Court supported position of tax officials regarding assessment of penalties for violation of settlement terms in the foreign economic activity sphere

Press service of the State Tax Service of Ukraine, published 14 June 2024 at 09:31 Chapter: News

Cassation court supported the supervisory authority’s position regarding legality of adopted tax notification-decision, which charged fines for violation of settlement terms in the foreign economic activity sphere.

Supreme Court stated that provisions of Instruction on the procedure for currency supervision of banks for observance by residents of settlement deadlines for export and import of products, approved by Resolution of Board of the National Bank of Ukraine №7as of 02.01.2019, (Instruction) do not provide for the possibility of completing currency supervision of residents' compliance with settlement deadlines for product export in connection with settlement by transfer of a promissory note in payment for delivered products.

Taking into account above specified, the panel of judges comes to the conclusion that transfer of a promissory note in payment for delivered products under product export is not a circumstance with which provisions of Instruction link completion of currency supervision over residents' compliance with settlement deadlines, even if this settlement form is stipulated by the contract terms, i.e. settlements for residents on the product export must be carried out exclusively by crediting funds to residents’ accounts in Ukrainian banks.

Supreme Court noted that the Law of Ukraine "On foreign economic activity" gives a right to the business entity to choose independently settlement form for foreign economic operations from among those that do not contradict laws of Ukraine, however, the Law of Ukraine "On currency and foreign exchange transactions", which is a special law in foreign exchange transactions and has prerogative in application, defines unified settlement form for transactions of residents on the product export, and this is exclusively by crediting funds to residents’ accounts in Ukrainian banks.

Realizing purpose with which cassation proceedings were opened in this case, the panel of judges formulates the following legal conclusion. Article 13 of the Law of Ukraine "On currency and foreign exchange transactions", which is a special law in the foreign exchange transactions, provides for settlements transactions of residents on the product export exclusively in monetary form, which should be understood as receipt of currency values ​​in both national and foreign currency converted into the national currency at rate of the National Bank of Ukraine, depending on the type and peculiarities of foreign economic agreements (contracts) in which settlements currency is determined. Funds shall be credited to residents’ accounts in banks of Ukraine within terms specified in contracts, but not later than term and in amount established by the National Bank of Ukraine.

Cassation administrative court as a part of the Supreme Court on 21.05.2024 in case № 140/10623/23 upheld cassation appeal of Main Directorate of the State Tax Service in Volyn region; decision of Volyn district administrative court as of 25.07.2023 and decision of Eighth administrative court of appeal as of 14.12.2023 were canceled and new decision was adopted to reject the plaintiff's administrative claim.