Changes of the court fee payment: how much will the taxpayer pay for the dispute with the tax body?
The Law of Ukraine “On amendments to some legislative acts of Ukraine concerning court fee payment” No. 484-VIII (hereinafter – the “Law”) introduced a number of significant changes with respect to:
- cancellation of upper limit of the court fee rates;
- cancellation of a number of benefits related to the payment of the court fee, including benefits for tax authorities;
- cancellation of possibility to pay the court fee partially when filing a claim (10% from the price of the claim).
Let’s consider below the most important changes regarding the court fee payment, which are relevant for the tax disputes.
Starting from September 1 of this year, the following court fee rates will be applicable for legal entities1 and power authorities :
I.For filing an administrative claim:
|1,5 per cent of the claim, but not less than 1 minimum wage
|II.For filing an appeal claim||110 percent of the rate had to be paid when filing a claim|
|III.For filing a cassation claim||120 percent of the rate had to be paid when filing a claim|
Disputes with tax authorities are among the most tangible disputes. Additional tax charges only upon the results of one audit, generally, amount from several tens of thousands to several millions UAH. We shall recall that in practice claims regarding cancellation of tax notification-decisions are deemed as property-related claims.
Let’s consider how will change the cost of litigation with the tax body for the taxpayer. For convenience, let’s compare the cost of litigation before and after September 1 concerning additional tax charges in the amount of, for example, 1 million UAH:
|Until September 1||After September 1|
|For filing a claim regarding cancellation of tax notification-decisions for the amount of 1 million UAH||4872 UAH * when filing a claim only – 487.2 UAH (10%)||15 000 UAH|
|For filing an appeal claim
*failure to achieve a positive result at the level of the first instance
|2436 UAH||16 500 UAH|
|For filing a cassation claim
*failure to achieve a positive result at the level of the appeal instance
|3410.40 UAH + *remaining amount of the court fee (90%) for filing a claim 4384.8 UAH||18 000 UAH|
|Total for the court case||From 487.2 USD to 10 718.4 USD||From 15 000 to 49 500 UAH|
As we can see, starting from September 1 the cost of litigation with the tax bodies will increase by almost 5 times.
It should be also mentioned that the opportunity of partial payment of the court fee when filing a claim in the amount of 10% from the price of the claim (provided by the provisions of part 3 Article 4 of the Law of Ukraine “On the court fee” in a new version) will be canceled starting from September 1.
At the same time, there are general provisions of the Code of Administrative Procedure of Ukraine (hereinafter – the “CAP of Ukraine”), which provide an opportunity to reduce the court fee or at least to delay/permit payment by installments of the court fee.
According to the provisions of part 1 Article 88 of CAP of Ukraine it is established: “The court, taking into account the financial status of the party, can by its decision reduce the amount of payable court costs or exempt from their paying fully or partially, as well as delay or permit payment by installments of the court costs for a certain period”.
We shall point out that the court fee can be reduced/delayed/paid by installments or be exempted under the condition of financial status of the party, which is obviously from the provisions of the above cited article as well as from special explanation of the Higher Administrative Court of Ukraine (hereinafter – the “HACU“), which is given in Regulation of Plenum No. 2 as of January 23, 2015 “On practice of application by administrative courts the provisions of the Law of Ukraine as of July 8, 2011 No. 3674-VI “On the court fee”.
There is no precise approach in juridical practice regarding the financial status which would authorize the applicant to reduce/delay/pay in installments or exempt him/her from the court fee. Currently, as sufficient reason for delaying the court fee payment courts unanimously admit only the fact of absence or funds blocking on the applicant’s accounts2.
Thus, in case the court rejects to reduce/delay/permit to pay in installments the court fee for filing a claim, the taxpayer will have to pay a court fee immediately and in full amount.
It should be noted that the changes concerning the court fee payment are also applicable to the tax bodies. The law cancelled a number of benefits related to the court fee payment in part of exemption from the court fee payment of certain categories of persons (Article 5 of the Law on court fee is set out in a new version).
In particular, the exemption to pay the court fee was also cancelled for the tax bodies, that starting from September 1 will pay the court fee on equal basis with taxpayers.
Hopefully that the cost of filing an appeal or cassation claim will be sufficient reason for the tax bodies to abandon the common practice of appeal of all judicial decisions without exception or at least will have positive impact on reducing the number of unjustified appeal and cassation claims from the tax bodies.
The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.
1For individuals and individual entrepreneurs the rate of court fee for filing of property-related administrative claim is 1 percent of the claim cost, but not less than 0.4 of minimum wage and not more than 5 of MW, for filing non-property-related claim – 0.4 of the minimum wage.
2Regulation of the Higher Administrative Court of Ukraine as of May 19, 2015 regarding case No. K/800/18773/15 is available in the Unified State Register of Court Decisions by reference.
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