LA Law Firm secures major tax victory on transfer pricing for client
LA Law Firm team won a tax dispute on transfer pricing, protecting the interests of a large pharmaceutical company – an importer of medicines.
The tax authority imposed fines, alleging a failure to provide transfer pricing documentation for the 2015-2022 period. The authority claimed the request had been duly served and, crucially, calculated penalties as eight separate offenses – one for each fiscal year covered by the single request. In reality, the client never received the correspondence due to service failures by the postal operator Ukrposhta.
LA Law Firm took over the defense during the administrative appeal stage. The legal strategy focused on two critical pillars: proving good faith in receiving correspondence and the erroneous conclusions regarding the service of the request, and challenging the penalty logic as the "per-year" calculation. The team also engaged the Business Ombudsman Council.
At the trial stage, the key point was to refute the defendant's position regarding the recognition of the request as duly served in the event of its non-delivery due to the fault of Ukrposhta. Furthermore, the team continued to build a vital legal precedent: a single documentation request, even if it covers several tax periods, must be treated as a single event, and a fine cannot be accrued separately for each year.
The court fully satisfied the client's claim, canceling the additional sanctions.
"In this dispute, the tax authorities did not deny that the client had paid all taxes and prepared the required documentation. Nevertheless, they pursued a fine. Although the legislator did not provide unambiguous wording for this specific case, we proceed from the principle that a diligent taxpayer should not be penalised for a third party’s error. The court's ruling affirmed this approach", – comments Vitalii Savchuk.
The project was led by Partner Vitalii Savchuk, with key support from Senior Associate Yaroslav Furiaka and Associate Oleksandr Tsurkan.
