A company engaged in the wholesale trade of petroleum products filed a complaint with the Business Ombudsman Council. The tax authority had assessed tax liabilities against the company totaling nearly UAH 12 million, including corporate income tax, VAT, and excise tax.
The main claims of the tax authority concerned doubts about the reality of the company’s transactions involving the purchase and subsequent sale of fuel to counterparties. Tax officials also argued that the company had failed to coordinate the transportation routes of the fuel deliveries with the National Police. Furthermore, the tax authority noted that some of the company’s counterparties were mentioned in criminal proceedings or were included in the lists of “risky” taxpayers.
During the complaint review involving representatives of the State Tax Service of Ukraine, the company, and the Business Ombudsman Council, a senior inspector of the Council expressed well-reasoned support for the company’s position. She emphasized that the company had submitted a complete set of primary documents confirming the reality of all business transactions challenged by the tax authority.
Additionally, the Council and the company jointly compiled an extra set of evidence to demonstrate that, under current legislation, transportation routes for diesel fuel (the subject of the disputed deliveries) do not require approval by the National Police. Therefore, the tax authority’s allegations regarding the fictitious nature of the transactions were premature and unfounded. The information about the counterparties’ risk status emerged only after the transactions had taken place and thus could not be considered evidence of the company’s bad faith. These arguments were thoroughly detailed by the Council in an official letter to the State Tax Service of Ukraine.
As a result of the review, the State Tax Service took into account the company’s position supported by the Council and partially cancelled the tax assessment decisions in the total amount of over UAH 8.94 million, which represents 75% of the disputed charges.
Since the tax authority’s decision is not subject to further pre-trial appeal, the Council closed the case following the achievement of a positive outcome for the complainant.
