Court confirmed legality of accrual totaling 462.12 million UAH for violation of tax legislation

Cassation administrative court as a part of the Supreme Court supported conclusion of the courts of previous instances and position of the controlling body on the legality of accrual of the corporate income tax due to non-reflection of accounts payable to non-resident as a part of income, statute of limitations for which has expired.

Panel of judges noted that according to Paragraphs 1.7, 1.8, 1.16, 2.1 of the Regulation on procedure for residents to receive credits, loans in foreign currency from non-residents and granting foreign currency loans to non-residents by residents, approved by the Resolution of the Board of the National Bank of Ukraine № 270 as of 17.06.2004, the resident borrower is obliged to register contract with the National Bank before actually receiving the loan.

Registration of contracts concluded by resident borrowers who are not banks is carried out by the territorial administration of the National Bank at the location of servicing bank.

Resident borrowers must stipulate in the contract that it enters into force from the moment of its registration (or not earlier), with exception of contracts on obtaining loans by authorized banks for a period not exceeding one year.

Requirements of Clause 1 of this Paragraph are applicable to changes to the contract that relate to the amount, currency, credit term, amount of the interest rate, commissions, penalties, other payments established by the contract, including those that are sanctions for improper performance of the contract, affecting amount payments for credit use.

Changes related to parties of the registered contract, amount, currency, credit term, amount of the interest rate, commissions, penalties, other payments established by this contract, including those that are sanctions for improper performance of the contract, affecting amount of payments for credit use, require registration of relevant changes to the contract in the National Bank according to the procedure established for contract registration and taking into account requirements of Paragraph 1.13 Chapter 1 of this Section.

Therefore, in case of signing changes to the credit agreement in foreign currency, which relate to the term of granting/returning credit, the corresponding changes require mandatory registration at the National Bank and come into force not earlier than the date of the corresponding registration.

Cassation court noted that the courts of previous instance reasonably found that the plaintiff did not provide evidence to confirm registration of additional agreements to the credit contract at the National Bank of Ukraine.

In addition, according to letters of the National Bank of Ukraine, it was established that registration of additional agreements to the credit contract concluded between the plaintiff and non-resident was not carried out.

Cassation administrative court summarizes that evidence examined during the case hearing and the established factual case circumstances give grounds for a conclusion that the statute of limitations has expired and therefore conclusion of the tax authority regarding illegality of the claimant's non-attribution of the disputed debt to the composition of income is correct.

Decision of the Cassation administrative court as a part of the Supreme Court as of 22.11.2022 in case № 640/3652/20 dismissed the taxpayer’s cassation appeal and left unchanged decisions of the courts of previous instances, which refused to satisfy claims for recognition of tax notifications-decisions totaling 462.12 million UAH as illegal and their cancellation.