The agreement was also reached with the State Tax Service and the Pension Fund of Ukraine on the procedure for repayment of the existing SSC debt of enterprises for the disputed period of 2015-2017.” The case was successfully closed.

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