On November 29, a business discussion “Rates Management: Minimizing Risks” took place, at which representatives of state authorities and business discussed the main issues that taxpayers face in relations with tax authorities.
The event was organised by GOLAW. Main media partner – one of the leading legal periodicals of Ukraine “Legal Practice”.
On November 29, a business discussion “Rates Management: Minimizing Risks” took place, at which representatives of state authorities and business discussed the main issues that taxpayers face in relations with tax authorities. The event was organized by GOLAW law firm. The main media partner is “Yuridicheskaya Praktika” (“Legal Practice”) newspaper.
According to Vadym Demchenko, Deputy Head of Directorate General of the State Fiscal Service in Kyiv, the voluntary tax payments in Ukraine today amount to 98%, which, of course, indicates a general positive trend. However, cases of tax evasion are still recorded, and the main violation is attempts to minimize tax payments.
Vadym noted that at present, the issue of paying taxes through the banks that were liquidated is quite crucial. In such a case, the payer has an actual evidence base, in accordance with which a payment order has been issued for tax payment, but there is no confirmation that this amount has been written off. Some judges, in their turn, decide to credit these funds and oblige the SFS to enter in the integrated taxpayer’s card information that such amount has been paid. “This issue has already reached a critical point, and we will talk about bringing to justice those judges who allow this,” Vadym commented.
According to Iryna Antonenko, Director of the Department of Administrative Appeals and Judicial Support of the SFS of Ukraine, one of the main prerequisites for satisfying the complaints regarding the tax notification-decisions is compliance with the requirements for processing the complaints themselves.
Iryna noted that at the inspection stage, reports should be drawn up on which documents were not provided by the payer. If these documents are provided after the inspection, they may only be considered if they do not affect the amount recalculation. Otherwise, the SFS has legal grounds for conducting a new, unscheduled inspection, taking into account such documents.
In addition, the speaker also noted that the SFS carefully listens to complaints from tax inspectors who have carried out inspections in case of legislative provisions violations during such an inspection. To date, the SFS has already received 97 complaints from inspectors, and as a result of considering these complaints, all 97 persons have been brought to disciplinary action.
Iryna Kalnytska, GOLAW Partner and Head of the Tax Practice, advised on how to prepare for tax audit and what to do in case of receiving tax notifications-decisions. “The tax audit begins long before the inspection comes to you,” the lawyer stated.
According to Iryna, the first step to prevent any negative consequences of the audit is to conduct own tax audit. Already at this stage, it is possible to identify all the risks that in the future may create a number of problems during the state audit.
The speaker also noted that very often taxpayers ignore inspection reports, however, it is in vain: the objections of inspections prove the position of the payer and help to ensure a constructive dialogue with the Tax Inspectorate. In addition, according to Iryna, tax notifications-decisions may and even need to be appealed in an administrative manner, rather than immediately brought to court. “We believe that taxpayers should use all the tools to protect their rights,” concluded Iryna.
A significant role in challenging the results of tax audits is played by the Business Ombudsman Council. Deputy Business Ombudsman Tetyana Korotka noted that the Business Ombudsman’s Council acts as a mediator, whose task is to “help state authorities to increase discipline in the implementation and compliance with legislation when interacting with business”. According to the speaker, the Ombudsman Council will adhere to a “neutral position”, and by no means all complaints received by the Ombudsman are well-founded, and therefore may not be satisfied.
Tetyana supported the statements of the previous speakers that the key to the positive outcome of the tax audit is the timely and competent preparation for it both from the side of inspectors and from the side of the business.
Representatives of business also took part in the discussion: Dmytro Fedechko, Head of Legal Department, Louis Dreyfus Ukraine, and Andrey Havryliuk, Head of Tax Law division of the Legal Department of Group of Companies FOZZY GROUP. According to the speakers, one of the problems with conducting tax audits is the unpredictability of such inspections. Thus, changing the schedule of inspections creates many problems for companies that are preparing for inspections in advance. In addition, the unwarranted actions of some inspectors, who should be held accountable, deserve special attention. However, the overall dynamics of change over the past 7-10 years is positive, and business in Ukraine already feels this in practice.
According to Natalia Blazhivska, Vice-President of the All-Ukrainian Association of Administrative Judges, the quality of the SFS work and the judgments handed down depends to a great extent on the quality of the laws developed, the professional training of authorities’ employees and the willingness of the payers themselves to prepare for inspections in advance.
In addition, the speaker stressed that taxpayers should exercise due diligence when choosing counterparties, which will allow the possibility of referring to the principle of individual liability in the future in the event the Tax Inspectorate detects tax laws violations by such counterparties.
Yevhen Kozlov, Advisor to the Deputy Minister of Finance of Ukraine, concluded the discussion. The speaker noted that the adoption of the BEPS plan for Ukraine is a very important step. “The BEPS plan is a mechanism for combating tax optimization and a set of measures aimed at eliminating the competitive advantages of companies that use tax optimization schemes compared with those who conduct their business honestly and transparently.”
The speaker also noted that last week Bill No. 9260 adopted a number of norms, which would significantly affect the administration of taxes in Ukraine. In particular, the document stipulates a change in the maximum limit of court fees in tax disputes from 350 living wages to 10. Moreover, if today the penalty for delay in the tax payment for 90 days is calculated from day 1, then the new Bill provides for the payment of a fine only beginning on day 91. Changes will also take place in the area of appealing tax audits: the period for filing an objection to a report based on the results of tax inspections will increase from 5 to 10 business days, and filing an appeal of the tax notification–decision in an administrative appeal will increase from 10 calendar days to 10 business days.
According to Valentyn Gvozdiy, the discussion moderator, GOLAW Managing Partner and Deputy Chairman of the Ukrainian Bar Association, Council of Lawyers of Ukraine, this business discussion has become a great opportunity for representatives of business and state authorities to discuss the real problems of tax legislation and find ways to address them.
We thank all the participants of the discussion for the participation and the media partner “Legal Practice” for organizing the event.