Tax authority agrees to droop a company’s debt

Tax issues: Other issues Kyiv

A company engaged in the trade of machinery for the mining industry filed a complaint with the Business Ombudsman Council. The reason for this was the tax authorities’ decision to charge the company with a tax debt of 84k UAH, which arose as a result of an audit in 2023.

The company initially attempted to challenge this tax notification decision (TND) independently, first through administrative procedures and then in court, strictly adhering to the appeal deadlines. This is important because timely challenging of TND means it remains unagreed, i.e., it is not subject to payment and does not acquire the status of tax debt until the matter is finally resolved.

Thus, on the eve of the New Year, the company filed a lawsuit through the e-court to the Kyiv District Administrative Court (KDAC) to declare the TND illegal. Although the lawsuit reached the court, it was not registered, and the case number was not assigned. As a result, at the beginning of February 2024, without any information regarding the appealing of TND in court for over two months, the Kyiv tax authorities decided it was time to collect the debt from the company.

With the support of the Business Ombudsman Council, the company immediately decided to use the administrative procedure and challenged the tax demand of the Kyiv tax authorities. The Council sent a letter to the Head of KDAC, reminding about the reasonableness of the deadlines in procedures such as registering a lawsuit and assigning a case number. The complainant’s lawsuit regarding the TND had remained unregistered for over 40 working days. Meanwhile, the actions of the tax authorities towards the company were hasty, as highlighted by the Council during the administrative complaint hearing.

Furthermore, the Council discussed the case and the issue of delays in procedural decisions at KDAC during the regular monthly meeting of the Expert Group with the State Tax Service of Ukraine (STS of Ukraine).

Already in March 2024, KDAC issued a ruling to open proceedings in the complainant’s administrative case, and the STS of Ukraine decided to adjust the tax debt charged to the company. Now, the court will decide the fate of the 84k UAH charged.

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