NEWS (September 28, 2020)

KPMG Law Ukraine protected the interests of the largest wood-based sheet materials producer

KPMG Law Ukraine has represented the interests of one of the largest producers of wood-based sheet materials in Ukraine - laminated and polished chipboard, and post-forming.

Based on the results of the scheduled tax audit, the tax authorities made a conclusion that the company had violated the applicable tax laws, considering that the company transactions related to the delivery of goods had been insufficiently documented. According to the tax authorities, more than UAH 42 million credited to company bank account as payment for the goods delivered, is some other rather than operating income of the company.

In this episode, the KPMG Law Ukraine team managed to prove the following:

- the conclusions made by the tax authorities that the company provided tax benefits to its counterparties-buyers, as well as the allegedly insufficient documentary evidence of the business transactions actual performance, are refuted by the circumstances related to the delivery, as well as the primary and additional documents executed on their basis;

- moving the figures from line 2000 of the Statement of financial results “Net income from the sale of products (goods, works, services)” to line 2240 “Other income” does not affect the item subject to income tax;

- if the company included the amounts received from the delivery of goods into other rather than operating income, the figures of line 01 "Income from any activity (net of indirect taxes)” in the Income tax Returns, estimated according to the accounting rules, still stayed the same;

- reporting of funds in line 2240 without simultaneous adjustment of the figures in line 2000 of the Statement of financial results entails the double taxation of the company with income tax.

Also, the KPMG Law Ukraine experts managed to substantiate the illegality of the conclusions made by the tax authorities regarding the understatement of the VAT liability by the company as part of operations to impair and liquidate the fixed assets, as well as the operations related to disassembling (destruction) of the non-current asset. The total amount of the tax notice-decisions issued based on the above conclusions exceeded UAH 9 million.

The project was implemented under the leadership of Konstantin Karpushin, partner, Larysa Antoshchuk, attorney-at-law, head of the tax dispute resolution practice. Yana Bazia, attorney-at-law, senior lawyer worked on the project as well.


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