Less tax invoice suspensions, more inspections

During July-September 2023, BOC received 310 complaints from companies regarding state bodies’ malpractice and closed 180 cases. As of the beginning of November, the investigation of 99 cases is ongoing. In Q3, the Council helped businesses return UAH 305.6 mn. Since launch of operations, the financial effect of the Council’s activities amounted to UAH 25 bn.

The most common category of business complaints has traditionally been tax issues, although their share changed in the reporting quarter due to a gradual progress in implementing BOC’s recommendations on improving SMKOR operation by state bodies. Thus, in July-September 2023, 176 or 58% of complaints concerned tax issues (as compared to about 70% in Q1 and Q2 2023). At the same time, for the first time during the martial law period, a tax audits category came to the fore. The Council’s practice proves that more than a half of complaints about challenging tax audits findings is resolved successfully. Meanwhile, problems in the VAT system, concerning which the Council performed its own investigation last year, have not yet been fully resolved. The Business Ombudsman emphasizes that despite a decrease in the number of tax invoice suspension cases as compared Q4 2022, stabilization stopped at a level 3-4 times higher than the desired one.

Apart from tax issues, in Q3, the Council continued receiving complaints about abuses of law enforcement bodies and customs – their number was 13% and 9% respectively. However, the institution did not observe dramatic surges or shift in these areas.

“What neither legitimate business nor international partners really want is the current spike in “gotcha!” fines and penalties based on formalities that see companies punished despite having already met their tax obligations in full. The state should treat business  ensuring Ukrainian economy sustainability with understanding and attention along the path of Ukraine to European integration and its inevitable victory,”, Roman Waschuk, the Business Ombudsman of Ukraine pointed out.

The Council is actively expanding cooperation with the Ministry for Restoration and the Restoration Agency, helping them establish relations with member companies of leading business associations being potential participants in the reconstruction process. Similarly, BOC cooperation with the NACP in implementing current State Anti-Corruption Strategy is also developing rapidly.

Currently, the Council is also a part of the working group under the Secretariat of the Cabinet of Ministers working on the development of amendments to the Tax Code in terms of the administrative appeal procedure introduction. The Law on the Administrative Procedure, the adoption of which had been lobbied by the Council for many years, would become effective in December 2023. It will help businesses get new opportunities and tools for appealing controversial decisions of state bodies.

The third quarter was also marked by positive, long-awaited news related to institutionalization of BOC at the legislative level. The provision on the Business Ombudsman is finally injected in the Law No. 3311-IX on state support of investment projects with considerable investment in Ukraine, signed by the President in September. Currently, the update of the relevant Decree on the Business Ombudsman is pending.

Finally, in Q3, the Council, jointly with the Entrepreneurship and Export Promotion Office and Diia.Business national project, held a joint webinar project devoted to tax and customs business issues. Increasing the ability of businesses to independently prevent abuses of state bodies remains an important direction of the Council’s work.

The Business Ombudsman Council (BOC) remains one of the key Ukrainian institutions aiming to protect the rights of Ukrainian businesses before state bodies with all its legal services delivered to entrepreneurs free of charge.

You can submit a complaint to the BOC through the form on the institution’s updated website: https://boi.org.ua/en/podaty-skargu/

You can read the report here.

Next news: Key points of the Business Ombudsman at Rebuild Ukraine confereces in Warsaw and Toronto