Zaporizhzhyaoblenergo customers defended their right to tax credit

Subject of complaint: Zaporizhzhyaoblenergo State Enterprise PJSC (Zaporizhzhiaoblenergo)
Complaint in brief: On February 14, 2018, a union of entrepreneurs from Zaporizhzhya Oblast appealed to the BOC. The Complainants could not register tax invoices on operations with the power distribution company and, accordingly, form a tax credit.
Zaporizhzhyaoblenergo is a monopoly supplier of electricity in Zaporizhzhya Oblast. In late 2017, the company faced financial problems, it actually was on the verge of bankruptcy due to lack of working capital. As a result, the oblenergo’s amount on the account in electronic administration system (EAS) was insufficient for registration of invoices. Thus, because of the negative amount of the limit oblenergos’ customers could not register tax invoices in EAS. According to Zaporizhzhya Regional Council, customers of the state enterprise generally accumulated tax invoices worth over UAH700 mn.
The Tax Code stipulates that entrepreneurs may attribute VAT paid amounts to the tax credit without registering tax invoices based on invoices issued by oblenergos. However, due to a regulatory gap in the EAS, there was no such an option for them.
Actions taken: Having determined existing systemic discrepancies between legislation and EAS service functions, the Council’s representatives repeatedly discussed the Complainants’ issue at SFS Expert Group meetings. Particularly, the Council’s investigator monitored the EAS finalizing process of the tax amount calculation on which a taxpayer has the right to register invoices. Finally, the Ministry of Finance changed EAS functioning procedure. Adjustments were introduced in the test mode in July after submission of tax reporting by companies along with new version annexes to declarations filled out.
Result achieved: In late July, the Union confirmed that with the help of a new application in the EAS companies received a tax credit. It is worthy to note that as the issues affected interest of the whole regional business, many state authorities contributed to sorting out the different aspects of the problem. Notably, that according to the Complainant, “The Business Ombudsman Council rendered a great support in resolving this issue, particularly, regarding changes made both to reporting and tax invoices registration program.”
A systemic gap, which Zaporizhzhya Oblast entrepreneurs suffered from, was finally filled.