Number of claims filed by Ukrainian business against actions of tax authorities is not reducing, as associates note being interviewed by Interfax-Ukraine.
Andriy Reun, Head of Tax Practice, Evris, noted that if additional tax charges are significant, as a rule, the real business always files claims for cancellation of such additional charges, and the decision to refuse to appeal additional tax charges in court is usually taken if such additional charges are really substantiated and/or if costs of judicial appeals and appeal process administration are comparable with such additional charges.
“At least, filing a claim may delay payment date regarding additional tax charges and fines with penalties accrued for the period of judicial appeal or reduce amount thereof. At most, courts cancel illegal additional charges. From our experience: Over the past year, more than 90% of tax inspections ended in courts; in most cases, taxpayers won actions,” he said.
At the same time, the associate noted that “a certain proportion also falls on claims to appeal against orders to conduct tax inspections, as well as on claims to cancel individual tax consultations, but the number of such claims is substantially less than that of claims to cancel additional tax charges.”
By A. Reun estimate, number of business claims against tax authorities remains relatively constant. “Except for claims related to blocked tax invoices, we see no tendency to increase in the number of litigations with tax authorities, since earlier large business, as a rule, also filed a claim after each tax inspection,” he said.
Commenting on innovations in court practice on claims against tax authorities which arose due to the entry into force of new procedural codes, A. Reun noted that “it seems that a new Supreme Court set a course for fiscal interpretation of the tax legislation and for budget replenishment” by taking quite a tough position regarding additional charges on transactions of taxpayers with their counter parties, which founders/directors were charged with fictitious entrepreneurship.
“Later, these positions were a bit eased, however, there is still no single judicial practice on this issue. Tough fiscal position of the Supreme Court on issues of cash discipline, penalties for violation of maturity dates of settlements in foreign currency, excise tax on retail sale of petroleum products also demonstrates tendency of the Supreme Court to hold position of the state more than that of taxpayers,” he said, emphasizing that nonetheless “everything is not that bad.”
“Taxpayers continue winning tax disputes. However, there is still no unity of judicial practice and widespread application of rules on tax disputes resolution in favor of a taxpayer with possibility of multiple interpretation of tax legislation by courts,” summed up his experience the associate.
In her turn, Lada Konduforova, Director of Legal Function, Chief Legal Counsel of Smart Holding, confirms that business quite often has to apply to courts with claims against tax authorities.
“The tendency, as before, is preserved: Fiscal bodies formally approach processes of inspections, focusing on internal methodologies, but not analyzing actual activities of enterprises, continue to recognize transactions between business entities as invalid not on the basis of the procedure established by the law, but solely at their own discretion, which in turn becomes the basis for adoption of illegal tax notice-decisions by fiscal bodies,” she said.
Commenting on innovations in court practice on tax disputes, L. Konduforova has noted that, when considering judicial disputes with fiscal authorities, judges still often violate principles of equality of arms, adversarial principles.
“As a rule, during the proceedings, judges are more lenient to representatives of fiscal bodies and overlook their procedural violations. Courts continue violating reasonable terms for consideration of lawsuits, especially in the appellate and cassation instances,” she said, stressing that “new procedural codes did not noticeably affect court proceedings, as the courts did not have time to adjust according to innovations that the legislator had tried to implement.”
At the same time, when commenting on the situation with filing complaints against illegal actions of law enforcement agencies by business, L. Konduforova noted that in this sphere as well as in the sphere of administrative proceedings, the situation became more intense over the past few years.
“Complaints are filed often, but rather “for the sake of appearances”, as if there is a chance for a positive decision against fiscal authorities in administrative process, then chances of obtaining a positive decision on a complaint about illegal actions of law enforcement agencies tends toward zero,” she said.
According to the associate, “courts increasingly have no time to consider such complaints within the terms defined by the Criminal Procedural Code, and having considered such complaints, they dismiss them, because often unlawful actions of law enforcement bodies have been earlier authorized by decisions of the same courts.”