KPMG Law Ukraine represented the interests of pharmaceutical company
KPMG Law Ukraine team represented the interests of a subsidiary of one of the largest international pharmaceutical companies in a tax dispute on confirmation the correctness of calculation output VAT, reality of transactions and the right to form input VAT credit.
As a result of tax audit, the tax authority challenged VAT applicable to transactions on ordering marketing, accounting services and outsource reasoning it by “unreal nature of services” and absence of connection with core business activity. In addition, the tax authorities insisted that the company should have reported liability on VAT up to cost of purchase, while selling goods cheaper than the purchase cost (good used for advertising purposes). This conclusion was based on Tax Code of Ukraine provisions, that came in force in period after the respective transactions were done. Thus, the tax authority issued respective tax notice-decisions on VAT.
In the course of the appeal proceeding, the lawyers of KPMG Law Ukraine managed to prove the reality of outstaffing, accounting and marketing transactions and their connection to core business activity, therefore the input VAT credit was confirmed as duly reported. The Court also confirmed that the company was not upon laws obliged to report output VAT while selling goods cheaper than the purchase cost.
As a result, the court of appeal recognised that the tax notices-decisions were illegal and contradicted theprovisions of tax law. Thus, the Company's property rights were protected.
The tax dispute project was led by Konstantin Karpushin, partner, and Larysa Antoshchuk, attorney-at-law, head of tax dispute resolution practice KPMG Law Ukraine. The engagement team also included Nataliia Musiienko, Yurii Oliinyk and Maria Hrabchak.