SFS drops over UAH 2 mn additionally charged to children’s hospital “Dobrobut-Dytynstvo”

Tax issues: Inspections by state tax and fiscal agencies Kyiv

Subject of complaint: The State Fiscal Service (SFS), General Directorate of the SFS in Kyiv (GD SFS)
Complaint in brief: On August 2, 2018, a children’s medical center “Dobrobut-Dytynstvo” appealed to the Council. The Complainant disagreed with the tax audit conclusions regarding additional payments worth about UAH 3 mn in taxes and fines. 
In May the SFS audited company’s compliance with the tax, currency legislation and social insurance payment.
One should mention methods the SFS exploits when identifying tax obligations. The fiscal body assumed, that the children’s hospital transferred 4/5 of the call centre maintenance cost to other hospitals of the network. In this way the SFS calculated taxes, which these hospitals should have paid if they had maintained separate call-centres. It amounted to over UAH 1 mn of VAT.
The company insisted that the SFS competence does not include choosing the optimal business model for the enterprise. Moreover, it is wrong to calculate additional taxes based on the above-stated unconfirmed assumptions.
In addition, according to the auditors, the debt of suspended individual entrepreneurs before the Complainant should have become uncollectable. 
Disagreeing with such conclusions, the medical center appealed them in the SFS and turned to the Council for help. 
Actions taken: Having studied case materials, the Council’s investigator prepared arguments in favor of the company. He pointed out there was no proper evidence of the contact center maintenance, and, accordingly, the cost of leasing and operation of premises, as well as the fact that, as a result of business activity termination by an individual (entering a record of termination in the USR), his obligations under concluded contracts were not terminated, but remain with him/her as an individual. 
Result achieved: SFS accepted the Council’s arguments and dropped over two thirds of additional payments. The case was closed successfully. 

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