July 23, 2024
On July 17, 2024, the Taxes and Accounting Committee of the German-Ukrainian Chamber of Industry and Commerce held an online meeting aimed at supporting member companies in light of numerous challenges due to the full-scale war and constant changes in tax and customs legislation. Experts and business representatives gathered at the event to share experiences and best practices.
Alexander Minin, Senior Partner at 
delivered a report on “Intensification of tax audits. Combination of tax audits with the pressure of criminal proceedings”. The issue of tax audits is becoming increasingly relevant. There were significant restrictions during the Covid and at the beginning of martial law, and today inspections have begun to resume. “However, the legislator has made a lot of “confusion” by resuming tax audits not quite clearly from the procedural and technical point of view”, noted Alexander. “In many cases, the tax authorities can be prevented from carrying out a tax audit as there are no legal grounds for it or one can fundamentally challenge the existence of a violation in terms of poor legislative technique”.
Alexander cited a number of changes in the legislation that have led to “chaos” rather than clarity and precision of the law. At the same time, these contradictions provide opportunities to argue with the tax authorities in case of unlawful pressure. As an example, Alexander mentioned a case, where the retention periods of tax audit documentation, regarding which there are also many questions to the legislator (see the link), could have played a crucial role and prevented complications in the case. He also reminded that according to Article 19 of the Constitution of Ukraine, no one shall be forced to do what is not envisaged by legislation.
Nowadays, the pressure on business has also increased through the opening of criminal cases. According to public sources, the past year set a record for the number of criminal proceedings against businesses. There is a lot of work to be done in this area, the state bodies are reluctant to cooperate, which makes the business environment in Ukraine even more challenging. “For a wonder, the most adequate/productive cooperation was with the Security Service of Ukraine. Therefore, there are procedural possibilities to resist this pressure”, – Alexander added.
The next topic of discussion was “Practice of TP audits and documentary audits on customs matters during the war”, which was presented by Ivan Shynkarenko, partner at . TP audits actively began even before the lifting of the moratorium on audits during wartime, so there is already a certain practice. Ivan pointed out that the audit actually starts even before the formal audit begins, – “the code provides for such a concept as monitoring of controlled transactions. That is, in fact, the transactions of taxpayers who submitted reports on controlled transactions are already being examined by the tax authorities in the process of monitoring”.
It is important to respond to further requests from the tax authorities in a timely and correct manner, in particular, a request based on subpara. 73.3 of the Tax Code, request for TP documentation, etc. Ivan shared his recommendations on how best to act at each stage to minimise the risks when interacting with the tax authorities and when not to comply with all the “whims” of the tax authorities. “Unfortunately, the approach of the tax authorities is not aimed at establishing objective reality, but at how to accrue as much as possible. And the TP rules, which are not an exact science, provide the tax authorities with the tool to make accruals that are obviously unreasonable from a common-sense perspective”. The case of “Olympex Coupe International” v. Main Directorate of the State Tax Service in Odesa region, which has been mentioned and analyzed several times (see the link), is a vivid example of such actions by the controlling authorities.
The moratorium on customs audits has been abolished since May 1. Ivan briefly described which audits are allowed/prohibited, the inclusion of companies in the quarterly plan-schedules in 2024, the conditions for conducting customs audits, etc. He also noted that “there is no practice yet, as far as we know, Customs is preparing, but we should expect similar approaches, as we see from the point of view of tax control”.
More information on the topics of Alexander’s and Ivan’s speeches can be found in the presentations (available in Ukrainian).
Intensification of tax audits. Combination of tax audits with the pressure of criminal proceedings
Practice of TP audits and documentary audits on customs matters during the war.