Enforcement of Court Decisions on VAT Refund Arrears ~ U-Tax Blog

Wednesday, November 7, 2012

Enforcement of Court Decisions on VAT Refund Arrears

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It often happens that taxpayers having VAT refund in arrears owed by the Ukrainian tax authorities doubt whether to claim it through the court or not to do so. The reason is that should the court find for the taxpayer the decision will be enforced on the “first come first serve” basis*. One can assume that there is a long line of such decisions outstanding from the previous years. So, the enforcement of the decision can take years.

On the other hand, the taxpayer always has the possibility to negotiate the VAT refund with the tax authorities and to enjoy it much earlier than when passing through the litigation. As a matter of practice, in exchange of the VAT refund the taxpayer is required to make advance payments of corporate income tax amounting up to 50 per cent or even more of the VAT refund sought.

In view of the above, I have filed the information request with the Ukrainian Treasury Service so as to clarify the situation surrounding the enforcement of court decisions on VAT refund arrears. The Ukrainian Treasury Service omitted to answer the main question being of interest to the taxpayers, i.e. what total amount of the court decisions on VAT refund arrears is currently outstanding. Yet they provided some information on the enforcement of such decisions in 2010,2011 and 2012.

According to the Ukrainian Treasury Service, they enforced 65 decisions on the total amount of UAH83.10 million in 2010, 146 decisions on the total amount of UAH266.53 million in 2011 and 21 decisions on the total amount of UAH 46.58 million in the first quarter of 2012.

Please see below my request to the Ukrainian Treasury Service and their response (in Ukrainian).

* - Pursuant to para 9 of Chapter VI “Closing and Transitional Provisions” of the Budget Code of Ukraine. 

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