Court supported position of the State Tax Service on certain issues of the VAT administration

Press service of the State Tax Service of Ukraine, published 11 April 2023 at 10:08 Chapter: 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 Dnipropetrovsk region in case № 160/2602/22 that account replenishment in the value added tax electronic administration system by a third party cannot be considered as the value added tax payment by another person on the taxpayer’s behalf.

Panel of judges noted that the VAT payment to budget has certain peculiarities, which consist in debiting amounts from the taxpayer's electronic account in the value added tax electronic administration system. Formula component for calculating registration amount in the value added tax electronic administration system is indicator of replenishment amount of the electronic account. Replenishment amount of the electronic account is a total replenishment amount from current taxpayer’s account of account in the value added tax electronic administration system.

Current legislation does not provide for increasing registration amount by replenishing the VAT account from other sources. This conclusion is due to the fact that both Article 200¹ of the Tax Code of Ukraine and Procedure of electronic VAT administration, approved by Resolution № 569 of the Cabinet of Ministers of Ukraine as of 16.10.2014 (with changes and amendments), contain unambiguous instructions regarding procedure for replenishing the VAT payer’s electronic account, increasing registration limit, debiting amounts from the electronic account, etc.

Cassation court noted correctness of observation by the Appellate court regarding the fact that in power of attorney agreement, under terms of which a third party, as attorney, assumed obligation on behalf and at the plaintiff’s expense, as a principal, to perform legal actions directed to the execution monetary obligations, the attorney's right to represent legal interests of the principal and conduct matters related to payment of taxes is not specified in any way.

Cassation administrative court summarizes that analysis of Article 200¹ of the Tax Code of Ukraine and Order № 569, which contain unambiguous instructions regarding procedure for replenishing electronic account of the value added tax payer, increasing registration limit, debiting amounts from the electronic account, etc., gives grounds for conclusion that that the VAT payer's registration limit is increased only by the replenishing amount that comes from his own current account.

Norms of Paragraph 200¹.4 Article 200¹ of the Tax Code of Ukraine determines that the electronic account at the electronic account in the value added tax electronic administration system can be replenished only from the taxpayer's current account. That is, funds transferred from the current account other than payer's current account should not have been credited to the electronic account at all.

Therefore, by decision of the Cassation administrative court as a part of the Supreme Court as of 21.03.2023 in case № 160/2602/22, the taxpayer’s cassation appeal was dismissed, decision of the Third administrative appellate court as of 14.12.2022, which refused to satisfy claims for recognition of inaction as illegal and obligation to perform certain actions – remained unchanged.