Subject of complaint: The Main Department of the State Fiscal Service of Ukraine in Kharkiv Oblast (SFS)
Complaint in brief: The Council received a complaint from a regional Kharkiv-based pharmacy network about charging of taxes based on a scheduled inspection results.
Having analyzed the company’s activities for 2015-2018, the SFS questioned the reality of the Complainant’s transactions with a number private entrepreneurs. The tax authority particularly pointed out insufficient detailing of transactions in primary documents on delivery of advertising, marketing and printing services as well as cash registers maintenance services. The above conclusions became the ground for additional charging of income tax and VAT. The claims set forth by fiscals are quite common for this category of disputes.
Disagreeing with the tax authority conclusions, the company appealed the decision of the SFS and turned to the Council for support.
Actions taken: The investigator studied case materials and concluded that certain errors in primary documents cannot show the fictitious nature of transactions – reports were a sufficient confirmation of performed works. The Council upheld the Complainant’s position and asked the SFS in writing to comprehensively and impartially consider the pharmacy network’s complaint. In addition, the Council’s team participated in the consideration of the case at the SFS. We stressed that it was the supervisory authority that had to prove the legality of charges, and all ambiguities should be interpreted in favor of the taxpayer.
Result achieved: Having accepted the Council’s arguments, the SFS canceled 70% of additional payments worth UAH 630k. When canceling disputed tax notifications-decisions, the supervisory authority, inter alia, substantiated its position with the relevant Supreme Court practice. The case was closed successfully.
