On September 20, 2024, the Business Ombudsman Council held a round table “The Rule of Law: Protection of Business in Tax Disputes” with the participation of judges of the Supreme Court, the State Tax Service representatives, the Prosecutor General’s Office, legal and business communities.
The event was opened by Business Ombudsman Roman Waschuk, emphasizing that: “The round table arranged by the Council is an important platform for an open discussion about the problem of non-enforcement of court decisions between all the stakeholders involved in this process.” “It is enforcement of a court decision that is a practical implementation of the rule of law in the state”, he added.
The judge of the Supreme Court in the Cassation Administrative Court – Nataliia Blazhivska was a moderator. “Unconditional adherence to the principles of the rule of law is essential for the sustainable development of the state. The supreme law (the rule of law) is key to ensuring the functioning of a responsible business environment. A responsible business on the one hand and good governance on the other,” emphasized Nataliia Blazhivska at the opening of the first session.
The team of BOC senior investigators Tetiana Mykulska, Yuliia Mykhailiuk and Volodymyr Kutsenko devoted a presentation to the topic of non-enforcement of court decisions, being the main challenge of law enforcement in tax disputes.
Taking into consideration cases of the Council’s complainants, the investigators noted problematic aspects of court decisions executions. According to the BOC, tax authorities should take into account court proceedings realities in their daily practice. After all, as the statistics of court proceedings show, in the vast majority of cases the courts rule in favor of taxpayers. Meanwhile, the Council manages to maintain a constructive dialogue with the Tax Office, positively affecting entrepreneurs’ complaints resolution.
It is worth reminding that in recent years, the Council provided its recommendations on fixing business problems in the tax sphere in reports based on its own-initiative investigations into the problems of the SMKOR (bit.ly/4gyDmKE) and tax audits (https://bit.ly/3MUa8s0). According to the BOC, not only the essential filling of decisions needs improvement; each individual case requires analysis and a risk-based approach before making a decision.
Rayisa Khanova, the Secretary of the Judicial Chamber for Taxes, Fees and Other Mandatory Payments of the Cassation Administrative Court as part of the Supreme Court, dedicated her speech to the state of cassation review of complaints and articulated the legal positions of present-day judicial practice. She also emphasized the importance of taking into account economic consequences of economic transactions for tax accounting.
Shevtsova Nataliya, a judge of the Grand Chamber of the Supreme Court, revealed the topics of tax disputes jurisdiction change from commercial to administrative courts and the impact of lengthy bankruptcy cases on tax issues resolution.
The State Tax Service representatives also actively joined the round table discussion: Oleksandr Yakymchuk, the Deputy Director of the Department – Head of the Department for support of disputes on refusal to register tax invoices and Tetyana Bohiv, the Deputy Head of the Department – Head of the Department of the State Tax Service interests representation in courts. They noted that the Tax Office was constantly working on improving interaction with taxpayers, as well as monitoring current court practice. The STS thanked the Council for the regular dialogue in solving entrepreneurs’ complaints.
The Prosecutor General’s Office was represented by Oleksii Bonyuk, the Head of the Department of Criminal and Legal Policy and Investment Protection. In his speech, he stressed that civilized approaches should be added to the risk management system. It is about the analysis of factors underlying violations of taxpayers. At the same time, it is important that the basis of this process should be a tool of dialogue and communication to allow finding solutions and compromises in tax disputes. Such a vision resonates with the BOC’s active promotion of “Consult First principle encouraging state bodies to act proactively to resolve possible disputes at an early stage, without resorting to instant punishments of businesses for minor violations.
BOC supports a systemic intersectoral dialogue of settling tax disputes with authorities and encourages the round table participants to join elaborating ways to resolve them at future meetings.
