A Ukrainian company belonging to a well-known international group engaged in the production and sale of pharmaceuticals, healthcare products, and household goods submitted a complaint to the Business Ombudsman Council regarding the results of a tax audit.
According to the tax authority, the company overstated the amount of VAT subject to budgetary reimbursement and the tax credit carried forward to subsequent periods by a total amount exceeding UAH 120 million.
The tax authority’s claims concerned the company’s purchase of advertising and marketing services in pharmacy chains. The tax officials insisted that the advertising was carried out for trademarks owned by a non-resident and that the marketing services were not substantiated, since no photo evidence was provided and the activities were allegedly not aimed at generating the company’s income.
During the complaint review involving representatives of the State Tax Service of Ukraine (STS), the company, and the Business Ombudsman Council, the Council supported the company’s position and emphasized that the company had provided a complete set of primary documents confirming that the advertising referred specifically to the products rather than to trademarks.
The Council also noted that the legislation does not require photo documentation of marketing services, and that the effectiveness of advertising and marketing activities is by nature delayed — it does not necessarily result in an immediate increase in sales or revenue. The Council set out these arguments in detail in its official letter to the STS of Ukraine.
Following the review, the STS of Ukraine took into account the company’s position, supported by the Council, and cancelled the tax notices totalling over UAH 120 million.
