Court confirmed legality of tax notification-decision on the application of financial sanctions in the amount of over 40.7 million UAH

Appellate court supported the controlling authority’s position regarding legality of adopted tax notification-decision, by which the plaintiff was fined with 40744180.48 UAH for violating requirements of Paragraph 2 Article 13 of the Law of Ukraine № 2473-VIII “On currency and currency operations” as of 21.06.2018, in terms of untimely receipt of foreign exchange proceeds for exported products.

Appellate court established that this type of audit was conducted by the tax authority, and therefore the plaintiff's claim that conducted unscheduled documentary in-place audit is unfounded, since it was established that before the audit began, official of the controlling authority handed order to conduct unscheduled in-place audit, official ID and presented referral.

Regarding the plaintiff’s representative's reference to the fact that official of the controlling authority visited enterprise only once during the entire audit period, the Appellate court notes that tax legislation does not provide for the inspector’s period of stay, who conducts such audit at the enterprise and does not regulate number of visits for conducting audit. Controlling authority and its official independently decide terms and duration of their stay directly at the enterprise during unscheduled documentary in-place audit.

Appellate court also concluded that since financial sanction provided for in Part 5 Article 13 of the Law of Ukraine "On currency and currency operations" for violation of the payment terms for export and import of products during quarantine period established by the Cabinet of Ministers of Ukraine throughout Ukraine in order to prevent spread of the coronavirus disease (COVID-19) in Ukraine, is applied on the general basis and is not subject to provisions of Clause 11 Paragraph 52-1 Section XX "Transitional Provisions" of the Tax Code of Ukraine, the Court of first instance unlawfully annulled the contested tax notification-decision in terms of application of financial sanctions.

According to the Appellate court, since documents specified in Paragraph 12 of the Instruction "On the procedure for foreign exchange supervision of banks over residents' compliance with settlement deadlines for export and import of products", approved by Resolution of Board of the National Bank of Ukraine № 7 as of 02.01.2019, which would confirm circumstances referred to by the plaintiff and which were taken into account by the Court of first instance, are not available to the plaintiff and were not included in the case materials, the Court of first instance also unlawfully canceled the contested tax notifications-decision in terms of application of punitive financial sanctions.

Eighth administrative appellate court on 29.10.2024 in case № 140/3393/24 dismissed the plaintiff's appeal; appeal of Western Interregional Directorate of the State Tax Service for Work with Large Taxpayers was satisfied. Decision of Volyn district administrative court as of 09.07.2024 was canceled and new ruling was adopted, which completely refused to satisfy the claim.