State Tax Service drops additional payments worth UAH 66 mn for Shell international energy company

Complainee: The State Tax Service of Ukraine (STS)
 
Complaint in brief: A Ukrainian representative office of an international energy company Shell, which, in particular, serves a network of gas stations in Ukraine, turned to the Council. The Complainant disagreed with the tax audit findings, according to which he had to additionally pay UAH 66 mn.
 
After auditing the company’s business activities, the tax authority concluded the Complainant overstated the income tax object negative value by UAH 56 mn. and understated the income tax by UAH 8 mn. The STS treated the company’s fuel sale to a number of counterparties via smart cards as unrealistic transactions. According to the state agency, the counterparties did not have enough employees, as well as the necessary technical facilities, vehicles for petroleum products storage and transportation.
 
Actions taken: After examining the circumstances of the case, the Council upheld the company’s position. The investigator asked the STS in writing to comprehensively and impartially consider the complainant’s appeal. According to the Council, the circumstances of the case pointed to the fact the tax authority was trying to bring the Complainant to liability for violations committed, perhaps, not by the Complainant but other business entities. In addition, according to the Complainant’s explanations, criminal proceedings, in which his counterparties appeared, was initiated based on of his own application. It should be noted that as soon as the company reported violation to law enforcers, it stopped cooperation with these partners – back in July-August 2016. 
 
The Council’s investigator participated in the administrative consideration of the company’s complaint at the STS, where he supported the company’s position again.
 
Result achieved: The tax authority accepted the Council’s arguments and dropped additional payments for a company worth UAH 66 mn. The case was closed successfully.