Tax office drops extra payment of UAH 1.5mn for advertising agency 

Tax issues: Inspections by state tax and fiscal agencies Kyiv

Subject of complaint: The General Administration of the State Fiscal Service (SFS)
Complaint in brief: On May 2, 2018, an advertising agency turned to the BOC with a complaint against the SFS. The Complainant disagreed with the findings of an audit that led to additional taxes and fines.
While reviewing the activities of the company over 2014-2017, the SFS challenged the Complainant’s activities with about 20 contractors, stating that some of the partner companies did not have enough human and material resources to provide the stated services. However, the advertising market typically engages small contractors for different types of professional services and it is difficult to determine the volume and cost of a creative product. As a result, the SFS often questions the legitimacy of such operations.
The tax audit findings also noted that many of the Complainant’s contractors had stopped submitting reporting to the tax authority. In some cases, more than a year had passed between the completion of a contract with the Complainant and the contractor’s last tax report. The ad agency’s position was that it could not be held responsible for its partners for months and years after they had cooperated and so it challenged the SFS decision.
Actions taken: The BOC investigator carefully assessed the case materials. The Council participated in a hearing of the case at the SFS. The investigator asked the tax authority in writing to comprehensively and impartially consider the advertising agency’s appeal.
Result achieved: With the assistance of the Council, the SFS partly satisfied the complaint and dropped an additional payment of UAH 1.5mn. The case was closed successfully.

Next case:: SFS refunds VAT UAH 200k to a Ukrainian subsidiary of the world computer corporation