Court confirmed legality of additional accrual of 1.12 million UAH for violation of tax legislationChapter: News
Cassation administrative court as a part of the Supreme Court supported conclusion of the Appellate court and position of Main Directorate of the State Tax Service in Zaporizhzhia region in case № 808/437/16 that implementation of operations to export goods to the Republic of Crimea cannot be equated with export operations, since the buyer’s tax address is not a territory of free economic zone "Crimea".
Basis of the special taxation regime is determined by provisions of Sub-paragraph 5 Paragraph 12.4 Article 12 of the Law of Ukraine № 1636-VII as of 12.08.2014 "On the establishment of free economic zone "Crimea" and on peculiarities of economic activity in temporarily occupied territory of Ukraine" (hereinafter – Law № 1636- VII), according to which the supply of goods with the customs status of Ukrainian goods from another territory of Ukraine to the territory of free economic zone "Crimea" is equated to the customs regime of export. Taxation of operations involving importation of goods to the customs territory of Ukraine from territory of free economic zone of Crimea is carried out under the import regime and is taxed in the general manner.
Provisions of Paragraph 5.3 Article 5 of the Law № 1636-VII provide that a legal entity (separate subdivision) that has tax address (location) in territory of free economic zone "Crimea" is equated to a non-resident for taxation purposes.
Appellate court established that the plaintiff's counterparty is registered in Kyiv, also registered for tax purposes and, accordingly, is a resident of Ukraine.
In addition, the Appellate court noted that the fact that the counterparty's production facilities are located in Armyansk city (AR Crimea) does not change the content of supply contracts and does not transfer them to the category of export contracts.
Taking into account the nature (type) of the plaintiff business operations with the counterparty-buyer established during the trial of this case, as well as the fact that the plaintiff transferred goods to the ownership of a resident of Ukraine in the customs territory of Ukraine, which is confirmed by the representative’s signature and the counterparty’s seal in invoices and subsequent transportation of these goods by relevant carriers, to whom persons authorized by the plaintiff transferred goods under the terms of the CPT Incorterms 2000, the court panel came to the conclusion that the plaintiff's operations for supply of goods to a resident of Ukraine in the customs territory of Ukraine (Paragraph 185.1 Article 185, Paragraph 193.1 Article 193, Paragraph 194.1.1 Article 194 of the Tax Code of Ukraine) should be taxed at the basic 20% rate.
Supreme Court, taking into account circumstances of the case established by the Appellate court, also noted impossibility of transporting the plaintiff's goods on the same day by the same road transport, carrying out customs clearance and registration in different regions of Ukraine at the same time.
Supreme Court noted that the Appellate court, rejecting the claim, reasonably assumed that the special taxation regime applies only to operations involving legal entities whose tax address is determined in the territory of free economic zone "Crimea". Provisions of the Law № 1636-VII are interrelated and provide for their systematic application.
Cassation administrative court summarizes that implementation of economic operations on the basis of primary documents, form of which does not meet legally established requirements, deprives such documents of officiality signs, cannot be a basis for determining tax liabilities and tax credit formation. Therefore, the plaintiff's reference to provisions of Sub-paragraph 5 Paragraph 12.4 Article 12 of the Law № 1636-VII is inadmissible.
Resolution of the Cassation administrative court as a part of the Supreme Court as of 08.11.2022 in case № 808/437/16 dismissed the taxpayer’s cassation appeal. Resolution of the Appellate court as of 13.12.2016, which refused to satisfy claims for recognition of tax notifications-decisions for the total amount of 1.12 million UAH as illegal and their cancellation was left unchanged.