KPMG Law Ukraine defended the interests of one of the largest media companies
The tax dispute resolution team of KPMG Law Ukraine proved in the course of judicial proceedings that the individual tax ruling provided by the fiscal authority was in conflict with the provisions of the Tax Code of Ukraine and the Double Tax Treaty signed between the Government of Ukraine and Government of the United Kingdom of Great Britain and Northern Ireland.
In fact, the fiscal authority provided to the company overall three individual tax rulings giving the limited interpretation of the tax legislation with regard to the taxpayer’s transactions. In particular, in the opinion of the controlling body, when acquiring the property rights for airtime from the non-resident, the Ukrainian resident was required to pay the advertising tax and deduct only 4% of the amount of such payments (in particular, on transactions performed until 1 January 2015). The legality of such consultation conclusions was considered by the court of all three instances, and the appeal process lasted almost five years.
The added complication was that eight months after the return of the appeal due to non-payment of the court fee, the fiscal authority has again appealed to the Appeal Court. Despite filing an appeal with violation of procedural timetable, procedure for the transfer of the case between the liquidated and newly created Appeal Court, the KPMG Law Ukraine team was able to prove that the fiscal authority’s arguments were groundless and to disprove the conclusion that the company's transactions were the acquisition of broadcast services (including, placement of advertisement). As a result of the lengthy judicial proceedings, the courts confirmed the conclusion that the company had the right to allocate the payment for airtime (the relevant rights to it) acquired from the non-resident to expenses in full and that such payment is not subject to advertising tax, which resulted in minimizing the company’s potential tax and legal risks.
The court's findings can be called precedent given that the court applied the rules of "non-discrimination" envisaged in the relevant double tax treaty on the avoidance of double taxation.
The project was implemented under the direction of Oksana Olekhova, partner, Tax & Legal, by Larisa Antoshchuk, attorney-at-law, head of the Tax Dispute Resolution Group, Kateryna Hamretska, manager, KPMG in Ukraine, Iryna Khyliak, Vladyslav Kepko, and Yurii Oliinyk, KPMG Law Ukraine lawyers.