The District Administrative Court of Kyiv has sustained the claims of the Arricano Group (PJSC «Livoberezhzhiainvest») in full, which has been reflected in the decision of the District Administrative Court of Kyiv dated October 25, 2018.
Arricano’s Legal Department together with lawyers from KPMG Law Ukraine have successfully defended the company’s interests in a dispute with fiscal authorities regarding the correctness of indicators display, including the right to increase the registration limit in the electronic administration system of value added tax (EAS VAT) and cancellation of an improperly charged fee. A team of lawyers proved in court that a negative value for VAT can be used to reduce tax liabilities on VAT and to simultaneously increase the registration amount at EAS VAT in any period, without any restrictions.
Svitlana Renkas, the Head of the Legal Department of Arricano, said that the lawsuit has been filed in April 2017. The main motive for filing a lawsuit was a violation of the provisions of the Law of the Tax Code of Ukraine by the State Fiscal Service bodies, as a result of which the taxpayer, one of the Arricano Group companies, was deprived of the right to credit the negative value of VAT provided for by the Tax Code of Ukraine in Section XX, Subsection 2, clause 33.
In 2015, the forms of tax invoices have changed due to the transition to a new electronic procedure for VAT administering. As a result, the State Tax Inspectorate in Shevchenkivskyi district of Kyiv has not recognized the legal right of PJSC «Livoberezhzhiainvest» (Arricano Group) for the balance of the tax credit in the amount of UAH 1.9 million and charged a penalty in the amount of UAH 1 million. Arricano’s legal service, relying on the current tax law, has sent requests to the State Fiscal Service indicating errors, illegal actions of the tax inspection, with requests to eliminate violations. However, violations have not been eliminated. Due to the current situation, the taxpayer had to go to court with a claim to recognize the inactivity of the State Tax Inspectorate in Shevchenkivskyi district of the Main Department of the SFS in Kyiv as illegal, to cancel the improperly charged penalty, to take into account all indicators specified in the VAT declaration according to the Ukrainian laws.
During the judicial appeal, the arguments of the fiscal body (the State Tax Inspectorate in Shevchenkivskyi district of Kyiv) that the Arricano Group (PJSC «Livoberezhzhiainvest») had no right to use the negative VAT balance to repay current tax liabilities and increase the registration amount in the electronic administration system of value added tax (EAS VAT) have been protested. As a result of the court proceedings, the company’s right to a legally formed negative VAT value was restored and the unreasonably charged penalty was canceled.
«By its decision, the Administrative Court has secured the taxpayer’s unconditional right to credit the entire amount of negative VAT, despite the practice of the state fiscal service that existed in 2015», — says Svitlana Renkas, the Head of the Legal Department of Arricano. — «We are also confident that the appellate court will support the decision of the District Administrative Court of Kyiv, in case of an appeal being filed by the defendants».