Pysarenko Oleksandr, Attorney-at-Law, MBA Degree.
Pysarenko Law Office, Kiev, Ukraine.

Tax agencies in Ukraine conduct scheduled and unscheduled inspections of legal entities.

The first type can only be performed according to schedule and should be appointed beforehand.

The second type can be performed only given the proper legal grounds listed in articles 44.7, 50.3, 77, 78, 200.11, 201.10 of the Tax Code of Ukraine.

In case with scheduled tax inspections there is not too much room for appeal. Legal grounds for such appeal are generally connected with violation of formal requirements, such as, but not limited to absence of wet signature on the inspection order issued by tax authorities or refusal to present official certification by inspectors.

Unscheduled inspections, on the other hand, provide much more room for defensive action. Tax authorities can perform such inspections only within limited spectrum of circumstances and under a very strict set of procedural rules.

Violation of tax regulations at any point of unscheduled tax inspection by the tax authorities can be used in defenses favor.

Tax inspection order is legal only if all conditions within the same paragraph of article 78 of the Tax Code of Ukraine are being met.

As an example, according to article 78.1.1 such conditions are:
1) According to the outcome of inspections of other taxable persons or of received tax information, facts were revealed that evidence the possible breaches by a taxable person of tax, currency or other legislation;
2) Taxable person doesn’t provide explanations and documentary support thereof in response to a written request of state tax service agency within 10 business days after receipt of such request;

Abovementioned conditions are often not met by the tax inspection authorities when issuing tax inspection order. It is especially true, when inspected person, assisted by tax attorney, takes a firm and formalized position in communication with tax inspection office. This leads to a quite frequent annulment of tax inspection orders.

Appeals on the inspection order or other actions of tax authorities are possible even before an actual inspection takes place.

Although appeal must be conducted through lasting court proceedings, recognition of illegality of inspection order greatly increases chances of cancellation of tax notification-decision in tax dispute.

Pysarenko Law Office. Kiev, Ukraine.

Tel.: +38 (044) 270 60 46