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Tax issues: Problems with the electronic VAT administration Kyiv

Company returns UAH 1.9 mn of registration limit

A Kyiv-based company turned to the Business Ombudsman Council back in 2021, having an issue with the capital's tax office. In 2019, tax officials canceled the company's VAT certificate. As a result, the registration limit amount in the electronic VAT administration system (SEA VAT) was reduced by almost UAH 1.9 mn. Later, the court took the company’s side and canceled the tax authority’s decision. Now, the capital STS was obliged to execute the court's decision. Yet, the company independently managed to have the tax authority return it to the VAT payers register. At the same time, the situation couldn’t be resolved at that point, because the tax office still had to adjust the VAT registration limit amount in the SEA by returning the same UAH 1.9 mn written off when the certificate was canceled. As it later turned out, the lack of the necessary software became an obstacle to resolving the issue. After processing the complaint, the Council upheld the complainant’s position and officially communicated with the State Tax Service. Over ten times, the Council discussed the issue of STS in the format of an Expert Group, and also held several working meetings with the participation of the payer. Thus, according to the Tax Code provisions, in case of cancelling the decision to revoke the VAT payer registration, the registration limit amount shall be recalculated within three working days after the date of the decision to renew the VAT payer status in the system. However, as it turned out, for a long time the STS lacked the tools to take this action technically, and practical aspect resolution of this issue was delayed for almost three years. It is noteworthy that the Council issued recommendations to the Ministry of Finance and STS to arrange a technical update of indicators in the SEA VAT in the systemic report “Administering Taxes Paid by Business” (2020). For our payer the STS implemented technical solutions that allowed updating all the payer's indicators in the SEA VAT. The case was closed successfully. In the meantime, the Council has already received new complaints, where the STS planned to use algorithms developed during processing the mentioned complaint to renew lost indicators in SEA VAT as a result of a similar situation.

15.02.2024

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