LA Law Firm wins UAH 151 million tax dispute at pretrial stage
The client is a major enterprise that imports and exports products from Ukraine. The tax authority denied the VAT refund because the VAT amount arose not from a tax credit, but from the adjustment of overstated VAT liabilities.
During an internal audit, the enterprise discovered that it had been overstating its VAT liabilities. The enterprise made adjustments under the provisions of the Tax Code and the relevant accounting certificate.
Throughout the process of adjusting VAT liabilities, the LA Law Firm team assisted the Client in obtaining an individual tax ruling, which played a key role in the appeal process.
LA Law Firm initiated a case with an administrative appeal procedure and developed a legal position regarding the unlawful actions of the local tax authority. One of the key elements of the position was the refutation of the controlling authority’s statement that VAT refund is only possible where there is a positive difference between the tax credit and the liabilities. Our team challenged this position and confirmed that a VAT refund is also carried out at the expense of the negative value of the liabilities resulting from their adjustment.
Another significant issue in the case was the tax authority's formal refusal to recognize paid VAT as a tax credit solely due to the counterparty’s risk status. The LA Law Firm team presented a complete supply chain of products, from the point of import to the carrier’s arrival at the enterprise's production facility. This allowed for a successful appeal of the tax authority's actions.
Upon review of all submitted documents and objections, the higher-level tax authority upheld the legal position of LA Law Firm and fully overturned the decision of the local tax authority. LA Law Firm successfully defended the interests of a major Ukrainian manufacturer in a VAT refund dispute, ensuring the continued uninterrupted operation and stability of the relevant industry.
The project was led by Partner Vitalii Savchuk, along with Senior Associate Yaroslav Furiaka, Associates Oleksandr Tsurkan and Maksym Sulyma.
